Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-94-07137/USCOURTS-caDC-94-07137-0/pdf.json

Nature of Suit Code: 320
Nature of Suit: Assault, Libel, and Slander
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 6, 1995 Decided January 30, 1996

No. 94-7137

ROBERT C. MCFARLANE,

APPELLANT

v.

ESQUIRE MAGAZINE, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 92cv00711)

Forrest A. Hainline, III argued the cause and filed the briefs for appellant.

Bruce W. Sanford argued the cause for appellees. With him on the brief were Lee T. Ellis, Jr., Henry

S. Hoberman and Robert D. Lystad.

Before: WILLIAMS, GINSBURG and RANDOLPH, Circuit Judges.

Opinion for the Court filed by Circuit Judge WILLIAMS.

WILLIAMS, Circuit Judge: In the late '80s and early '90s articles appeared in the American

press asserting an "October Surprise"a scheme by members of the 1980 Reagan-Bush campaign

team to thwart President Carter's efforts to negotiate the release of Iran's American hostages by

inducing the Iranians to delay their agreement. Ultimately (in January 1993) a bipartisan task force

of the House of Representatives emphatically rejected these claims. See Joint Report of the Task

Force to Investigate Certain Allegations Concerning the Holding of American Hostages by Iran in

1980, H. Rep. No. 102-1102 (102d Cong., 2d Sess.) ("Task Force Report"). In the meantime,

however, defendant Craig Unger wrote and defendants Esquire Magazine and Hearst Corporation

(collectively "Esquire") published an article sketching out the conspiracy theory in lurid terms. The

magazine's October 1991 cover asked, "Did the Republicans conspire with Iran and Israel to delay

the release of the hostages and steal the 1980 presidential election?" The article's answer appeared

to be a qualified Yes.

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In a breathless and kaleidoscopic account rivaling an Oliver Stone movie, Unger writes that

plaintiff Robert McFarlane, while an aide to Senator Tower, attended a February 1980 meeting with

Iranian officials in Teherana meeting that "helped set up later meetings in Madrid, which in turn

paved the way for the crucial October rendezvous in Paris." (In the "October rendezvous" George

Bush and William J. Casey are supposed to have closed the deal by which Iranians stalled hostage

negotiations in exchange for promises of arms. But see Task Force Report at 173 (finding that the

records and testimony "conclusively prove candidate George Bush's whereaboutsin October 1980,"

and that he did not travel to Parisin the period alleged).) It is not said just how the February meeting

"helped set up" later meetings (or how those "paved the way" for the supposed climax in Paris), but

in the course ofthe account the defendants used language effectivelycalling McFarlane an Israelispy.

McFarlane focuses on this passage, which quotes from Ari Ben-Menashe, a self-professed former

Israeli spy and a major source for conspiracy theorists:

In February 1980, Ben-Menashe says, Robert "Bud" McFarlane, then an aide

to Senator John Tower, and Earl Brian, a businessman who had been secretary of

health in Reagan's California cabinet, met highly placed Iranian officials in Teheran.

In a sworn affidavit submitted by Elliott [sic] Richardson on behalf of one of his

clients, a computer-software company called Inslaw, Ben-Menashe states that both

McFarlane and Brian had a "special relationship" with Israeli intelligence, McFarlane

having been recruited by Rafi Eitan, a legendary Israeli agent who was the model for

a leading character in John LeCarre's Little Drummer Girl. "McFarlane was the

famous Mr. X in the Pollard case," adds Ben-Menashe, referring to the trial of

Jonathan Pollard, an American convicted ofspying for Israel. In Pollard's case there

were persistent allegations about another, unnamed American who secretly worked

for the Israelis.

Both McFarlane and Brian have declined comment.

McFarlane and Brian's visit, Ben-Menashe says, helped set up later meetings

in Madrid, which in turn paved the way for the crucial October rendezvous in Paris.

(Emphasis added, except for Little Drummer Girl.)

Unger's article discloses doubts about Ben-Menashe's credibility, including quotations from

intelligence officials and journalists calling him a "fake" and a "con man." The article also says that

Ben-Menashe took a lie detector test for a news organization and "failed miserably," but then adds

that "it's almost impossible to dismiss him."

McFarlane brought suit against both Esquire and Unger in the U.S. District Court for the

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District of Columbia, alleging that the above passage falsely conveyed to Esquire's readers that

McFarlane was an Israeli spy and a traitor to his country. After discovery the district court granted

defendants' motion forsummary judgment. It held that it had no personal jurisdiction over Unger and

that no reasonable jury could have found, by clear and convincing evidence, that Esquire had

published the piece with "actual malice," i.e., with knowledge that the statements were false or with

reckless disregard of their probable falsity, which McFarlane, as an undisputed public figure, would

have to prove in order to win his case. See New York Times Co. v. Sullivan, 376 U.S. 254, 279-80

(1964); Liberty Lobby, Inc. v. Dow Jones & Co., Inc., 838 F.2d 1287, 1293 (D.C. Cir. 1988). We

affirm.

* * *

I. Personal jurisdiction over Unger

McFarlane claims that the court had personal jurisdiction over Unger by virtue ofsubsection

(3) or (4) of the District's statute relating to personal jurisdiction based on conduct linked to the

District:

(a) A District of Columbia court may exercise personal jurisdiction over a person,

who acts directly or by an agent, as to a claim for relief arising from the person's

(1) transacting any business in the District of Columbia;

...

(3) causing tortious injury in the District of Columbia by an act or omission

in the District of Columbia;

(4) causing tortious injury in the District of Columbia by an act or omission

outside the District of Columbia if he [1] regularly does or solicits business,

[2] engages in any other persistent course of conduct, or [3] derives

substantialrevenue fromgoods used or consumed, orservicesrendered, in the

District of Columbia.

D.C. Code 1981 § 13-423(a). Although the D.C. Court of Appeals reads subsection (1) to extend

to the "limits of due process," see Environmental Research Int'l v. Lockwood Greene Eng., 355 A.2d

808 (D.C. 1976), McFarlane does not assert it. See also Calder v. Jones, 465 U.S. 783 (1984)

(exploring limits of due process as applied to personal jurisdiction over out-of-state writer of an

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article defaming a resident of the forum state). And the subsections he does assert are unavailing.

The first, § 13-423(a)(3), requiresthat both tortiousinjury and an act predicate to it take place within

the District. But Unger's acts were not in the District; it is undisputed that he wrote the article in

New York and delivered it to Esquire in New York. The case is therefore like Moncrief v. Lexington

Herald-Leader Co., 807 F.2d 217 (D.C. Cir. 1986), where the defendant in Kentucky published and

mailed a newspaper that allegedly defamed the plaintiff in the District, and we found no basis for

jurisdiction under subsection (3).

McFarlane argues that in a libel action the injury is part of the tort, so that, in law, the

defendant has committed an act within the District. We rejected that claim in Moncrief, on the

ground that to accept it would obliterate subsection (3)'s careful distinction between "injury" and

"act." Id. at 220-21. McFarlane appears to concede that circuit precedent excludes Unger from the

purview of § 13-423(a)(3), and invites us to overrule Moncrief. But we have no power to do so,

even if we thought it desirable. One panel of the court does not have authority to overrule another.

See, e.g., United States v. Caldwell, 543 F.2d 1333, 1369 n.19 (D.C. Cir. 1974).

Section 13-423(a)(4) is of no more help to McFarlane. It contemplates jurisdiction when

there is tortious injury within the District accompanied by any of three specified kinds of additional

contacts between the District and the defendant, not necessarily related to the contested act or injury.

Crane v. Carr, 814 F.2d 758, 763 (D.C. Cir. 1987). McFarlane has not shown that Unger had any

of the specified types of contacts. His appeal makes no claim at all on the third typederiving

substantialrevenue fromgoods used or consumed, orservicesrendered, in the District. Invoking the

first and second types (regular business or persistent course of conduct), he points to the fact of

Unger's having written for six national publications whose circulations include the District and, on

two occasions, writing for District-based publications(the Washington Post and the NewRepublic).

But writing an article for a publication that is circulated throughout the nation, including the District,

hardly constitutes doing or soliciting business, or engaging in a persistent course of conduct, within

the District. The writer is not the publisher; Unger's contacts must be assessed separately. See

Keeton v. Hustler Magazine, 465 U.S. 770, 781 n.13 (1984).

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Thus we are left with two articles appearing in Washington-based publications, one in the

Washington Post (which was written after McFarlane's complaint was filed and is therefore no basis

for personal jurisdiction, see Klinghoffer v. S.N.C. Achille Lauro, 937 F.2d 44, 52 (2d Cir. 1991);

Asarco, Inc. v. Glenara, Ltd., 912 F.2d 784, 787 n.1 (5th Cir. 1990)) and one in the New Republic.

If "regularly" and "persistent" are to have any meaning, sale of two articles to District-based

publications over a career in journalism cannot amount to "regularly" doing business or to a

"persistent" course of conduct. Thus, without regard to the circuit's "newsgathering exception" to

jurisdiction, see Moncrief, 807 F.2d at 222-25, we agree with the district court that McFarlane has

failed to show contacts between Unger and the District satisfying § 13-423(a)(4). We affirm its

finding of a lack of personal jurisdiction over Unger.

We also affirm the district court's decision to dismiss instead of transfer the case against

Unger. The plaintiff asked for a transfer under 28 U.S.C. § 1406(a), which permits transfer "in the

interest of justice" of a "case laying venue in the wrong division or district." Where personal

jurisdiction is absent and venue is proper (or at least unchallenged, as here), courts have disagreed

as to whether a request for transfer should be analyzed under § 1406(a) or instead under 28 U.S.C.

§ 1404(a). See generally 15 Charles A. Wright et al., Federal Practice and Procedure § 3827, at 263-

67 (1986). In this particular case it appears to make no difference. Our standard of review is the

sameabuse of discretionunder both sections. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 257

(1981) (adopting abuse of discretion standard, noting need to balance multiple factors, in transfer

under § 1404(a)); Naartex Consulting Corp. v. Watt, 722 F.2d 779, 789 (D.C. Cir. 1983) (applying

abuse of discretion, without discussion, in transfer under § 1406(a)). And, although § 1404(a) calls

on the court to consider "the convenience of parties and witnesses" (in addition to "the interest of

justice," which both sections specify), neither party addresses arguments uniquely pertinent to

convenience. Accordingly, we need not try to resolve the "nearly hopeless muddle" of conflicting

reasoning and precedent asto which statute properlyapplies. Ellis v. Great Southwestern Corp., 646

F.2d 1099, 1106-07 (5th Cir. 1981).

The district court's denial of a transfer matters because the statute of limitations for

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defamation has now apparently expired in New York, the place where McFarlane could most readily

secure jurisdiction over Unger. The district judge explained that while denying such a transfer thus

exacts a "heavy penalty," the fault for the problem rests with McFarlane, who was put on notice, by

Unger's answer to the complaint, of Unger's intention to rely on a defense of lack of personal

jurisdiction, and nonetheless failed to file a protective suit in New York. The district court further

reasoned that McFarlane would not be prejudiced by denial of transfer, as Esquire had adequate

insurance. That strikes us as something of an oversimplification, as McFarlane's quest for vindication

would more easily be satisfied (as we shallsee) in a suit against Unger than against Esquire, because

of Unger'sfar greater awareness ofthe reasonsto doubt the truth ofthe article's claims. Nonetheless,

because of McFarlane's notice of the defense and his counsel'sinexplicable failure to file a protective

suit, we think the district court was within its discretion in denying a transfer.

II. Evidence of Esquire's actual malice

McFarlane concedes that he is a public figure, having held various high-level positions in the

Reagan Administration, including those of special envoy to the Middle East and National Security

Advisor. As such, McFarlane must show that the evidence in the record could support a reasonable

jury finding by clear and convincing evidence that the allegedly defamatory statements were made

with actual malice, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255-56 (1986), i.e., with

"knowledge that [they were] false or with reckless disregard of whether [they were] false or not,"

New York Times Co. v. Sullivan, 376 U.S. at 279-80. See also Harte-Hanks Communications, Inc.

v. Connaughton, 491 U.S. 657, 692 (1989) (actual malice shown if there is a "purposeful avoidance

of the truth"); Tavoulareas v. Piro, 817 F.2d 762, 775-76 (D.C. Cir. 1987) (citing cases). We first

consider whether Unger's state of mind may be attributed to Esquire for these purposes, and then,

having concluded that it may not, examine the evidence as to the state of mind of Esquire's

employees.

A. Attribution of Unger's state of mind to Esquire

If Unger had been an employee of Esquire, his state of mind could undoubtedly be attributed

to his employer. See Cantrell v. Forest City Publishing Co., 419 U.S. 245, 253-54 (1974). As

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McFarlane effectivelyacknowledges, however, Unger wasworking as an independent contractor, not

as an employee. McFarlane notes that Unger did use the prestige of Esquire by representing himself

to interviewees as working for Esquire, so we assume that Esquire may have established some sort

of agency relationship with Unger. Thus we consider the question whether the malice of a

non-employee agent can be imputed to the principal under New York Times v. Sullivan.

New York Times itself is a good place to start. There the Court threw out the case against

four individuals who (the Court assumed) had authorized use of their names as makers of the

defamatory statement, explaining that "there was no evidence whatever that they were aware of any

erroneous statements or were in any way reckless in that regard." 376 U.S. at 286. Thus the Court

refused to impute to the individuals as principals any information in the minds of persons they

authorized to act as their agents in the matter.

Nonetheless, a different rule might applyto a corporate defendant, which can act only through

agents of one sort or anotheremployees or non-employee agents. Yet the courts have not so

found. Commonly they have interpreted Cantrell as barring liability on any theory other than

respondeat superior (which is limited to employees). See, e.g., Price v. Viking Penguin, Inc., 881

F.2d 1426, 1446 (8th Cir. 1989); Secord v. Cockburn, 747 F. Supp. 779, 787 (D.D.C. 1990). But

Cantrell doesn't say that. The writer in question was an employee of the corporate defendant, and,

although the trial court had given an instruction somewhat muddling the categories of employee and

agent, no one had objected. Cantrell, 419 U.S. at 253-54 & n.6. So Cantrell presented no occasion

for the Court to address the issue of when the mental state of non-employee agents may be imputed

to the principal. See also Masson v. NewYorker Magazine, Inc., 832 F. Supp. 1350, 1371 (N.D. Cal.

1993) (discussing Cantrell).

McFarlane invokes Gertz v. Robert Welch, Inc., 680 F.2d 527, 539 n.19 (7th Cir. 1982), but

in that case the Supreme Court had already determined that the plaintiff there was not a public figure,

so that states were free to impose liability on whatever ground they chose, "so long as they do not

impose liability without fault." Gertz v. Robert Welch, Inc., 418 U.S. 323, 347 (1974). On remand

the Seventh Circuit applied an actual malice standard anyway, because Illinois law had adopted that

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standard for statements derived from public proceedings(some of which were at issue), and because

(it ultimately concluded) the plaintiff had satisfied even that heightened standard with respect to yet

other statements not covered by that privilege. Gertz, 680 F.2d at 537. As Masson explains, 832 F.

Supp. at 1372-73, in so doing the court was willing to attribute the knowledge of the

independent-contractor writer to the defendant under Illinois agency law for purposes of Illinois

defamation law. Gertz, 680 F.2d at 539 n.19. Gertz neither asserts nor cites authority for the

proposition that vicarious liability can be the basis for finding actual malice under New York Times,

apart from respondeat superior. In the next section of its opinion, to be sure, the Gertz court

affirmed the imposition of punitive damages against the principal, Gertz, 680 F.2d at 540, which

under federal constitutional law requires a showing of actualmalice,see Gertz, 418 U.S. at 349; Dun

&Bradstreet, Inc. v. Greenmoss Builders, Inc., 472 U.S. 749, 756-57 (1985), but with no discussion

or analysis of the issue. In practice, then, Gertz has little significance as a ruling on actual malice

under the New York Times standard, and our own analysis leads us to conclude that under New York

Times actual malice may not be attributed outside respondeat superior.

Liabilityforthe acts ofa non-employee agent normallyflowsfromthe principal's authorization

ofthe agent's acts, and establishment ofthe principal-agent relationship as a threshold matter is based

largely upon control of one party by the other. See Restatement of Agency 2d §§ 140, 14. The

question here is what kind of control (if any) might suffice to tie Esquire to Unger's knowledge for

these purposes. In Hunt v. Liberty Lobby, 720 F.2d 631 (11th Cir. 1983), the court addressed the

possibility that a principal might be liable for the malice of a non-employee agent on the grounds of

its control over the agent's activities. Cf. Restatement of Agency 2d § 254 (discussing imputation of

agent's defamation to principal, without reference to malice). But the court in Hunt seemed to

assume that the positions of independent contractor and of agent were mutually exclusive, Hunt, 720

F.2d at 649, which they are not, Restatement of Agency 2d § 14 N cmt. a, and therefore conflated

the enterprise of showing someone to be a de facto employee with that of showing agency. In any

case, the court found no controlby the publisher, asthe writer had simply sold the publisher a finished

product. Hunt, 720 F.2d at 648-49 & n.30. This overlooks the fact of the publisher's ability to edit

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and, ultimately, to veto the publicationthe court does not say that the article was sold on a

take-it-or-leave-it basis. Similarly, in Price v. Viking Penguin, 881 F.2d 1426, the court examined

the editor's relation to the author. Finding that it was limited to matters of structure, priorities and

clarity, the court declared that the author "clearly was not an employee of Viking such that liability

could be imputed, were we to find any," id. at 1446. Despite the court's reliance on the finding that

the writer was not an employee, its examination of the editing process suggests that it may have

viewed some forms of editorial control as a possible basis for vicarious liability for the state of mind

of a non-employee agent, classification of the writer as an employee being clearly out ofthe question.

Although Hunt and Price seem to require an employment relationship, they might also be

understood as supposing that some kinds of intense editorial involvement by a publisher's employees

might entangle them in the independent writer's thought process enough to serve as a basis for

holding the publisher vicariously liable. But why should editorial controls that take the employee

editors themselves to a point short of actual malice be deemed to establish the publisher's actual

malice? One answer might be that not to do so creates a perfect escape hatch for deep-pocket

publications. But the answer is not completely satisfactory, as any writer who knowingly ventures

into legally risky waters, and who isreluctant to experience personal bankruptcy, would presumably

demand an indemnity agreement, putting the publisher on the line. Further, actual malice is a First

Amendment protection predicated on a subjective state of mind, Hutchinson v. Proxmire, 443 U.S.

111, 120 n.9 (1979) (citing New York Times), which surely cuts against any extension of vicarious

liability beyond respondeat superior. Because we doubt that actual malice can be imputed except

under respondeat superior, and because in any case McFarlane presents no evidence showing

Esquire's supervision of the process by which Unger turned raw data into finished article (as distinct

from control over his final product), cf. Restatement of Agency 2d § 14 N cmt. b, we conclude that

McFarlane may show Esquire's malice only through evidence of the information available to, and

conduct of, its employees.

B. Evidence that Esquire editors had actual malice

Because both parties in their original briefs made little effort to distinguish between the

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possiblemalice ofthe two defendants, we ordered an additionalround of briefing directed to evidence

of actual malice on the part of Esquire's editors. We assume, in favor of McFarlane, that information

in the mind of each individualEsquire editor may be aggregated with information in the mind of every

other editor, but we do not decide the point. Our review persuades us that McFarlane failed to

submit evidence from which a jury could find such malice.

McFarlane's supplemental brief on the issue is obscure. In a series of paragraphs the brief

asserts that "Esquire editors knew ..." various facts. The facts are largely ones that appear on

computer disks containing Unger's transcriptions of his notes of interviews with various sources,

which Unger sent over to Esquire. But with one exception the Esquire editors questioned on the

matter said (and McFarlane offers no reason why a jury should disbelieve them) that they did not

examine the transcripts; the single exception, research editor Mark Warren, said that he had spot

checked some of themso far as appears, only those of Ben-Menashe and Richardson. But

McFarlane does not claim material conflicts between the Ben-Menashe transcripts and the published

article's accounts of his claims. Thus, as we shall see, McFarlane is driven largely to rely on Esquire's

alleged distortions of what Richardson had to say.

McFarlane's contentions that Esquire had actual malice comprise four basic points. First, he

suggests that Esquire editors not only had reasons to doubt Ben-Menashe's truthfulness but also in

fact doubted itso much so that their decision to publish without further corroboration showed

malice. Second, McFarlane claims that Esquire either knowingly, or with reckless disregard,

participated in Unger's (alleged) fabrication of a "pedigree" for Ben-Menashe in the form of an

endorsement by Elliot Richardson. Third, McFarlane suggests that general aspects of Esquire's

presentation ofthe articlesegment headings, promotionalblurbs elsewhere in the magazine, and the

yellow highlighting of certain passagesadd to the "defamatory sting" of the specific passage on

McFarlane. Finally, McFarlane says that Esquire editors fabricated the article's statement that he had

denied comment. We review these points in turn, recognizing that McFarlane is entitled to an

aggregate consideration of all of these claimswith the evidence construed most favorably to

himto see if he has met his burden. Tavoulareas, 817 F.2d at 794 n.43.

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1. Reasons to doubt the credibility of Ben-Menashe

Ben-Menashe is the source for many of the details in "October Surprise," including the ones

in the passage under attack in this case. Several of Unger's sources made clear to him their belief that

Ben-Menashe was a liar, and Esquire does not deny its awareness of these views; it couldn't, as the

article passed a substantial chunk ofthemthrough to the readers. The article directly quotes a former

CIA officer and a Washington Post journalist as calling him, respectively, a "liar" and a "con man."

It notes that when he took a lie detector test he "failed miserably," and it quotes an ABC News

producer as saying that in the lie detector test Ben-Menashe "goes way off the chart on all relevant

questions. My theory is that a lot of what he says is true, but that Ari exaggerates his own role and

muddies the water." But full (or pretty full) publication of the grounds for doubting a source tends

to rebut a claim of malice, not to establish one. See Tavoulareas, 817 F.2d at 788 n.35.

We are not, of course,saying that one may altogether shield a defamation simply by including

the source's reputation as a liar. Here Esquire supplied an answer of sorts to the question of why,

knowing Ben-Menashe's flaws, they still saw fit to pass his accusations on to its readers. Editor

William Blythe approved addition of the phrase, "Yet it's almost impossible to dismiss him," directly

after the recitation of Ben-Menashe's vulnerabilities. Explaining the decision, he testified, "We

wouldn't have used him as a source unless we thought he had some knowledgeability.... We ... knew

that he ... wasthe [sic; "a"?] source of the Iran-Contra story, and certainly that had checked out, and

also that Congress was investigating Ari Ben-Menashe's charges and using him as a witness."

Esquire's editor-in-chief, in the course of elaborating on his denial that he "knew that what BenMenashe was saying was as likely to be false as it was to be true," also pointed to Ben-Menashe's

apparent vindication in Iran-Contra. And the editors relied on Unger's record; he had worked with

Esquire editor David Hirshey on two earlier pieces, and Hirshey had found him "exemplary."

Reliance on a reporter'sreputation can indeed show a lack of actual malice by a publisher. See Speer

v. Ottaway Newspapers, Inc., 828 F.2d 475, 478 (8th Cir. 1987); McManus v. Doubleday & Co.,

513 F. Supp. 1383, 1390 (S.D.N.Y. 1981). Cf. Washington Post Co. v. Keogh, 365 F.2d 965, 971-

72 (D.C. Cir. 1966) (exploring difficulties in using writer's questionable reputation against the

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publisher). McFarlane does not dispute the validity of these bases for Esquire's going forward

(though he does, of course, assert Esquire's allegedly inadequate attention to countervailing

negatives).

As to Ben-Menashe's being interviewed by congressional staffers, we have in the past given

weight to the fact that a source told congressional investigators the same story that he told the

defendant, under circumstances where lying could have serious consequences. See Tavoulareas, 817

F.2d at 791 (source gave information to congressional investigators in formal setting which, though

without oath, could possibly lead to criminal liability for lying). But no one should suppose that such

colloquies add up to some sort of congressional endorsement. That it may make sense for

congressional staffers to give the time of day to a wildly improbable source, on the off chance that

he will yield something useful, tells virtually nothing about the source's credibility. Further, Esquire

does not even claimto have had information that Ben-Menashe'sstatementsto the investigators were

the same as to Unger, and it offered no evidence that the circumstances of the interviews in any way

would have alerted Ben-Menashe to the penalties for lying.

McFarlane says that Esquire "reviewed" a report by the PBS television documentary

"Frontline," showing that an arms dealer, Houshang Lavi, not Ben-Menashe, attended a meeting at

the L'Enfant Plaza with some Reagan campaign foreign policy advisers. (This meeting actually

occurred. See Task Force Report at 109-18.) From the fact that the final article did not mention the

L'Enfant Plaza meeting, whereas Unger's original draft did, expressing doubt about Ben-Menashe's

claim to have been present there, McFarlane argues that the jury could infer a willful intent to

suppress an instance where Ben-Menashe was proven flat-out false. It is not clear to us that the

pronouncements of an obscure international arms dealer are so self-evidently true that they could be

said to establish the falsity of Ben-Menashe's claims, though of course the contradiction is not trivial.

(In fact, the strongest evidence presented to the Task Force on the identityofthe foreign interlocutor,

a contemporaneous memo by participant Richard Allen, identifies him as one A. A. Mohammed, a

Malaysian and so far as appears in no way connected to Ben-Menashe or Lavi. See id. at 115.)

Moreover, McFarlane has not directed our attention to any depositions indicating what real contact

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Esquire editors may have had with the Frontline report or with raw data as to the L'Enfant Plaza

meeting generally.

In sum, given Ben-Menashe's supposed role as a source in Iran-Contra, Unger's reputation

with Esquire, and the inherent difficulties in verifying or refuting a claim that someone is the agent

of a foreign power, the proofs do not add up to the possibility of a reasonable jury finding of clear

and convincing evidence of reckless awareness of probable falsity, and in no way show an actual

belief in falsity.

2. Fabrication of the Elliot Richardson endorsement of Ben-Menashe's credibility

McFarlane claims that "October Surprise" artificially boosted Ben-Menashe's credibility,

fabricating a "pedigree" for him with quotations from Elliot Richardsonreferred to in the article as

the "moral hero" of Watergatepurporting to show that Richardson took Ben-Menashe seriously.

First, recall that the disputed passage includes the following sentence:

In a sworn affidavit submitted by Elliott [sic] Richardson on behalf of one of his

clients, a computer-software company called Inslaw, Ben-Menashe states that both

McFarlane and Brian had a "special relationship" with Israeli intelligence, McFarlane

having been recruited by Rafi Eitan, a legendary Israeli agent who was the model for

a leading character in John LeCarre's Little Drummer Girl.

The statement istechnicallyfalse in one narrow respectRichardson evidentlydid not appear

as counsel of record in the Inslaw case. But he later said (and it is not disputed) that he was on the

legal team for Inslaw, and he evidently so represented himself to Unger, who was Esquire's only

claimed source of information about Ben-Menashe's Inslaw affidavit.

The sentence has a far more serious flaw. Its latter part, beginning with "McFarlane having

been recruited by Rafi Eitan," is not in the affidavit. Nor indeed is there anything in the affidavit

remotely supporting the statement in the article's following sentences, making McFarlane out to be

an equivalent of Pollarda spy who had pled guilty to, in effect, selling masses of top secret U.S.

material to the Israelis. While McFarlane does not dispute that Ben-Menashe made these assertions

to Unger, the text of the affidavit supports only the idea of a "special relationship." Thus, says

McFarlane, Esquire stretched the Richardson imprimatur from the relatively innocent "special

relationship" all the way to the charge of espionage.

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Esquire offerstwo answers. First, it now argues that there is "no material difference" between

the "recruited by" and "special relationship" phrases. This is fanciful. "Special relationship" seems

infinitely elastic, while "recruited," in context, suggests a switch of allegiance to a foreign power.

Second, Esquire's editorstestified that they recognized that the passage might appear to suggest that

the whole accusation was in the affidavit, but that they ordered changestheir recollection was the

addition of the commato indicate the contrary. Their brief also notes that the affidavit surely

would not have cited Little Drummer Girl, alerting the reader to the fact that the spy charge was not

advanced in the affidavit. Although we find the comma theory pretty thin, this imprimatur stretch

seems as consistent with linguistic muddle as with reckless disregard, and in context not enough, even

in conjunction with other evidence, to show actual malice by Esquire editors.

McFarlane puts more stress on Esquire's use of a truncated quote from Richardson in a

mention ofthe Ben-Menashe affidavit in the course of a generic canvassing ofBen- Menashe'sspotty

credibility:

And former attorneygeneralElliott [sic]Richardson ... hassubmitted sworn affidavits

by Ben-Menashe on behalf of a client. A standard legal gambit, perhaps, but

Richardson finds Ari Ben-Menashe a compelling witness. "I take him seriously as

being who he says he is," says Richardson.

Richardson's actual comment, as reflected in Unger's earlier draft and substantially

corroborated in his notes, was, "Quite apart from what he knows, I take him seriously as being who

he says he is." Esquire's editors removed the first clause from Unger's draft, in McFarlane's view

greatly increasing the intensity of the endorsement.

Esquire argues that any problem here is solved by an affidavit of Richardson, filed in this

litigation, saying that "[t]he statements and quotations attributed to me accurately reflect statements

I made to Mr. Unger, and accurately reflect my views ofMr. Ben-Menashe." But while the statement

may aid Esquire in a defense of truth (on a rather peripheral matter, not the defamatory material

itself), it does not dispose of the question of actual malice, which turns on Esquire'ssubjective beliefs

and purposes at the time of publication. Esquire saw Unger's notes, and they speak for themselves.

Nonetheless, we think the explanation by Esquirethat they deleted the clause because of

space considerations and because of its ambiguityaltogether plausible. "Quite apart from what he

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1The transcript, without corrections, reads as follows:

... one thing that is true of people like him is that they live ina world of such

cosnstatn deception is that they are used to moveing without missssetp bewtwen

truth and fabircation so he deosnt help much wit hte ocrotber surprise sty toverify

the truthufl 

knows" could be taken to mean that Richardson believed Ben-Menashe's claimed identity but not his

statements, or it could mean that Richardson wanted to emphasize his belief in Ben-Menashe's

identity, not simply Ben- Menashe's apparent knowledge. The clause is ambiguous. And with or

without it this Richardson endorsement seems to add up to very little.

We are more troubled about a different discrepancy between Unger's notes and the final

article. The notes, quoting Richardson's statements to Unger about Ben-Menashe, say (correcting

obvious typographical errors):1

[O]ne thing that is true of people like him is that they live in a world of such

constant deception [ ] that they are used to moving without misstep between truth and

fabrication so he doesn't help much with the Octobersurprise story to verify the truth.

As Esquire put most of its eggs in the Ben-Menashe basket, both for October Surprise

generally and for the accusation against McFarlane, thisseems a sharp renunciation ofitsstar witness

by his putative champion. The statement is in Unger's notes of his talks with Richardson, and it is

undisputed that Mark Warren browsed in precisely those notes. But at no time, so far as we can tell,

did McFarlane's counsel ever ask Warren whether he'd spotted this passage and, ifso, what he made

of it. Accordingly, its presence, though puzzling, cannot much help McFarlane.

We are also troubled by the fact of Unger's uncontradicted testimony that he sent to Esquire

a draft including a quote about Ben-Menashe from Richardson, "I can't tell if the son of a bitch is

telling the truth." The editors apparently removed it, with the purpose, according to Unger, of

"maintaining the integrity of what Mr. Richardson said." This appears to be some sort of jargon for

suppressing material inconsistent with a broad effort to build up Ben-Menashe's credibility. Still, in

view of the article's inclusion ofsolid material damning Ben-Menashe, the removal gets only limited

weight.

3. Embellishments

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McFarlane points to aspects of the article's presentation that generally hype its broad theme

of Republican skullduggerythe yellow highlighting of certain sentences in the article that push the

theory forward (but not ones that detract from it), the inclusion of a cover sticker ["OCTOBER

SURPRISE DID THE Republicans conspire with Iran and Israel to DELAY the RELEASE of

the hostages and steal the 1980 PRESIDENTIAL election?"] (typography in original), the

placement of color photographs, and the use of bold section titles. But while these displays of bias

may be the sort that deprive Esquire of any "neutralreporting" privilege, In re UPI, 16 Media L. Rep.

(BNA) 2401, 2408 (D.D.C. 1989), but see White v. Fraternal Order of Police, 909 F.2d 512, 514,

528 (D.C. Cir. 1990) (leaving open the scope of the privilege under District law)), none of the

displays relates directly to McFarlane or goes directly to Esquire's subjective intent to tell a mistruth

or speak with willful disregard of truth. "The fact that a commentary is one sided and sets forth

categorical accusations has no tendency to prove that the publisher believed it to be false."

Westmoreland v. CBS, Inc., 601 F. Supp. 66, 68 (S.D.N.Y. 1984).

4. The report of McFarlane's refusal to comment

In the last stages of editing, Esquire changed the article's treatment of McFarlane's response

to the charges. "McFarlane ... denied the charges" became "McFarlane ... refused comment."

Esquire's David Hirsheytestified that they had been holding space for McFarlane'sresponse, but were

told by Unger that McFarlane had refused to agree to any kind of interview. Indeed, McFarlane

wrote that he thought he would be "of little help" to Unger, essentially declining to be interviewed.

McFarlane notesthat Unger'sletterrequesting help fromMcFarlanewas phrased veryblandly,

saying that he was about to do an article on the October Surprise and asking for an interview. There

was not a clue as to the depths of the charges ("By the way, I plan to accuse you of being an Israeli

spy."). And Mark Warren acknowledged having seen a copy of the letter to McFarlane, and the

latter's reply, in the editing process. In a later telephone call, according to McFarlane's executive

assistant, Unger mentioned October Surprise and Inslaw, but, again, not a word about espionage.

Thus Warren and Esquire were on some notice of what had led to McFarlane's position. In

retrospect, this looks at least very careless, but not enough to entangle Esquire in Unger's apparent

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misleading, which would be necessary for Esquire's behavior to help show actual malice on its part.

"[P]laintiff must prove more than an extreme departure from professionalstandards." Harte-Hanks

Communications, Inc. v. Connaughton, 491 U.S. 657, 665 (1989).

* * *

The standard of actual malice is a daunting one. McFarlane has been accused of espionage

and, because the trial court rightly believed that want of adequate evidence ofmalice wasthe simplest

way of addressing the claim against Esquire, has as yet had no opportunity to secure vindication.

Compare Arnold A. Lubasch, "Time Cleared of Libelling Sharon But Jurors Criticize its Reporting,"

New York Times, Jan. 25, 1985, at A1 (reporting jury finding that Time's story about Israeli general

Ariel Sharon was false and defamatory but not published with actual malice); cf. Herbert v. Lando,

603 F. Supp. 983, 988 (S.D.N.Y. 1985) (noting submission of special verdict to jury in Sharon v.

Time, Inc., 83 Civ. 4660(ADS) (S.D.N.Y. 1985)). Nonetheless, as the dismissal was correct, we

must affirm.

Because of the correctness of the finding on malice and of the trial court's dismissal of the

claim against Unger for want of personal jurisdiction, the judgment is

Affirmed.

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