Christopher J. Alf, Appellant,v.The Buffalo News, Inc., Respondent.BriefN.Y.June 20, 2013To be Argued by: JOHN J. WALSH (Time Requested: 15 Minutes) Erie County Clerk’s Index No. I-2008-11720 New York Supreme Court Appellate Division-Fourth Department CHRISTOPHER J. ALF, Plaintiff-Appellant, - against - THE BUFFALO NEWS, INC., Defendant-Respondent. BRIEF FOR PLAINTIFF-APPELLANT Of Counsel: John J. Walsh, Esq. Michael K. Plumb, Esq. Of Counsel: Richard T. Sullivan, Esq. CARTER LEDYARD & MILBURN LLP 2 Wall Street New York, New York 10005 (212) 732-3200 and HARRIS BEACH PLLC 726 Exchange Street, Suite 1000 Buffalo, New York 14210 (716) 200-5050 Attorneys for Plaintiff-Appellant TABLE OF CONTENTS page QUESTIONS PRESENTED .......................................................................... 1 SUMMARY OF ARGUMENT ...................................................................... 2 STATEMENT OF THE CASE ...................................................................... 7 STANDAP~ OF REVIE\V ............................................................................ 7 STATEMENT OF FACTS ............................................................................. 9 A. The Parties ......................................................................................................... 9 B. Background ....................................................................................................... 9 C. The Plea Agreement and Global Settlement ................................................... 11 D. The Defamatory Articles ................................................................................. 13 E. The Dispute with the Government and Its Role in "Relevant Conduct" ........ 16 F. Subsequent Proceedings Vindicating Plaintiff ................................................ 18 POINT I TH~ LOWER COURT ERRED IN }'INDING D~}'ENDANT'S ARTICLES "ACCURATE ENOUGH" TO BE PRIVILEGED UNDER CIVIL RIGHTS LAW § 74 .......................................................................... 19 A. The Articles Are Not Fair andirue Reports of the Judicial Proceedings ..................................................................................... 19 1. Reports falsely expanding the scope of criminal charges are not protected by Civil Rights Law § 74 ............................................. 22 2. False reports of admissions of criminal guilt are not protected by Civil Right Law § 74 ................................................................... 25 B. The Material Relied on by the News' Reporter and AIrs Relationshin with NAC Could Not Fairlv Lead that Renorter to .L ".L Write and the News to Publish the Articles as Written ................... 34 1. The documents and courtroom colloquy the News' reporter relied on do not include admissions of years of criminal conduct ........ 37 2. The documents and colloquy the News' reporter relied on do not state that the Plea Agreement spared Alffrom prison ................. 38 1 6988898 1 3. The documents and colloquy the News' reporter relied on do not include admissions of cheating the government falsely attributed to Alfand NAC ............................................................................ 40 C. The News' Omissions of Material Facts Render the Reports False ................................................................................................. 41 POINT II THE LOWER COURT ERRED BY HOLDING INACCURATE AND MISLEADING NEWS REPORTS PRIVILEGED UNDER CIVIL DTr'll'T'~ T A 'Xl 10: "'Ii nvr' A TTSV 'T'llV DVDAD'T'VD l\/rTGH'T' ~TA'T' II A "E .'-.I.'-J ••• kl LJ~TT ~ " .IJ.£J'--~U .£J ••• .£J .~. ~.," • .£J.," 1.T •••• 1. ... ~ ••• ~T UNDERSTOOD LEGAL TERMS USED IN THE JUDICIAL PROCEEDING .............................................................................................. 43 A. A Reporter's Understanding or Misunderstanding of a Judicial Proceeding Is Not a Basis for Privilege Under Civil Rights Law § 74 ..................................................................................................... 43 B. Requiring Reports to be "Fair and True" for Civil Rights Law § 74 to Apply, Regardless of a Reporter's Subjective Knowledge, Is Reasonable and Consistent with the Language and Intent of the Statute .............................................................................................. 46 POINT III THF, LOWER COURT ERRED BY FAILING TO GR-\NT ALF'S CROSS MOTION FOR PARTIAL SUMMARY JUDGMENT .............. 49 A. The Articles Are False ..................................................................... 49 B. The News' Defense Based on Civil Rights Law § 74 Privilege Should Be Stricken .......................................................................... 51 C. The Articles Are Not Substantially True and That Defense Should Be Stricken ...................................................................................... 51 D. The Editorial Is Not Privileged Opinion and That Defense Should Be Stricken ...................................................................................... 52 CONCLUSION .............................................................................................. 54 .. 11 6988898.1 TABLE OF AUTHORITIES Page(s) NEW YORK CASES Alvarez v. Prospect Hospital, 68 N.Y.2d 320 (1986) .......................................................................................... 8 Cholowsky v. Civiletti, 69 A.D .3d 110 (2d Dep't 2009) ......................................................................... 51 D & L Holdings v. Goldman Co., 287 A.D.2d 65 (1 st Dep't 2001 ) ......................................................................... 33 Daniel Goldreyer, Ltd. v. Van De Wetering, 217 A.D.2d434 (1stDep't 1995) ................................................................. 20,43 Dibble v. WROC TV Channel 8, 142 A.D.2d 966 (4th Dep't 1988) ............................................................... passim Eidlisz v. New York University, 1 ~ lI,T 'T "..J ~30 ''''''010) 0 1,) l~.I • .JU I ~L .......................................................................................... (') Ford Motor Credit Co. v. Colonial Funding Corp., 215 A.D.2d 435 (2d Dep't 1995) ....................................................................... 33 Fraser v. Park Newspapers o/St. Lawrence, Inc., 246 A.D.2d 894 (3d Dep't 1998) ................................................................ passim Fraser v. Park Newspapers o/St. Lawrence, Inc., 257 A.D.2d 961 (3d Dep't 1999) ....................................................................... 26 Glendora v. Gannett Suburban IVewspapers, 201 A.D.2d 201 (2d Dep't 1994) ....................................................................... 19 Greenberg v. CBS Inc., 69 A.D.2d 693 (2d Dep't 1979) ..................................................................... 8, 52 Gross v. New York Times Co., 82 N.Y.2d 146 (1993) ...................................................................... 33, 39, 52,53 111 6988898.1 Jimenez v. United Federation of Teachers, 239 A.D.2d 265 (18t Dep 't 1997) ....................................................................... 51 Matovcik v. Times Beacon Record Newspapers, 46 A.D.3d 636 (2d Dep't 2008) ......................................................................... 50 Ocean State Seafood v. Capital Newspaper, 112 A.D.2d 662 (3d Dep't 1985) ....................................................................... 20 Palmerton v. Envirogas, Inc., 80 A.D.2d 996 (4th Dep't 1981) .......................................................................... 7 Posner v. New York Law Pub. Co., 228 A.D.2d 318 (18t Dep't 1996) ....................................................................... 51 Prozeralik v. Capital Cities Comm., Inc., 82 N.Y.2d 466 (1993) ........................................................................................ 48 Sassowar v. New York Times Co., 48 A.D.3d 440 (2d Dep't 2008) ......................................................................... 41 Shulman v. Hunderfund, 12 N.Y.3d 143 (2009) ........................................................................................ 51 Sillman v. Twentieth Century-Fox Film Corp., 3 N.Y.2d 395 (1957) ............................................................................................ 8 Stanwick v. /' .. leloni, 158 A.D.2d 944 (4th Dep't 1990) ........................................................................ 7 Suozzi v. Parente, 202 A.D.2d 94 (18t Dep't 1994) ......................................................................... 48 Williams v. Williams, 23 N.Y.2d 592 (1969) ........................................................................................ 47 Zuckerman v. City of New York, 49 N.Y.2d 557 (1980) .......................................................................................... 8 FEDERAL CASES Aksoy v. United States, 101 F.3d 1393 (2d Cir. 1996) ............................................................................. 30 IV 6988898.1 Calvin Klein Trademark Trust v. Wachner, 129 F. Supp. 2d 248 (S.D.N.Y. 2009) ................................................................ 20 Gertz v. Robert Welch, 418 U.S. 323 (1974) ........................................................................................... 48 Karp v. Hill & Knowlton, Inc., 631 F. Supp. 360 (S.D.N.Y. 1986) ..................................................................... 26 Milkovich v. Loraine Journal Co., 497 U.S. 1 (1990) ................................................................................... 39, 52, 53 Montes v. Scully, CV-90-1078, 1993 WL 372266 (E.D.N.Y. Sept. 1, 1993) ................................ 29 United States v. Streich, 987 F.2d 104 (2d Cir. 1993) ............................................................................... 29 Wenz v. Becker, 948 F. Supp. 319 (S.D.N.Y. 1996) ..................................................................... 41 STATUTES Civil Rights Law § 74 ....................................................................................... passim CPLR Rules 3211 ...................................................................................................... 7 CPLR R_ule 3212 ........................................................................................................ 7 CONSTITUTIONAL PROVISIONS New York State Constitution, Article I, § 8 ............................................................ 46 v 6988898.1 QUESTIONS PRESENTED 1. Did the court err in granting Civil Rights Law § 74 protection to nevIs reports that falsely expanded the scope of an admission in a criminal proceeding and led readers to conclude that Plaintiff-Appellant had admitted to cheating the government over a period of years? 2. Did the court err in granting Civil Rights Law § 74 protection to news reports of a judicial proceeding based on a finding that it would be unreasonable to hold a newspaper reporter to a standard that requires knowledge of legal terms used during such proceedings? 6988898,1 SUMMARY OF ARGUMENT In 2007, Christopher Alf ("AI f') was Chairman and owner of National Air Cargo ("NAC"), an air freight forwarder which arranges for the transport of supplies between U.S. military installations. In 2001, an employee fired for insubordination made "whistle blower" allegations that initiated a federal investigation focused on alleged overcharges for carriage of materials for U.S. armed forces. The investigation led to years of negotiations between NAC and the government involving conflicting interpretations of federal regulations concerning carriage of freight within the United States. Then the situation escalated: the U.S. Attorney in Buffalo threatened an indictment, raising the possibility of immediate, indefinite suspension ofNAC's primary business. This left Alfwith a clear choice: either direct NAC to stand on principle and fight an indictment, and risk failure to continue as a going concern, or negotiate a plea agreement and global settlement which would allow NAC to continue in business. Alfmade the prudent business decision. On October 25,2007, a corporate representative for NAC pleaded guilty in federal court to an Information that charged NAC with submitting a single false statement to the federal government. At the same time, NAC entered into a settlement resolving all aspects of the years- long investigation and qui tam allegations, without admitting any other wrongdoing, by agreeing to pay the substantial amount reached in negotiations 2 6988898.1 with the federal government. The Buffalo News ("the News") was advised of the reason behind the decision prior to reporting on the judicial proceeding, and ignored it. The next day, and in the days and weeks that followed, the News published a series of false and defamatory articles stating that NAC and Alf, its owner, had admitted to cheating the government out of millions of dollars from 1999 to 2005. The articles also reported that the plea agreement spared Alf from being sentenced to prison for these years of criminal activity, emphasizing that Alfhad bought his way out of prison through campaign contributions and political connections. Alf commenced this action for defamation in 2008. In December 2011, Hon. Gerald J. Whalen, Erie County Supreme Court, granted the News' motion for summary judgment based on Civil Rights Law § 74, which bars civil claims based "f'" • 1 ~ . r . 1· .. 1 1·", ... 1". "·.1 ." on a laIr ana (rue repon 01 a jUmCIai proceemng. AIler revlewmg me enure record, Justice Whalen found that: 6988898.1 It is clear from a review of the entire record that Alf did not admit to cheating the government over a period of years. At no time did Alf appear during the judicial proceedings nor did the News obtain statements or quotes from Alf prior to printing the relevant articles and editorial. The judicial proceedings was brought against NAC as a corporate defendant and not Alf individually. The plea agreement was entered into by NAC. 3 Record on Appeal (hereafter R. at ~ at 13. The lower court also found that the articles led readers to believe that Alfhad admitted to years of cheating the government. Specifically, the decision states that "a fair reading of the articles leads the reader to inaccurately conclude that NAC and Alf admitted to cheating the government over a period of years." (R. at 14.) It also states that "[Alf] correctly argues that the reporter's depictions of 'relevant conduct,' in the plea agreement and during the plea colloquy, as evidence of additional admissions by NAC and Alfis inaccurate" and that "[t]he News' articles inaccurately relied upon the terms of the plea agreement and the in-court colloquy at sentencing, including the references to 'relevant conduct. '" (R. at 14, 16.) Despite these findings, and contrary to controlling law, the lower court then held that the articles are, nevertheless, protected from civil suit by Civil Rights Law § 74, holding: 698889R.l The News' articles inaccurately relied upon the terms of the plea agreement and the in-court colloquy at sentencing, including the references to "relevant conduct." However, such reliance, as it related to assertions against NAC and Alf, cannot form the basis of an actionable libel. The content of all of the aforementioned information in addition to Alfbeing chairman and sole shareholder ofNAC could fairly lead one to report this story as it was reported by the News despite it being not technically accurate. When viewed in the totality of circumstances, the reporter's factual account of what transpired is accurate enough to fall under the protection of §74 of the Civil Rights Law. 4 (R. at 16.) In an apparent effort at explanation, the lower court also held that it would be "unreasonable" to "hold a newspaper reporter to such a standard as to require technical legal knowledge of specific terms used during a legal proceeding" (R. at 15), an effort that only compounded its errors of law. The lower court's findings of fact are incompatible with its ultimate holding that the articles are "accurate enough to fall under the protections of § 74 of the Civil Rights Law." (R. at 16.) As a matter oflaw, the lower court's finding that the News published inaccurate statements about the proceedings that had an effect on the minds of readers different than the actual truth necessarily means that the reports are not "fair and true" and are not protected by Civil Rights Law § 74. Dibble v. WROC TV Channel 8, 142 A.D.2d 966 (4th Dep't 1988). Controlling caselaw also denies Section 74 protection where a newspaper falsely reports admissions of criminal guilt or expands the scope of criminai charges against a defendant. Id.; Fraser v. Park Newspapers afSt. Lawrence, Inc. ,246 A.D.2d 894 (3d Dep't 1998). The News falsely reported admissions by Alfand falsely reported charges against him. Section 74 cannot protect these false statements. The novel, subjective knowledge standard applied by the lower court in determining that the articles are "accurate enough," involving a reporter's understanding of legal terms and corporate relationships, has no precedent, and 5 6988898.1 threatens to turn the qualified privilege of Section 74, which is based on objective considerations, into an absolute privilege unintended by the legislation which created it. The knowledge or subjective understanding of a reporter does not affect the truth or accuracy of the report and has no place in detennining the application of the Section 74 defense. Dibble, 142 A.D.2d at 968. Even if the reporter's knowledge were an issue, it would create a material issue of fact not subject to resolution on a motion for summary judgment. This Court should reverse the decision of the lower court and strike the News' defenses based on Civil Rights Law § 74, substantial truth, and privileged opinion. Because the record establishes that the articles are false, the Court should also grant AIrs motion for partial summary judgment on the issue of falsity. 6 6988898,1 STATEMENT OF THE CASE On October 23,2008, Appellant Alf commenced the instant action seeking damages for the defamatory articles. The News answered and counterclaimed on November 12,2008. Alffiled the Amended Complaint on April 12, 2010. The News answered and counterclaimed on June 16, 2010. Both parties requested discovery. The News filed a motion for summary judgment pursuant to CPLR Rules 321 1 (a) and 3212 on April 6, 2011. On June 14,2001, Appellant Alf cross- moved for partial summary judgment pursuant to CPLR Ruie 32i2(e) and (t). On December 14, 2011, Justice Whalen heard oral argument on the cross motions for summary judgment, and on December 22, 2011, issued an II-page decision and order dismissing the Amended Complaint by finding the complained of statements protected by Civil Rights Law § 74. STANnARD OF P-F,VIF,W Summary judgment on an issue of law may be granted only where the moving party demonstrates that there is no triable issue of material fact and judgment as a matter of law is warranted. See CPLR § 3212. The record should be "scrutinized carefully in the light most favorable to the part[y] opposing the motion." Palmerton v. Envirogas, Inc., 80 A.D.2d 996,996 (4th Dep't 1981); Stanwick v. Meloni, 158 A.D.2d 944, 944 (4th Dep't 1990) ("reviewing the proof submitted in the light most favorable to the non-moving party"). 7 6988898.1 As the Court of Appeals has "frequently said," the proponent of a summary judgment motion "must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact." See Alvarez v. Prospect Hasp., 68 N.Y.2d 320, 324 (1986) (citing Winegrad v. N.Y. Univ. Med. Ctr., 64 N.Y.2d 851,853 (1985); Zuckerman v. City of New York, 49 N.Y.2d 557, 562 (1980); Sillman v. Twentieth Century- Fox Film Corp., 3 N.Y.2d 395, 404 (1957); see also Eidlisz v. N. Y. Univ., 15 N.Y.3d 730 (2010) (applying same standard to cross motions). The Court of Appeals further noted, "[ fJailure to make such prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers." Alvarez, 68 N.Y.2d at 324. Libel actions do not require a special rule concerning motions for summary judgment. HIf a material, triable issue of fact exists in a libel action, SUmmalj judgment must be denied." Greenberg v. CBS Inc., 69 A.D.2d 693, 700 (2d Dep't 1979). Obviously, if an error of law is made in the grant of summary judgment, as happened here, the decision must be reversed. See CPLR § 5501 (c). 8 6988898.1 STATEMENT OF FACTS A. The Parties Plaintiff-Appellant Christopher J. Alf ("AIr') is the Chairman and sole shareholder of National Air Cargo Holdings, Inc., which wholly owns National Air Cargo, Inc, ("NAC"). He founded NAC, an air freight forwarder, in 1990. (R. at 705.) Defendant-Appellee The Buffalo News, Inc. ("the News") is a New York corporation conducting its operations from One News Plaza, Buffalo, New Yark in Erie County. (R. at 20.) B. Background In 1997, NAC entered into an agreement with the Military Traffic Management Command to become eligible to participate in the transport of general commodities as an air freight forwarder for the U.S. Department of Defense ("DOD"). NAC's military transport contracts soon became a major part of its business. R. at 705. In 2001; an employee fired for insubordination made "whistle blower" the investigation was referred to the Office of the United States Attorney for the Western District of New York. This was the beginning of a longstanding disagreement about transactions between NAC and DOD concerning interpretation 9 6988898.1 and compliance with government regulations. In 2005, the former employee's qui tam complaint was filed in federal court in Buffalo, New York and sealed. After years of explaining why NAC was right and both the qui tam relator and DOD's interpretation of the regulations were wrong, the investigation appeared to be coming to an end. Instead, however, the investigation escalated to include threats of corporate indictments and worse yet, indefinite corporate suspensions if the company failed to plead guilty and pay a substantial fine. CR. at 706-07.) According to federal regulations, an indictment against a government contractor may result in the immediate suspension of all future government contracts until charges are resolved. See 48 CFR 9.407-1 to -5; R. at 607-15. These regulations force government contractors like NAC, facing grand jury inquiry and the threat of indictment, to weigh the effect of a suspension of operations during a trial against the government's demands for payment of contested amounts. NAC's government business involved a day-to-day service, entirely dependent on a continuing stream of individual shipment contracts. By 2007, daily shipments to military bases overseas constituted the largest part of NAC's business. CR. at 707; 569.) Although Alf believed and contended for years that NAC had strictly complied with applicable regulations, suspension of all thture business during a protracted trial would have likely caused NAC to cease to exist as a viable 10 business. The destruction ofNAC, which was performing with high praise from the military units directly involved in the shipments, would have interrupted transport of vital supplies to overseas conflict zones and would have put 400 employees out of work, including nearly 60 employees in the Buffalo area. On October 14, 2007, after lengthy negotiations, Alf authorized NAC to enter into a plea agreement and global settlement to conclude the years-long investigation and preserve NAC as a viable enterprise. (R. at 707-08.) c. The Plea Agreement and Global Settlement NAC appeared in court on October 25, 2007, to confirm its Plea Agreement (R. at 286-308) and to enter a plea of guilty to a single count in an Information filed in case No. 07 CR 254S by the United States Attorney just two days before. The Information alleged that NAC made a single false statement in response to an audit request on a proof of delivery for a shipment of government cargo. Besides the plea, NAC agreed to pay the government, under the global settlement, a negotiated amount of $28 million, in full settlement of case No. 07 CR 254S, related civil forfeiture proceedings, and the qui tam action. (R. at 21.) The only criminal act admitted by NAC in any of these matters is described in the Plea Agreement, ~ 4, which states: 6988898.1 g) On or about February 23,2001, Anniston requested hard copies of various proofs of delivery from NAC. On or about March 19,2001, an employee of National Air Cargo did submit, via facsimile machine to Anniston a hard copy POD which had been falsified, to wit, a POD 1 1 for Bill of Lading 0 l26l2AA, on which the actual delivery date of January 26,2001, had been concealed and replaced with an earlier delivery date of January 24,2001. (R. at 289.) Other than as specifically admitted in the Plea Agreement and plea, no allegations made in the civil cases were ever established as facts, and neither NAC nor Alf admitted any other wrongdoing or fault. In the agreement settling the qui tam complaint, NAC and Alf explicitly denied any other wrongdoing. (R. at 619.) The Plea Agreement refers to a government estimate of its loss relating to "relevant conduct," a subject pertaining to sentencing in federal criminal cases. NAC agreed it would not contest the government estimate of loss for purposes of the Plea Agreement. (R. at 289.) During both the October 25,2007 Plea Hearing, and the March 6, 2008 sentencing hearing, the Judge and the attorneys for both sides discussed the scope of the "relevant conduct" clause within the Plea Agreement as required by the Federal Sentencing Guidelines without characterizing it as a form of admission. (R. at 219, 239.) The Plea Agreement also included a clause in which the government agreed it would not prosecute NAC or its officials based on facts or documents provided to the government through the course of the investigation and spanning the six years from 1999 through 2005. (R. at 287, 297.) This "no-prosecution" clause ensured that the settlement finally and permanently resolved all issues raised or that could be raised in the government investigation from its inception. The 12 6988898.1 inclusion of a no-prosecution clause in the Plea Agreement was entirely for NAC's benefit and was not intended to be, and is not, an admission of wrongdoing by NAC. (R. at 709-10.) At the conclusion of the October 25 plea hearing, the presiding Judge, Hon. William J. Skretny, provisionally accepted the written Plea Agreement without modification. (R. at 268.) D. The Defamatory Articles Notwithstanding the specific and narrow scope of the admission made in the Plea Agreement and reviewed in open court, on October 26,2007, the day after the plea hearing, the News began to publish a series of defamatory articles (the "Articles") greatly expanding the scope ofNAC's admission. Within the Articles, the News published statements asserting, among other things, that Alf, individually as chief executive and sole O\Xfner of NAC, admitted to repeatedly and fraudulently overcharging the government by millions of dollars and either admitted violating or was found to have violated the False Claims Act. The Articles falsely report that NAC and Alf admitted guilt to unproven allegations made in the civil forfeiture and qui tam actions as though they were judicially established facts when in fact they were denied. (R. at 21-22,34-55 (the Articles attached to the Amended Complaint).) 13 6988898.1 The common factual premise of the Articles is that, in the Plea Agreement, and the October 25,2007 Plea Hearing, and subsequent proceedings in open court, Alf, as the senior executive and sole owner ofNAC, admitted to repeatedly and fraudulently overcharging the government by millions of dollars, and either admitted violating or was found in court to have violated the False Claims Act, the basis of the qui tam action. These premises, and therefore the Articles, are false and defamatory. (R. at 20.) With no supporting factual details, the Articles falsely assert that NAC admitted to cheating the U.S. Military out of millions of dollars by over-billing for services rendered, admitted to fraudulent billing, and that in the plea hearing on October 25,2007, much more than a single count in an Information was charged and admitted - all conduct for which Alfbore personal responsibility. The News also falsely repol ied that the Plea Agreement established that NAC and AIf repeatedly overcharged the government for military shipments within the United States from early 1999 until April 2005, and falsely reported that NAC and Alf admitted to obtaining government funds through theft. The News also falsely attributed statements to Alf and NAC, made outside the judicial proceeding, in which they insisted none of the "criminal wrongdoing" took place in the Middle East and falsely stated that Alf and his NAC representatives had stated that they "stopped cheating" the government in 2005. (R. at 22-23,34-55.) 14 6988898.1 One of the Articles, a November 8, 2007 editorial, also falsely implied that Alf was criminally culpable for expansive criminal conduct and that Alf, aided by political contributions and connections, escaped justice by buying his way out of a prison sentence. R. at 28. In addition, the editorial, based on the previous Articles, also falsely stated that Alf and NAC took advantage of the plight of American servicemen during time of war and engaged in war profiteering. None of these false allegations have any basis in fact and each defames Alf in his individual character and as an honest business professional. (R. at 28.) The defamatory nature of the Articles was confirmed in the News' own pages by readers of the News. Letters to the editor published by the News on November 4, 2007, describe Alf as one of the "modem day 'robber barons ", and assert that Alfwas allowed to "systematically steal millions of dollars from the United States ... without jail time" and that he engaged in eChold faced thievery." (R. at 30, 57.) The News also published an internet page which invited public comment on the Articles. Readers submitted comments reflecting their understanding of the judicial proceeding as reported in the Articles, including the following statements: Alf should have been "charged with sedition as well"; "it's clear the AIrs have no conscience"; "[Alf1 is a thief and his company is his co- thief ... his wicked avarice benefits the unsavory creatures of our world like 15 6988898.1 Ossama bin Laden and Mahmoud Ahmadinejad"; and, "I hope they [the Alfs] and theirs rot in a cancer ward." (R. at 30, 62, 64, 66-67, 69.) Local blogs excerpted portions of the Articles and provided links to the Articles posted on the News' website. Comments to those blogs described Alf as a "war profiteer," a "criminal," and "disgusting." (R. at 30-31, 71-72.) The Articles have severely damaged AIrs personal and business reputations and have reduced by many millions of dollars NAC's value as a company solely owned by, and closely identified with, Alf. (R. at 27-30.) E. The Dispute with the Government and Its Role in "Relevant Conduct" Prior to entering into the Plea Agreement, NAC had spent years in negotiations with DOD officials and government investigators challenging the government's interpretation of controlling regulations. (R. at 706-07.) For example, the government asserted that an air freight forwarder "vas required to send each shipment by air for some portion of the delivery (the "air-truck" issue). (R. at 694-96.) In contrast, NAC consistently maintained that while an "air carrier" has to move a shipment by air for at least one leg of a transport, an "air freight forwarder," such as NAC, may, under the applicable regulations, deliver using trucks only. (Jd.) At the March 6, 2008 sentencing hearing, one ofNAC's attorneys stated, without objection, that the Assistant U.S. Attorney had explained 16 6988898.1 to him that the loss estimated by the government for purposes of "relevant conduct" involved those shipments that moved solely by truck. CR. at 365.) Since entering the Plea Agreement, Alf and NAC's position on the "air- truck" issue has been vindicated. As a result of the contradictory regulatory interpretations in question, the United States Congress passed a bill (Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, S. 3001, 11 Oth Congo (2008», subsequently signed by the President, that acknowledges that within the DOD there has been a "lack of understanding of the contractual conditions required by the Surface Distribution and Deployment Command under which 'air freight forwarders' operate" and that the "confusion" is "generated by lack of clear guidance" and "uncertain definitions of terms." The law directed the Air Force to revise its controlling regulation ("AFTRP No.5") to conform with Defense Travel Regulations to ensure that freight covered by AFTRP No.5 is delivered using a mode-neutral approach. In short, Congress and the President told the Air Force that air freight forwarders, including NAC, are free to determine whether DOD freight moves by air or truck - NAC's understanding of the controlling regulation from the beginning of the dispute. If this clarification of the controlling regulation had been in place earlier, there likely would have been no dispute and the government's estimated "loss" in the colloquy about "relevant conduct" would diminish to the amount NAC consistently asserted: "zero." (R. at 365-66.) 17 6988898.1 F. Subsequent Proceedings Vindicating Plaintiff In 2008, following the district court's acceptance of the Plea Agreement, Alf was debarred from contracting with the government for a period of 10 years, based on an administrative decision by the Air Force Deputy General Counsel. The Air Force official relied on the same government interpretation of conflicting regulations and shipments handled by NAC that the government had threatened to use as a basis for indictment during the settlement negotiations. (R. at 712.) Alf filed suit in federal court in the District of Columbia challenging the basis of the administrative decision debarring him. He then moved for a preliminary injunction to lift the debarment while the case was pending based on a likelihood of success on the merits. The District Court granted the motion for a preliminary injunction lifting the debarment and, thereafter, the Air Force and Alf settled his action, leading to his resumption of control ofNi\ .. C. (R. at 712.) The District Court's decision on AlI's motion for preliminary injunction states that "the decision to debar the plaintiff ... was logically flawed" and it was likely that Alf would "successfully persuade the court that the debarring official failed to 'articulate a rational connection between the facts found and the choice made. '" (R. at 642-43.) The decision also states that the debarring official failed to indicate that Alf had "personally participated in the misconduct, had actual knowledge of the misconduct or had information from which a reasonable person 18 6988898.1 could infer that misconduct had occurred." (R. at 646.) In further recognition of AIrs position on another issue, alleged late deliveries, the decision states that the Air Force had failed to take into consideration factors within its contract with NAC that allowed for additional time in making deliveries and that the Air Force provided "no reasoned explanation" for its failure to consider these factors. (R. at 642.) With the conflicting regulations clarified and the Air Force's settlement allowing Alf to be reinstated at NAC, the only party continuing to assert that Alf admitted to wrongdoing beyond his company's submission of a single false statement to the U.S. government, or that the alleged "relevant conduct" constituted admissions of wrongdoing, is The Buffalo News. POINT I THE LOWER COURT ER.ltED IN FINDING DEFENDANT'S ARTICLES ~~ACCURAT£ ENOUGH" TO BE PRIVILEGED UNDER CIViL RiGHTS LAW §74 A. The Articles Are Not Fair and True Reports of the Judicial Proceedings New York Civil Rights Law § 74 prohibits causes of action based on the publication of a fair and true report of a judicial proceeding. A publication is considered "fair and true" if it is "substantially accurate." Glendora v. Gannett Suburban Newspapers, 201 A.D.2d 620, 620 (2d Dep't 1994). A report is not substantially accurate if it has a different effect on the mind of the recipient than the actual truth. Dibble v. WROC TV Channel 8, 142 A.D.2d 966,967 (4th Dep't 19 6988898.1 1988); Daniel Goldreyer, Ltd. v. Van De Wetering, 217 A.D.2d 434, 436 (1 st Dep't 1995). Section 74 does not protect libel defendants as a matter oflaw when the statements at issue "suggest more serious conduct than that actually suggested in the official proceeding." Daniel Goldreyer, Ltd., 217 A.D.2d at 436; Ocean State Seafood v. Capital Newspaper, 112 A.D.2d 662, 666 (3d Dep't 1985); see also Calvin Klein Trademark Trust v. Wachner, 129 F. Supp. 2d 248 (S.D.N.Y. 2009). In this case, the lower court clearly undertook the required "substantially accurate" analysis, but reached the wrong legal conclusion based on that analysis. As required, the lower court described the News' reports, compared the actual truth to those reports, and determined that the Articles have a different effect on the mind of the reader than the actual truth. Specifically, in comparing the News' reports to the actual truth of what happened in the judicial proceeding, the lower COUll found that "[i]t is clear from a review of the entire record that Alf did not admit to cheating the government over a period of years" (R. at 13) and that "the reporter's depictions of 'relevant conduct,' in the plea agreement and during the plea colloquy, as evidence of additional admissions by NAC and Alf is inaccurate" (R. at 14). Then, in determining the effect on the mind of the reader, the final step in the "substantially accurate" analysis, the lower court found that "a fair reading of the articles leads the reader to inaccurately conclude that NAC and A1f admitted to cheating the government over a period of years." (R. at 14.) In light of the 20 6988898.1 lower court's findings that "Alf did not admit to cheating the government over a period of years," and that the readers of the News were led to an inaccurate conclusion that "Alf admitted to cheating the government over a period of years," there can be no doubt that the Articles had a substantially different effect on the minds of readers than the actual truth. Based on the lower court's own analysis, the Articles are neither "substantially accurate" nor "substantially true" and not entitled to the protection of Section 74. Despite the seemingly inescapable logical conclusion from the lower court's findings that the Articles are not accurate in very serious ways (e.g, expanding an admission of guilt for a single act to six years of felonious conduct), that court held, in error, that the reports were privileged because they were "accurate enough." (R. at 16.) But reports that have such a different effect on the mind of the reader than the actual truth simply are not "substantially true," are not "fair and true," and cannot be privileged by Civil Rights Law § 74. Dibble, 142 A.D.2d at 967. Beyond the general rule of law stated in Dibble that articles that are not substantiallv true are not nrivileged bv Civil Rights Law & 74. the falsities in the "" ..I. '-' "" '-' V / Articles in this case are specifically excluded from Civil Rights Law § 74 protections as a matter of law. As discussed below, reports that falsely expand the scope of criminal charges are categorically excluded from Section 74 protection, as 21 6988898.1 are false reports of admissions of criminal guilt. Dibble, 142 A.D.2d 966 (4th Dep't 1988); Fraser v. Park Newspapers of St. Lawrence, Inc., 246 A.D.2d 894, 896 (3d Dep't 1998). 1. Reports falsely expanding the scope of criminal charges are not protected by Civil Rights Law § 74. Section 74 protection is unavailable when a report falsely expands the scope of charges brought in court. Dibble v. WROC TV Channel 8, 142 A.D.2d 966 (4th Dep't 1988). The lower court ignored this controlling precedent in reaching its decision. In Dibble, the plaintiff had been charged with one count of grand larceny in the second degree. The media defendant reported that Dibble had been "indicted on charges of fraud, embezzlement and securities violations." The grand jury had not heard evidence of securities violations, embezzlement, or stock fraud and, therefore, this court held that the defendant's Civil Rights Act § 74 defense must fail as a matter of law because a report that expands the scope of criminal charges is not substantially accurate and cannot secure the Section 74 privilege. Dibble, 142 A.D.2d at 967. In this case, the News reported some of the government's statements about its investigation as though they were facts establishing criminal liability at the October 25 plea hearing. For example, the Articles referred in the plural to 22 6988898.1 "crimes uncovered" (R. at 24, 34) rather than the single false statement charged in the Information, and stated that "millions of dollars in inflated bills were submitted to the government" (R. at 24, 34), that the alleged misconduct involved "thefts" (R. at 24, 35), that "the couple [Alf and his wife] maintains that it stopped cheating the government in 2005" (R. at 25, 38), and that "the company maintains that it stopped cheating the government in 2005" (R. at 25, 40). Each of these statements falsely expanded the single admission made by NAC in the judicial proceeding. The lower court correctly found that "Alf did not admit to cheating the government over a period of years" and that the proceeding "was brought against NAC as a corporate defendant and not Alfindividually." (R. at 13.) Accordingly, none of the false statements expanding the scope of criminal charges against NAC to include Alfboth directly or impliedly by reporting admissions by him to uncharged • ~·,1 1, ". 1'-' ,. ,..,.;;1 CrImeS are enUlieG to prOIecnon unGer ;:')ecnon i'f. The Articles' misdescriptions of the proceedings did not stop there. They also made references to the government's agreement not to prosecute- part of the Plea Agreement's quid pro quo - and falsely reported the protection from future orosecution NAC and its officers received as either admissions of guilt in . ~ transactions the government might have included in the foregone prosecution, or as findings establishing the alleged underlying facts. (See R. at 24-25, 37 ("National Air Cargo admitted that it cheated the Defense Department by overcharging for 23 6988898.1 deliveries of military supplies"); R. at 38 ("the couple [Alfand his wife] also maintains it stopped cheating the government in 2005"); R. at 40 ("[NAC] admitted that it overbilled the government by millions of dollars for military shipments in the years 1999 to 2005"); R. at 40 ("the company maintains that it stopped cheating the government in 2005"); R. at 41 ("No one from [NAC] will see the inside of a jail for repeatedly overcharging the Defense Department for military shipments within the United States between early 1999 and April 2005.").) The lower court conclusively rejected this false interpretation of the no-prosecution clause, explaining that the Articles lead readers to "inaccurately conclude that NAC and Alfadmitted to cheating the government over a period of years." (R. at 14.) Despite this finding, the lower court failed to then reach the inevitable and correct legal conclusion that such false statements are not subject to Section 74 protection. The no-prosecution clause within the Plea Agreement, while precluding the government from pressing future charges based on facts and documents from 1999 to 2005 that it had seen in its investigation, simply did not establish that multiple crimes were uncovered or that "millions in inflated bills" were submitted to the government. And it certainly does not establish that "the company maintains it stopped cheating the government in 2005," or "admitted that it overbilled the government by millions of dollars for military shipments between the years 1999 24 6988898.1 and 2005." CR. at 25, 40). Under the controlling precedent established by this court in Dibble, the Articles cannot be privileged under Section 74 because they falsely expanded the scope of the single charge against NAC to include years of criminality by Alf, and left readers with the false impressions that Alfhad been charged or bore responsibility as an individual for those years of criminal behavior. 2. False reports of admissions of criminal guilt are not protected by Civil Right Law § 74. The lower court found that Alf did not admit to cheating the government, but that readers of the News would understand that Alfhad made precisely that admission. Such false reports of a guilty plea or admission "cannot be considered such a trivial defect" that the report can be characterized as a "substantially accurate" account of a judicial proceeding. Fraser v. Park Newspapers of St. Lawrence, Inc., 246 A.D.2d 894, 896 (3d Dep't 1998). "A report that an individual has been accused of a crime ... has an entirely different connotation than one announcing that the accused has in fact admitted, pleaded guilty to or been convicted of engaging in such activity." Id. (emphasis added). While reporting an accusation "leaves open the possibility of a benign explanation ... the average reader would be less inclined to entertain that thought once informed that the accused had admitted his wrongdoing." Id. Even where a defendant can demonstrate that plaintiff engaged in the accused of conduct, "that would not tend 25 6988898.1 to prove the truth of the charged libel, namely, that [the libel plaintiff] had pleaded guilty to a crime." Fraser v. Park Newspapers of St. Lawrence, Inc., 257 A.D.2d 961,962 (3d Dep't 1999). The lower court found that "a fair reading of the articles leads the reader to inaccurately conclude that NAC and Alf admitted to cheating the government over a period of years" because "it is clear from a review of the entire record that Alf did not admit to cheating the government over a period of years." (R. at 13-15.) The lower court also found that "the judicial proceeding was brought against NAC as a corporate defendant and not Alfindividually" and the Articles' depictions of "relevant conduct" as "evidence of additional admissions by NAC and Alf is inaccurate." (ld.) Based on the lower court's analysis of the facts in the record, the Articles falsely reported admissions of criminal guilt and, therefore, are not protected by the Section 74 pliviiege. And the record conclusively supports the lower court's analysis of the facts and the judicial proceedings. NAC only admitted to submitting a single false statement to the government, a charge that simply does not encompass "cheating the government over a period of years" as a necessary element. See Karp v. Hill & Knowlton, Inc., 631 F. Supp. 360, 364 (S.D.N.Y. 1986) (holding that a report describing a complaint as based in fraud was fair and true only because the allegations in the complaint supported the elements of fraud). NAC's very limited 26 6988898.1 admission became the basis for a negotiated Plea Agreement and global settlement that resolved all potential criminal charges, a civil forfeiture proceeding and a related civil qui tam action. a. The Plea Agreement admitted only the submission of a single false statement The record conclusively demonstrates that the Plea Agreement admitted only the submission of a single false statement. The October 25, 2007 plea colloquy focused on the operative documents in the settlement, including the Plea Agreement and the Information, the charging document. Paragraph 1 of the Plea Agreement stated that "[t]he defendant agrees to waive indictment and plead guilty to a one-count information .... " (R. at 286.) Couched in traditional government charging language, the Information stated that: [NAC] ... did knowingly and willfully make a material faise statement of fact, in that the defendant, [NAC], knoH"ncrl" -:lnrl u"11full,, sent tA th"" n""f'''''n~'''' T Acrl~tl{,~ vv~ ~6 J U..L..L'-..I. VY..L..L..L..L ..L..LJ ..L V ..L..L"'" L.J""'..L""'..L.J.~"'" L...IV6.J.1.JI\..J.VI.JI Agency ... a falsified proof of delivery (POD) document. That falsified POD document, which was submitted in response to an audit request by the Defense Logistics Agency for proof of timely delivery of shipments by defendant, [NAC], was altered to show a earlier delivery date, when in truth and in fact, as defendant, [NAC], well-knew, the true delivery date was later. (R. at 173-74.) When the adjectives and adverbs are put aside, the facts, i.e. events that NAC admitted actually occuned, distill down to submitting one document to the government with a false date. There is no reference to any other actions or 27 6988898.1 events, or to dollars of "loss" in any amount in that charge. That is the extent of the government's charge to which NAC, in the negotiated plea deal, agreed to plead guilty. Clearly, then, NAC did not admit to years of cheating the government, or admit that millions of dollars were involved in that single charged offense - and, as the lower court found, neither did Alf. (R. at 13.) Just as there is nothing to substantiate the News' overstatements about the plea of guilty to the Information, the factual basis for the Plea Agreement similarly lacks any language supporting the News' overstatements of admissions. Subparagraphs 4(g) and 4(h) of the Plea Agreement provide the facts which are the basis for the agreement, stating, in complete consistency with the narrow charge in the Information: 6988898.1 g) On or about February 23,2001, Anniston requested hard copies of various proofs of delivery from NAC. On or about Nlarch 19, 2001, an employee of Nationai Air Cargo did submit, via facsimile machine to Anniston a hard copy POD which had been falsified, to wit, a POD for Bill of Lading 012612AA, on which the actual delivery date of January 26, 2001 had been concealed and replaced with an earlier delivery date of January 24, 2001. h) The parties agree that for the purposes of relevant conduct and for this plea agreement that the loss to the United States has been estimated by the government to be the sum of $4,400,000 for the time period January 1999 to and including March 2002. The defendant does not contest this estimate for purposes of this Plea Agreement. 28 (R. at 289.) In contrast to the unambiguous text of these subparagraphs, the News repeatedly reported that Alf authorized NAC to admit that it had "cheated" the government out of "millions of dollars." But any reader can see that 4(g) tracks the Information's single event charge precisely, and that NAC did not agree to the government estimate of loss in 4(h). Particularly in a plea deal which is part of a negotiated, global settlement of both a criminal investigation and civil actions involving the same subject matter (R. at 298-99,364), "not contesting" meant only that the government was free to present its "estimate" to the District Court for purposes of sentencing and approval of the overall settlement under federal sentencing guidelines. h. The lower court properly found that "relevant conduct" considered for sentencing purposes is not an admission of guilt The lower court found that "relevant conduct," as the term is used in federal criminal sentencing, is not "evidence of additional admissions by NAC and Alf." (R. at 14.) Federal case law is abundantly clear that "relevant conduct" is not predicated on whether or not a defendant contests or admits it, and that it may include unadmitted, unproven, uncharged, and incompetent evidence. See United States v. Streich, 987 F.2d 104, 108 (2d Cir. 1993) (relevant conduct includes facts not proven beyond a reasonable doubt, including even acquitted and dismissed indictment counts); Montes v. Scully, CV-90-1078, 1993 WL 372266 (E.D.N.Y. 29 6988898,1 Sept. 1, 1993) (relevant conduct includes uncharged crimes, counts dropped from an indictment, and hearsay statements from out-of-court witnesses); Aksoy v. United States, 101 F.3d 1393 (2d Cir. 1996) (relevant conduct includes hearsay evidence). Federal law is clear that relevant conduct is not evidence of additional admissions, but even without any prior knowledge of relevant conduct, anyone attending the Plea Colloquy or reviewing the Plea Agreement would have readily reached the same conclusion. At the plea colloquy on October 25,2007, which the News' reporter Dan Herbeck claims to have attended, Judge Skretny explained the role of "relevant conduct" in detail. (R. at 219 ("its relevant conduct for purposes of a final acceptance of the plea and the applicability of the various calculations for purposes of sentencing resulting in monetary amounts").) The Assistant U.S. Attorney (HAUSA") also explained that "[t]he facts set £Ol1h here refer only to the single instance that is the criminal charge" but that the "investigation covered more," which became the "relevant conduct." (R. at 239 (emphasis added).) The AUSA's comments that "the dollar amounts are unrelated to the factual basis for a guilty plea" makes clear that the monetary payment cannot be construed as an admission of "cheating the government out of millions of dollars." (R. at 230.) Rather, as the AUSA explained, the value of the monetary payment "simply relates to the 30 6988898.1 totality of the settlement, which our position is that is the appropriate number." (Id.) It is difficult to see how anyone in the courtroom that day, particularly if the person had a copy of the Plea Agreement, could have come to a conclusion, from statements made by the Judge and the prosecutor, other than that Alf had authorized NAC to plead guilty only to "the single instance" of a false statement involving one piece of paper. (R. at 286.) But the News did not just send anyone to report and explain the NAC proceedings to its readers; it sent its veteran federal court reporter, who had written "scores" of articles about federal criminal proceedings over more than 20 years on the "federal courts beat." (R. at 550. ) Why he did not report those proceedings fairly or accurately is one of the key issues to be determined in this case. Documents later filed in the global settlement in the Buffalo District Court and in subsequent but related litigation in the D.C. District Court further confirm that NAC's admission of guilt was limited to the conduct involved in sending the single false statement cited in the Information. For example, in the March 2008 qui tam case settlement agreement, NAC denied "any wrongdoing or fault related to the transportation of freight subject to AFTRP No.5, with the exception of the conduct specifically admitted in the Plea Agreement filed in United States v. National Air Cargo, Inc." (R. at 619.) That settlement agreement, which resolved 31 6988898.1 the unproven whistle blower and government allegations, also stated that "[t]his Agreement is neither an admission of liability by NAC nor a concession by the United States that its claims are not well founded." (R. at 619-20.) Based on the News' reports, its readers were told that NAC had already admitted all wrongdoing and fault related to transportation of freight, and if those reports were true, there would be nothing left for NAC to concurrently deny. As explained above, after Alf entered into the settlement, the Air Force debarred him from government contracting. Alf challenged that debannent in a civil action in the United States District Court for the District of Columbia. The District Court in that case imposed a preliminary injunction effectively lifting AIrs debannent because the Air Force's arguments for debannent were contrary to fact and law. (R. at 645, 712.) In that decision, NAC's guilty plea was described by the District COul i as follows: "NAC ultimately pleaded guilty to a one-count Infonnation charging NAC with knowingly and willfully making a material false statement to the DOD. Contemporaneously, NAC reached a global settlement of the qui tam suit in which it denied any wrongdoing aside from the false statement underlvim! the olea agreement." (R. at 635,) This indenendent judicial finding .;......, ~......, , / .L J '-"' clearly supports AIrs contention that the News falsely reported admissions that he and NAC never made and could not have made. 32 6988898.1 The decision imposing a preliminary injunction to lift the debarment also demonstrates the DOD's understanding of the scope of October 25,2007 admission. Had Alf admitted the wrongdoing the News reported, the Air Force would have been able to introduce those admissions to estop Alf from asserting an inconsistent position in the later action. See Ford Motor Credit Co. v. Colonial Funding Corp., 215 A.D.2d 435 (2d Dep't 1995); D & L Holdings v. Goldman Co., 287 A.D.2d 65, 71-72 (1st Dep't 2001). No such objection was raised - or could have been raised - because Alf never authorized an admission beyond that single event described in the Information. Despite the limited corporate admission to submitting a single false statement, the News falsely reported that Alfbore personal responsibility for the fact that NAC "admit[ted] cheating U.S. military" (R. at 24, 34), "admit[ed] it cheated the U.S. Defense Depmiment out of millions of dollars'; (id.), "admitted that it overbilled the government by millions of dollars for military shipments in the years 1999 to 2005" (R. at 25,40), and "admitted that it cheated the Defense Department by overcharging for deliveries of military supplies within the continental United States" (R. at 24-25, 37). These false reports of admissions that were never made are not privileged under Section 74. Indeed, it is difficult to see how the News' statements could more grossly mischaracterize what NAC actually admitted, or more falsely attribute responsibility for them to Alf. 33 6988898.1 Nevertheless, the News' counsel submitted to the lower court a 77-page affidavit, consisting largely of legal arguments and uncited facts, with 45 exhibits attached, meant to establish the truth of the Articles. The lower court properly and promptly brushed aside the News' claim that these reports are accurate, or that Alf or NAC admitted to more than the charge in the Information, conclusions that this court can quickly reach as well. It is indisputable that NAC admitted only to the submission of a single false statement and, for purposes of the Plea Agreement only, forbore challenging the government's estimate ofloss from "relevant conduct." The News' futile effort to establish the truth of its reports relies on unproven allegations denied by Alf in the qui tam action and memoranda from an overzealous Air Force administrator ultimately reined in by a federal judge. (R. at 619, 642, 646.) B. The ~Ylaterial Relied on by the News' Reporter and AIrs Relationship with NAC Could Not Fairly Lead that Reporter to Write and the News to Publish the Articles as Written 6988898.1 The lower court ultimately held that The News' articles inaccurately relied upon the terms of the plea agreement and the in-court colioquy at sentencing, including the references to "relevant conduct." However, such reliance, as it related to assertions against NAC and Alf, cannot form the basis of an actionable libel. The content of all of the aforementioned information in addition to Alfbeing chairman and sole shareholder ofNAC could fairly lead one to report this story as it was reported by the News despite it being not technically accurate. When viewed 34 in the totality of circumstances, the reporter's factual account of what transpired is accurate enough to fall under the protection of §74 of the Civil Rights Law. (R. at 16.) Coupled with its prior conclusion affording Section 74 protection because a newspaper should be excused from unfairness and inaccuracy when its reporter's lacked an understanding of legal tellllS (see Point III, below), this ruling compounded the lower court's error by excusing the equally unfair and inaccurate - indeed, the clearly false and unfair - attribution of years of felonious conduct to an individual simply because he was the chairman and senior executive of the corporation that pleaded guilty to a single charge based on a one-time event. (See R. at 14.) The logic that excuses attributions of crimes to an individual simply because he heads a company renders the lower court's decision even more dangerous to personal reputations as an untoward, undefined expansion of Section 74's scope. The lower court's reference to AIrs roles at NAC was an inappropriate factor in a Section 74 analysis because even if the admissions reported by the News were fairly attributable to Alf, the most that the News' reporter could have been "fairly [led] to report" is that Alfhad admitted that he had submitted or was responsible for a single false statement to the government on March 19, 2001 - a proposition that on its face contradicts the record. (R. at 635 ("it is undisputed that 35 6988898.1 the unknown NAC employee who made the false statement was not [AU]"); R. at 646 (holding that the Air Force failed to establish that Alf"personally participated in the misconduct, had actual knowledge of the misconduct or had information from which a reasonable person could infer that misconduct occurred").) The lower court's conclusion also defies logic and basic fairness, as demonstrated by the record, because the government did not charge Alf with a crime. The actual crime charged and admitted, on this record, clearly distinguishes between Alf and NAC. (R. at 173 (Information charging NAC only); R. at 286 (Plea Agreement between the government and NAC only).) Allowing the News to impute any crime that serves as the basis for a corporate plea agreement to the individual who heads the charged corporation, whether or not he or she even knew of that crime, would lead to denial of any remedy for blatant defamation of corporate executives and owners, such as PlaintitT-Appel1ant, who have been falsely identified as having personal responsibility for a criminal act by an employee for which the company alone is legally responsible. The framers of Section 74 surely could not have contemplated or intended such a result when they codified and extended to news reports a common law privilege based on fair and true reporting of a judicial proceeding. As explained below, substantial portions of the Articles are wholly unsupported by the record even if the names of Alf and NAC are fairly considered 36 6988898.1 interchangeable. In fact, the record does not include admissions by Alf or NAC to years of criminal conduct, does not include any discussion of Alffacing ajail sentence and being spared prison by authorizing the plea and global settlement, does not support allegations that Alfbought his way out of jail through political contributions, does not include the statements falsely attributed to Alf and NAC, and omits key facts that render the reports false. 1. The documents and courtroom colloquy the News' reporter relied on do not include admissions of years of criminal conduct The News falsely reported that "National Air Cargo admitted that it overbilled the government by millions of dollars for military shipments in the years 1999 to 2005." (R. at 25, 40; see also R. at 26, 41 ("repeatedly overcharging [DOD] ... between early 1999 and April 2005").) These statements are false and wholly unsupported by the record, as already demonstrated. In particular, there is no justification for the News' description of the duration (1999-2005) of the criminal conduct it said was admitted by NAC. The only portion of the Plea Agreement even addressing the six-year timespan is the typical "no-prosecution" provision included entirely for NAC's benefit. As previously noted, that provision ensured that the agreement tenninated the prosecutor's investigation of shipments from 1999 to 2005, and that the agreed payment was the end of the matter. (R. at 287,297.) The period covered by of the 37 6988898.1 provision may explain the source of the falsely reported date range, but provides no support for the false allegation that NAC or Alf somehow admitted to criminal conduct spanning six years. That neither NAC nor Alf admitted to cheating the government for six years should be self-evident because the prosecutor's charge was limited to an event that occurred on a single day. 2. The documents and colloquy the News' reporter relied on do not state that the Plea Agreement spared Alf from prison The U.S. Attorney never brought any criminal charges against Alf. Nothing in the Plea Agreement and related colloquy suggests that he had any knowledge of the admitted false statement. The allegations in the civil qui tam were settled with NAC and Alf expressly denying "any wrongdoing or fault" other than the "conduct specifically admitted in the Plea Agreement." (R. at 619.) But the News informed its readers, based on false "facts," that Alf should have gone to jail - the fate of a charged and convicted felon - and that he was spared this punishment because of his political contributions and connections. (See R. at 41 ("a different standard of justice applies to the politically connected ... why in the name of decency should the leaders of National Air Cargo escape personal punishment ... No one from National Air Cargo will see the inside of a jail"); R. at 37 ("a plea deal which spares Alf and other company officials from serving any jail time"); R. at 42 ("neither Alfnor anyone in his company will go to 38 6988898.1 jail"); R. at 48 ("a no-jail plea deal").) Yet, when the government had the opportunity, later, to attribute criminal conduct to Alf, it did not: in the 2009 D.C. District Court case, the judicial review that led to the enjoining of the administrative decision to debar Alf, the DOD did not dispute the fact that Alf did not make the false statement to which NAC pleaded guilty. (R. at 635.) The News also falsely reported that Alf managed to buy his way out of jail with political contributions and connections. These false allegations of personal guilt also have no basis in fact, but the News went to great lengths to lay a foundation for them in Articles detailing AIrs and his wife's alleged lifestyles and political contributions, before stating that Alf did "not see the inside of a jail cell" because he had been subject to "a different standard of justice" granted only to those who are "politically connected." (R. at 25-26, 41.) Without true facts to suppOli their charge, these statements are actionable defamation. See Alilkovich v. Loraine Journal Co., 497 U.S. 1, 19 (1990) (assertions of fact couched within opinion are actionable); Gross v. New York Times Co., 82 N.Y.2d 146,155 (1993) (same). These baseless and brazen allegations not only defame Alf, but also cast an underserved shadow on the nrosecutors and a federal ludQe in allowinQ a felon J. .J '-' '-' to somehow escape justice. The irresponsibility of publishing such statements - without an iota of truthful factual foundation - demonstrates the reckless disregard for truth prevalent throughout the Articles involved in this case. 39 6988898.1 3. The documents and colloquy the News' reporter relied on do not include admissions of cheating the government falsely attributed to Alfand NAC The News peppered its false reports with baseless quotes admitting criminal conduct beyond that admitted in the Plea Agreement and attributed to NAC and Alf. The quotes include: "the company insisted that none of its criminal cheating took place in the Middle East" (R. at 37-38); "the couple also maintains that it stopped cheating the government in 2005" (R. at 38); and, "the company maintains that it stopped cheating the government in 2005" (R. at 40). These attributions, even while reporting denials, all share the same phrasing implying admissions by NAC and Alfthat they had been cheating the government at an earlier time. Neither of the reporters who wrote the articles interviewed Alf or his wife. Nothing on the record suggests the existence of any such interview. Nothing on ihe record suggesis ihat the reporters used someone else's interview as source material. The lower court found that no such interviews had occurred. (R. at 13 ("At no time did ... the News obtain statements or quotes from Alf prior to printing the relevant articles and editorial.").) The attributions of the quotes are false and the contents of the quotes are false. Simply put, the News relied on its own earlier false Articles expanding the scope of the "admitted" guilt to criminal conduct in the years 1999-2005 as the basis for these new statements it invented and then attributed to Alf. The falsity of 40 6988898.1 their context exposes the falsity of the attribution, because Alf has never adopted the News' "cheating" interpretation of the Plea Agreement. More to the point, the fact that Alf never uttered the words attributed to him by the News, or authorized NAC to utter them, also establishes that these statements are false. C. The News' Omissions of Material Facts Render the Reports False The lower court failed to consider the impact of the omissions that rendered the Articles false. An omission can render a statement unfair or untrue and strip the Section 74 protection from a report of a judicial proceeding. See Wenz v. Becker, 948 F. Supp. 319, 324 (S.D.N.Y. 1996) (omission of certain facts created jury question as to whether report was fair and true). While an omission of a merely technical detail may be within the discretion of the publisher, Sasso war v. New York Times Co., 48 A.D.3d 440, 441 (2d Dep't 2008), the omissions in the News' reporting are not technical details. Rather, the News omitted key facts that, by their omission, corrupted the very essence of the October 25 proceedings and rendered its reporting unfair and untrue. As already noted, the Plea Agreement specifically states that the government estimated a loss for purposes of "relevant conduct." (R. at 289.) Throughout the colloquy the judge and attorneys repeatedly clarified that the estimate was for the purpose of "relevant conduct." (R. at 230-31,239.) But the News entirely omitted any mention or discussion of relevant conduct - a discretionary factor in 41 6988898.1 sentencing - in its reporting. By failing to explain that the settlement payments were negotiated and associated with unproven and unadmitted "relevant conduct," and allegations in the qui tam complaint which were specifically denied by Alf, the News rendered its reporting unfair and untrue. A key omission facilitated the false impression rendered by the Articles. In response to his request for comment on October 25,2007, after the hearing, a NAC lawyer sent an e-mail to the News' reporter Herbeck stating that "[r]esolving these issues in court would have meant a potential suspension of all of our government shipments pending resolution." (R. at 531.) This e-mail, sent as the October 26, 2007 article was being prepared, made the News aware of the business issue- NAC's survival- driving the decision to settle. Not even a hint of this appeared in the October 26 article or any of the subsequent Articles. Without the explanation of why NAC entered the agreement, the News presented an unfair depiction of the story, claiming, contrary to the e-mail, that the driving purpose of the settlement was to avoid jail time, rather than saving NAC from a disastrous termination of government business. Obviously, including the business issue explained to the News' reoorter would have undermined the version of the nroceedin2: the renorter . . ~ . and, presumably, his editors decided to publish. Neither the documents relied on by the News nor AIrs relationship with NAC could "fairly lead" its reporters to write the Articles that so blatantly 42 6988898.1 misreported what actually occurred at the plea hearing on October 25,2007. The lower court clearly erred in finding the Articles "accurate enough" to merit protection under Civil Rights Law § 74. POINT II THE LOWER COURT ERRED BY HOLDING INACCURATE AND l',1ISLEADING NE\VS REPORTS PRIVILEGED UNDER CIVIL RIGHTS LAW § 74 BECAUSE THE REPORTER MIGHT NOT HAVE UNDERSTOOD LEGAL TERMS USED IN THE JUDICIAL PROCEEDING A. A Reporter's Understanding or Misunderstanding of a Judicial Proceeding Is Not a Basis for Privilege Under Civil Rights Law § 74 As explained above, Civil Rights Law § 74 only provides protection from defamation actions for "the publication of a fair and true report" of judicial proceedings. An inaccurate report is not "fair and true" when it has a different effect on the mind of the recipient than the actual truth. Dibble v. WROC TV Channel 8, 142 A.D.2d 966, 967 (4th Den't 1988); Daniel Goldrever, Ltd. v. Van , .l. ,. .... De Wetering, 217 A.D.2d 434, 436 (lst Dep't 1995). The lower court erred in factoring the reporter's capacity to understand the judicial proceeding into its analysis of whether the Articles were fair and true reports subject to the Section 74 privilege. This ruling, ifupheld, will create a privilege of unfathomable scope based on an immeasurable set of subjective factors. The lower court found first that the News' reporting "leads the reader to inaccurately conclude that NAC and Alf admitted to cheating the government over 43 6988898.1 a period of years." (R. at 14.) It also found that the News "inaccurately relied upon the terms of the plea agreement and the in-court colloquy at sentencing, including the references to 'relevant conduct. '" (R. at 16.) Then despite these findings, and contrary to both law and logic, the lower court also found the false reports privileged as "fair and true" reports under Civil Rights Law § 74 because it would be "unreasonable" to "hold a newspaper reporter to such a standard as to require technical knowledge of specific terms used during a legal proceeding, such as a federal sentencing." (R. at 15.) That conclusion oflaw must be reversed. The subjective factor of a reporter's knowledge of technical terms used in an official proceeding has no role in determining the application of the privilege provided by Civil Rights Law § 74. That conclusion also overlooked the key fact that the News' reporter, by the descriptions of his experience within the News' supporting affidavits, was no neophyte at reporting federal criminal proceedings, and that many of his prior reports involved pleas and sentencing. (R. at 549-50, 560.) In Fraser, 246 A.D.2d at 895 (3d Dep't 1998), the media defendant's reporter admitted that he wrongly assumed and wrote that a guilty plea had been entered when no such admission of guilt had been made by the libel plaintiff. As with this case, Fraser involved legal concepts. (Id. at 895.) Unlike this case, the reporter in Fraser had acknowledged the error and explained his misunderstanding of the specific legal terms used during the proceeding, specifically, his mistaken 44 6988898.1 understanding that a guilty plea was a necessary precondition to an adjournment in contemplation of dismissal. (Id.) Despite the reporter's clear lack of knowledge concerning technical legal jargon, the court held that Section 74 protection was not available because the defect in the reporting was not so trivial as to render the article "substantially accurate." (Id. at 896.) In this court's leading case, Dibble, the media defendant was denied discovery to "uncover facts which would support their [Section 74] defense." Dibble, 142 A.D.2d at 968. Because a side by side comparison of the documents relating to the judicial proceeding and the complained of reports established that the reports falsely expanded the charges in an indictment, nothing produced in discovery could thereafter make the reports true and privileged by Section 74. (Id.) Likewise in this case, and incidentally, as argued by the News' counsel in his r.c"'. ..1 • ..01 1 n .j. !"""'f A • -1 1· 1 1 1 ,1 1 1 '1 • ~ alllUavlt, the ;:,eCIlon i"f pTIVllege analYSiS snOUla nm lOOK oeyona a companson or the judicial proceeding and the published reports. (See R. at 107 ("A simple comparison of the publications with the proceedings ... is all that is required to dispose of this case .... "); R. at 105 ("the court may fully compare the [Articles] with the extensive public record of the proceedings ... to determine at this time .. . the legal fairness and accuracy of [the Articles]"); R. at 106 ("The entirety of the evidence on which legal resolution rests is publicly available and is submitted with this motion.).) The controlling caselaw is clear, and both parties to this litigation 45 6988898.1 agree, that a reporter's knowledge of technical legal tenns is not an element considered in detennining whether the privilege created by Civil Rights Law § 74 applies. B. Requiring Reports to be "Fair and True" for Civil Rights Law § 74 to Apply, Regardless of a Reporter's Subjective Knowledge, Is Reasonable and Consistent with the Language and Intent of the Statute There is nothing "unreasonable" about requiring that a report be "fair and true," regardless of the reporter's subjective state of mind, when detennining whether false statements are statutorily protected from civil actions. Civil Rights Law § 74 is not intended to protect publishers that would abuse free speech by printing falsehoods purportedly based on a lack of knowledge concerning the subject judicial proceeding. (See NY Const. art VI, § 8 ("Every citizen may freely speak, write and publish his or her sentiments on all subjects, being responsible for the abuse o/that right . ... ") (emphasis added).) Rather, the law is a qualified extension of the common law absolute privilege barring defamation suits arising from statements made by parties and judicial officers in the course of litigation. The qualified reporters' privilege was created by statute to further the State's interest in open and public courts by allowing news reporters to repeat the privileged statements made within court, also without fear of suit. However, unlike the common law privilege, the statutory privilege is not absolute, but limited 46 6988898.1 to "fair and true" reports. See Williams v. Williams, 23 N.Y.2d 592,597-98 (1969) (discussing the history and legislative intent of the statute). Plainly, the protections of Civil Rights Law§ 74 only apply when reporters get the story right. (See Point I, above.) The privilege is qualified because the State does not have any interest in promoting false reports of judicial proceedings. The reasonableness of the qualified nature of this statutory privilege must be viewed in light of the suite of judicial and statutory privileges afforded to the news media in defamation actions. To wit, in its Answer, the News asserted 22 affirmative defenses. Only one of those defenses, the fourth affirmative defense (R. at 85), relies on Civil Rights Law § 74. Many of the other 21 defenses asserted by the News involve consideration of the knowledge of the reporter. Expanding the scope of Civil Rights Law § 74 to include a knowledge element would therefore be nothing more than judicially double-counting deft:nses. Surely, it is not unreasonable to limit this one statutory defense to the text of the statute, and the controlling caselaw interpreting that text. After the Section 74 defense has been stricken by this Court, the News will have ample opportunity to reveal what its reporters knew or did not know in attempting to establish its other defenses. For example, a publisher'S knowledge of the falsity of an article, or its reporter's knowledge of the falsity of an article, is properly considered when determining fault. Whether the News, and its reporters 47 6988898.1 and editors, published the Articles with knowledge that they were false or with reckless disregard as to whether or not they were false presents material issues of fact that must be resolved through discovery in order to establish fault. Gertz v. Robert Welch, 418 U.S. 323, 332 (1974); Suozzi v. Parente, 202 A.D.2d 94, 101 (1st Dep't 1994). For the sake of argument only, even if the lower court intended to create a knowledge-based exception to the "fair and true" requirement for all reports involving technical legal terms, then, at best, the lower court identified a material issue of fact concerning the knowledge of the reporters in this case that precludes summary judgment at this time. Because the course of the pretrial so far has not involved any disclosure, Alfhas no knowledge of the News' editorial process beyond Herbeck's self-serving and meritless affidavit. See Prozeralik v. Capital Cities Conun., Inc., 82 N.Y.2d 466,478 (1993) (defendant broadcaster's arguments that newsroom personnel's assertions of good-faith preclude recovery rejected because "it would erect a logically impossible test which, by its practical application of governing precedents, would inevitably result in no defamation case ever qualifying for jury resolution"). Alfhas no indication that any editor ever reviewed the Articles, and the News has not submitted any evidence stating that an editor reviewed the Articles. In fact, no credible facts have been developed to determine the News' knowledge prior to publication. 48 6988898.1 If allowed to stand, the lower court's decision will expand the application of the Civil Rights Law § 74 privilege to all reports involving untrue or substantially inaccurate reports of technical legal terms, or corporate executive relationships, whether or not the reporter actually understood the legal issue in question. The sweeping scope of such a holding would create a license to defame parties to court proceedings, whether criminal or civil, and tum a qualified privilege into a virtually absolute one. POINT III THE LOWER COURT ERRED BY FAILING TO GRANT ALF'S CROSS MOTION FOR PARTIAL SUMMARY JUDGMENT A. The Articles Are False The falsity of the News' statements set forth in the Amended Complaint has been demonstrated: the News falsely reported on the judicial proceedings by describing admissions of criminal conduct by a corporation and an individual that were never made and falsely reported on the single, limited admission that was made by the corporation only; the News also falsely reported in the same way that the no-prosecution clause in the Plea Agreement constituted an admission of six years of criminal wrongdoing by Alf and NAC; the News omitted any discussion of the limited role of "relevant conduct" in the sentencing phase of the plea proceedings; and, by expanding that element of sentencing into admissions of guilt for six years of criminal acts by both, the News created a false and defamatory 49 6988898.1 understanding in its readers about the basis of the settlement payments and Alf. See Point I (above). The side-by-side comparison of the Articles with the source material which the News invited (R. at 105- 107) in fact establishes conclusively that there are no material issues of fact regarding the falsity of the News' reporting. The lower court repeatedly found the reports to be inaccurate in ways that can only be described as substantial. (R. at 14, 16.) As discussed above, inaccurate reports may be deemed true (or substantially true, or "accurate enough") only when the inaccuracies are minor. When inaccuracies within a report cause readers to take away a false or substantially untrue impression, then the inaccuracies are not minor, and the report is false and actionable. Dibble, 142 A.D.2d at 968; Matovcik v. Times Beacon Record Newspapers, 46 A.D.3d 636, 638 (2d Dep't 2008). The lower court properly found the two conditions necessary for the reports to be false: (1) the reports were inaccurate in multiple respects, and (2) those inaccuracies created a false impression about criminal behavior in the minds of the readers. Such reports are not only false but unprivileged under Section 74. Accordingly, this Court should reverse the decision below by both denvinQ the News' motion. and QrantinQ AIrs motion for nartial summarY 0.1 ~ ./ "-' "-' .J. .." judgment by holding that the Articles are false and striking the News' defenses based on Civil Rights Law § 74, substantial truth, and opinion. 50 6988898.1 B. The News' Defense Based on Civil Rights Law § 74 Privilege Should Be Stricken For the reasons explained above, the Articles are neither "fair and true" nor "substantially accurate." Accordingly, the Articles are not privileged reports under Civil Rights Law § 74. There are no material issues of fact concerning the falsity of the News' reporting and its Civil Rights Law § 74 defense should be stricken. C. The Articles Are Not Substantially True and That Defense Should Be Stricken Substantial truth is a common law libel defense which allows Courts to "overlook minor inaccuracies" in published reports. See Shulman v. Hunderfund, 12 N.Y.3d 143, 150 (2009). The "fair and true report" standard of Civil Rights Law § 74 is consistent with the substantial truth analysis. Cholowsky v. Civiletti, 69 A.D.3d 110, 114 (2d Dep't 2009); see Jimenez v. United Fedn. of Teachers, 239 A.D.2d 265, 266 (1 st Dep't 1997) (providing Civil Rights Law § 74 protection where the report was "substantially true"); Posner v. NY. Law Pub. Co., 228 A.D.2d 318 (1st Dep't 1996) (report protected as substantially accurate under Civil Rights Law § 74 despite minor inaccuracies). Reports that have a different effect on the mind of the reader than the actual truth are not "fair and true" and therefore also cannot be substantially true. See Dibble, 142 A.D.2d at 968. 51 6988898.1 Publishing a report that states an individual has admitted to crimes, when no such crimes were charged, and no such admission has been made, is neither a "trivial defect" nor a "minor inaccuracy" and is not afforded protection under Civil Rights Law § 74 or the substantial truth defenses. See Point II, above; Fraser v. Park Newspapers, 246 A.D.2d 894 (3d Dep't 1998). The News' substantial truth defense should be stricken. D. The Editorial Is Not Privileged Opinion and That Defense Should Be Stricken In its Answer, the News also asserted that the November 8,2007 editorial is privileged opinion. But editorials and opinions based on false "facts" are not privileged. Greenberg v. CBS, Inc., 69 A.D.2d 693, 702 (2d Dep't 1979) ("if the facts are false, the opinion is actionable"); see also lUilkovich v. Loraine Journal Co., 497 U.S. 1,19 (1990); Gross v. N.Y. Times Co., 82 N.Y.2d 146,155 (1993), activity that convey facts capable of being proven untrue are actionable). The November 8 Article, although an editorial, is based on "facts" in earlier Articies which are not only capable of being proven untrue but are actually proven untrue on this record. For example, the article asserts: Alf, as a leader ofNAC, escaped personal punishment for cheating the military during wartime; the leaders ofNAC, including Alf, should have gone to jail (obviously for their crimes); NAC repeatedly overcharged for military shipments from 1999 to 2005 and, thus NAC 52 6988898.1 leaders, including Alf, were taking advantage of the plight of American servicemen and women for profits. (R. at 41 (emphasis added).) Each of the "facts" expressly or implicitly underlying these assertions is capable of being proven false and has now been proven false by the record. In fact, the negative responses by the News' readers demonstrates beyond dispute that reasonable readers understood the editorial's and previous Articles' statements as assertions of facts about Alf and his company - clearly defamatory facts at that. (See R. at 29-31,56-57,61-70.) The publication of the false and defamatory assertions of fact, summed up in an editorial characterizing Alf as a criminal war profiteer are unprivileged and classic libel. Reasonable readers encountering those false facts for the fourth time in the editorial would understand those statements to be assertions of fact. See Gross v. " T 'II 17"'· '" ,.,,.... "Jo. T '< T ,,.... 1 1 4 f /. ~ r. - \ / _ • _ _ _ _, _ c ' . , r . New lorK i unes co., ~.L i"'i. r . .Ld 1 U ~lYYj) (reversmg grant 01 motIon to GlSlllSS because "there are actionable charges made in the articles ... that, although couched in the language of hypothesis or conclusion, actually would be understood by the reasonable reader as assertions of fact"); Milkovich v. Lorain Journal Co., 1 u.s. 497 (1990) (reversing grant of summary judgment in favor of defendant because a reasonable factfinder could conclude that the article implied facts capable of being proved false). In such circumstances, the opinion defense does not save the News' editorial, and the privileged opinion defense should be stricken. 53 6988898,1 CONCLUSION F or the reasons explained above, the Court should reverse the decision below, deny the News' motion for summary judgment, grant Appellant's motion for partial summary judgment on falsity, and strike the defenses of Civil Rights Law § 74, substantial truth and privileged opinion asserted by The News. Dated: March 27,2012 6988898.1 CARTER LEDY ARD & MILBURN LLP Michael K. Plumb, Esq. 2 Wall Street New York, New York 10005 Telephone: 212-732-3200 HARRIS BEACH PLLC Richard T. Sullivan, Esq. 726 Exchan2:e Street - - - u Suite 1000 Buffalo, New York 14210 Telephone: 716-200-5050 Attorneys for Plaintiff-Appellant 54