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) Appellate Division Docket No. CA 12-00560 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. REPLY 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 INTRODUCTION .......................................................................................................................... 1 POINT I DEFENDANT'S ARTICLES ARE NOT "ACCURATE ENOUGH" TO BE PRIVILEGED UNDER SECTION 74 ................................................................................................................... 4 A. Reports That Have A Different Effect on the Mind of the Reader Than the Actual Truth Are Not Protected By Section 74 ........................................................................................ 4 B. Readers of the News Understood the Articles to Report that Alf Engaged in and Admitted Multiple Years of Crimes .................................................................................... 7 1. Nothing in the Record states that AIfwas targeted for individual prosecution, charged, spared prison or should have gone to jaiL ................................................. 7 2. The News' Statements and Implications Are "Of and Concerning" AIf ................. 9 3. Every court to address the issue has determined that there is no evidence that AIf committed any crimes ........................................................................................ 9 POINT II A REPORTER'S MISUNDERSTANDING OF LEGAL TERMS IS NOT A BASIS FOR EXTENDING THE PRIVILEGE OF SECTION 74 TO RESULTING INACCURATE AND MISLEADING NEWS REPORTS ................................................................................... 11 POINT III THE RECORD STRONGLY SUPPORTS EACH OF THE LOWER COURT'S FINDINGS OF INACCURACY ........................................... ~ ..................................................... 12 A. AlfDid Not Admit to Cheating the Government Over A Period of Years ........................ 13 1. The Satisfaction Provision and Waiver of Prosecution Provision Within the Plea Agreement Were Not Admissions By NAC or AIf ........................................ 13 2. The Withdrawal Provision within the Plea Agreement Was Not an Adnlission .. .l4 3. The Complaint for Forfeiture Was Not an Admission .......................................... .l5 4. Statements Made by Government Attorneys Are Not Admissions by NAC or Mr. AIf ............................................................................................................... 15 B. The Reporter's and the News' Brief's Depiction of "Relevant Conduct" As Evidence of Admissions by NAC and Alf Are Themselves Inaccurate ............................................. 17 1. The Uncontested Government Estimate of Loss Is Not an Admission of Criminal Liability ................................................................................................... 1 7 2. Later Judicial Documents and Findings Confirm that Relevant Conduct Was Not an Admission of Years of Criminal Cheating ................................................. 19 1 7043251.1 3. Policy Statements and Introductory Commentary Within the Federal Sentencing Guidelines Do Not Support the News' Attempt to Justify "Accurate Enough",; "Relevant Conduct" and Culpability Calculations Are Not Evidence of Admissions of Criminal Liability .......................................................................... 20 4. The E-Mail NAC Sent to the News Prior to Publication of the First Article Was Not an Admission of Criminal Liability ........................................................ 22 C. A Fair Reading of the Articles Leads the Reader to Inaccurately Conclude that NAC andAlf Admitted to Years of Crimes ....................................................................... 23 1. The Novenlber 8 Editorial Establishes How a News' Editorial Board Member Understood the Articles ......................................................................................... 23 2. Comments by the News' Readers Establish Their Understanding of the Articles ................................................................................................................... 25 3. The Entire Context of the Articles, Including Headlines and Photographs of Alf, Caused Readers to Understand the Articles Were About Alf ........................ 26 4. The News Falsely Attributed Statements to Alf and NAC Admitting to Years of Criminal Cheating .............................................................................................. 28 POINT IV ALF'S CROSS MOTION FOR PARTIAL SUMMARY JUDGMENT SHOULD BE GRANTED .................................................................................................................................... 28 A. The Articles Are False ...................................................................................................... 28 B. The News' Defense Based on Section 74 Privilege Should Be Stricken .......................... 29 . C. The Articles Are Not Substantially True and That Defense Should Be Stricken .............. 29 D. The Editorial Is Not Privileged Opinion and That Defense Should Be Stricken ............ .30 CONCLUSION ............................................................................................................................ 31 ii 7043251.1 TABLE OF AUTHORITIES Page(s) NEW YORK CASES Armstrong v. Simon & Schuster, 85 N.Y.2d 373 (1995) ................................................................................................................ 9 Bee Publications v. Cheektowaga Times, 107 A.D.2d 382 (4th Dep't 1985) ............................................................................................ 27 Cholowsky v. Civiletti, 69 A.D.3d 110 (2d Dep't 2009) ............................................................................................... 29 Daniel Goldreyer, Ltd. v. Van De Wetering, 217 A.D.2d 434 (1st Dep't 1995) .......................................................................................... 4, 5 Dibble v. WROC TV Channel 8, 142 A.D.2d 966 (4th Dep't 1988) .................................................................................... passim Fraser v. Park Newspapers of St. Lawrence, Inc., 246 A.D.2d 894 (3d Dep't 1998) ..................................................................................... 6, 7, 30 Fraser v. Park Newspapers of St. Lawrence, Inc., 257 A.D.2d 961 (3d Dep't 1999) ............................................................................................... 6 Glendora v. Gannett Suburban Newspapers, 201 A.D.2d 620 (2d Dep't 1994) ......................................................................................... 4, 13 Greenberg v. CBS, Inc., 69 A.D.2d 693 (2d Dep't 1979) ............................................................................................... 30 Gross v. New York Times Co., 82 N.Y.2d 146 (1993) .......................................................................................................... 8, 30 Jimenez v. United Fedn. of Teachers, 239 A.D.2d 265 (1st Dep't 1997) ............................................................................................ 29 Matovcik v. Times Beacon Record Newspapers, 46 A.D.3d 636 (2d Dep't 2007) ............................................................................................... 29 Ocean State Seafood v. Capital Newspaper, 112 A.D.2d 662 (3d Dep't 1985) ............................................................................................... 5 Posner v. N. Y. Law Pub. Co., 228 A.D.2d 318 (1st Dep't 1996) ............................................................................................ 30 iii 7043251.1 Shulman v. Hunderfund, 12 N.Y.3d 143 (2009) .............................................................................................................. 29 Silsdorf v. Levine, 59 N.Y.2d 8 (N.Y. 1983) ......................................................................................................... 30 Stanwick v. Meloni, 158 A.D.2d 944 (4th Dep't 1990) ............................................................................................ 27 Suozzi v. Parente, 202 A.D.2d 94 (1st Dep't 1994) ........ : ..................................................................................... 12 Williams v. Williams, 23 N.Y.2d 592 (1969) .............................................................................................................. 11 FEDERAL CASES Aksoy v. United States, 101 F.3d 1393 (2d Cir. 1996) ................................................................................................... 18 Calvin Klein Trademark Trust v. Wachner, 129 F. Supp. 2d 248 (S.D.N.Y. 2009) ........................................................................................ 5 Gertz v. Robert Welch, 418 U.S. 323 (1974) ................................................................................................................. 12 Milkovich v. Lorain Journal Co., 497 U.S. 1 (1990) ........................................................................................................... 8, 30, 31 Montes v. Scully, CV-90-1078, 1993 WL 372266 (E.D.N.Y. Sept. 1, 1993) ...................................................... 18 Naantaanbuu v. Abernathy, 746 F. Supp 378 (S.D.N.Y. 1990) ..................... ; ..................................................................... 27 u.s. v. Romano, 825 F.2d 725 (2d Cir. 1987) ...................................................................................................... 21 United States v. Booker, 543 U.S. 220 (2005) ................................................................................................................. 21 United States v. Streich, 987 F.2d 104 (2d Cir. 1993) ..................................................................................................... 18 STATUTES Civil Rights Law § 74 ............................................................................................................ passim iv 7043251.1 INTRODUCTION "The court rmds 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." Decision and Order o/the Honorable Gerald J. Whalen, dated Dec. 22, 2011 (Record on Appeal ("R.") at 14) (emphasis supplied). What did readers of The Buffalo News conclude from the inaccuracies? "AIfs should go to jail. .. They make political contributions and walk away unscathed from bold-faced thievery." (R. at 57, The Buffalo News, Letters From Our Readers, Nov. 4, 2007.) "The fact is AIf is a very wealthy person and was caught in a series of criminal acts ... He is a thief and his company is his co-thief ... his wicked avarice benefits the unsavory creatures of our world like Ossama bin Laden and Mahmoud Ahmadinejad." (R. at 66-67, The Buffalo News, Blogs Home, Inside the News, Mar. 2, 2008.) "[S]ixty years ago the officers of Air Cargo would have been charged with sedition as well." (R. at 62, The Buffalo News, Blogs Home, Inside the News, Mar. 2, 2008) "Imagine that. Our own war profiteer right here in Western N ew York. How disgusting." (R. at 72, Robert Harding, Who is Christopher AlP, The AIbany Project, Mar. 2, 2008) (citing exclusively to articles in The Buffalo News). "It's clear the AIf's have no conscience, a problem that exists because of the failure of the nation's schools and churches to include proper ethical and philosophy in required curriculums." (R. at 64, The Buffalo News, Blogs Home, Inside the News, Mar. 2, 2008.) "I bet the scum defending the scummy AIf's would be OUTRAGED if they read about someone getting an extra buck in their welfare check ... I hope they and theirs rot in a cancer ward." (R. at 69, The Buffalo News, Blogs Home, Inside the News, Mar. 2, 2008.) The damage caused by the libel inflicted upon Mr. AIfby The Buffalo News ("the News") could not be more clear from its own published material. Despite a negotiated corporate settlement that involved an admission of criminal liability for no more than the submission of a single false statement to the government in a $400 transaction, readers of the News lamented that Mr. AIfhad not been jailed for thievery, sedition, aiding terrorists, and war profiteering. The News created that misimpression and animosity by the articles in suit ("Articles"), including 1 7043251.1 falsely reporting admissions that Mr. AIf and his wife never made ("The couple also maintains that it stopped cheating the government in 2005." (R. at 38)), falsely reporting that Mr. AIfhad committed crimes but avoided jail ("A no-jail plea deal" (R. at 48) and a "plea deal, which spares AIf and other company officials from serving any jail time" (R. at 37)), and falsely reporting that a government prosecution had established six-years of crimes, even though the government charge was limited to a single event occurring on a single day (R. at 173-174, Information filed Oct. 25, 2007). To explain the disparity between its reports and the actual guilty plea of making a single false statement to the federal government, the News falsely implied to its readers that political donations allowed Mr. AIf to evade jail ("a different standard of justice applies to the politically connected" (R. at 41)). Now, confronted with the above and a series of other judicial findings stating that the Articles caused readers to inaccurately conclude that Mr. AIf and his company, National Air Cargo ("NAC"), admitted to years of criminal misconduct, the News argues that it faithfully reported the corporate admission to a single false statement and that this Court should justify or excuse as privileged the false statements and implications also reported over the course of the Articles. But, on this Record, a single clarifying statement cmmot negate the impact of the many false statements and implications and, quite evidently, did not alter their defamatory effect on the mind of the News' readers. NAC's carefully limited admission in the courtroom was the foundation for a global settlement of a six year long dispute between the government and NAC involving federal regulations, the timiQ.g and mode of transport, and claimed overcharges. Yet in the pages of the News, it became a prime example of corporate corruption unpunished. How could a reader of the News possibly read a fair and true report of the court proceedings which described that limited plea and global settlement, and conclude that Mr. AIf, his family, and his 2 7043251.1 lawyers should "rot in a cancer ward?" Readers could arrive at the understandings cited above only because the News unfairly and falsely reported what happened in federal court on October 25,2007 (the "Plea Colloquy"). For the many reasons discussed below, the protection afforded by Civil Rights Law § 74 (Section 74) does not excuse the News for its false reports which have so clearly damaged Mr. Alrs reputation. The lower court found the Articles to be inaccurate in substantial respects, and that those inaccuracies caused readers to believe that Mr. Alfhad admitted to "cheating the government over a period of years." R. at 13-15. While its ultimate holding erroneously found the Articles "accurate enough" to be protected under Section 74 (R. at 16), there is not a single word within the court's opinion addressing what made the Articles accurate "enough." In this Court, the News' 70 page brief and its 34 page "Schedule" simply rehash arguments already discredited by the lower court while advancing the inconsistent arguments that (1) the News faithfully reported the single, limited criminal charge and (2) the News' reports of admissions to six years of criminal cheating are also true. Implicitly acknowledging the inconsistency within its own arguments and the lower court's decision, the News now asks this Court to affirm the ultimate holding but reverse all of the findings of inaccuracy. The lower court reviewed the entire Record which clearly supports each of its findings of inaccuracy_ The lower court's error lies in its unexplained conclusion of "accurate enough" and its unprecedented application of the Section 74 privilege based on a reporters' inability to understand legal terms. That holding should be reversed to make it consistent with the lower court's findings and the well understood scope of the Section 74 privilege: it only applies to fair and "substantially accurate" reports of judicial proceedings. The News' Articles were neither. 3 7043251.1 POINT I DEFENDANT'S ARTICLES ARE NOT "ACCURATE ENOUGH" TO BE PRIVILEGED UNDER SECTION 74 A. Reports That Have A Different Effect on the Mind of the Reader Than the Actual Truth Are Not Protected By Section 74 The lower court's unexplained "accurate enough" conclusion is a novel standard in the context of Section 74. Not a single prior decision holds out "accurate enough" as an appropriate standard in applying the statutory privilege. None of the lower court's findings support its holding that the reports were accurate "enough," indeed, they contradict it: the explicit findings made indicate that the Articles are inaccurate in several substantial respects. Regrettably, the lower court's adoption of the "accurate enough" standard was error. Section 74 prescribes that only "fair and true" reports are eligible for its protection. A publication is only considered "fair and true" under New York case law ifit is "substantially accurate." Glendora v. Gannett Suburban Newspapers, 201 A.D.2d 620,620 (2d Dep't 1994). And 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 1988); Daniel Goldreyer, Ltd. v. Van De Wetering, 217 A.D.2d 434,436 (1st Dep't 1995). Even if "accurate enough" were to be seen as the lower court's alternative phrasing of "substantially accurate," that holding is still clear error on this Record. 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." R. at 14. The News' own publications establish that multiple readers reached that inaccurate conclusion because, as the lower court found, ''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. In fact, "Alf did not admit to cheating the government over a period of years." R. at 13. 4 7043251.1 The stark contrast between the actual truth and the effect of the News' reports on the mind of the recipient, as determined in findings by the lower court, clearly demonstrates that the reports were not "substantially accurate" and Section 74 cannot be applied in this case. Section 74 is also subject to several categorical exclusions which directly apply here. The privilege does not protect libel defendants as a matter of law 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 437; 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). Criminally cheating the government out of millions of dollars for years is obviously much more serious conduct than submitting to the government a single statement falsified to show a $400 delivery had arrived two days earlier than it had actually arrived. Nothing in the October 25 and subsequent court proceedings suggested war profiteering, or that political donations resulted in Mr. Alf avoiding a jail sentence. And nothing in the October 25 proceeding charged Mr. Alf with an offense that could have resulted in a prison sentence (or any other offenses), or addressed Mr. Alfbeing spared a prison sentence by entering into the October 25,2007 plea agreement ("Plea Agreement"; R. at 286-308). However, readers believed that Mr. Alf should have gone to j ail (or worse), because the News repeatedly suggested that he had engaged in conduct much more serious than that actually charged in the federal proceeding. Section 74's protection is also unavailable when a report falsely expands the scope of criminal charges brought in court. Dibble, 142 A.D.2d at 967. The lower court ignored this controlling precedent in reaching its decision and the News now tries to distinguish Dibble by arguing that, in this case, on two occasions, the News accurately described the guilty plea, unlike the defendant in Dibble. Brief for Defendant-Respondent (''News' Brief') at 41-42. But readers 5 7043251.1 of the News were given to understand that NAC and Mr. AIfanswered to and admitted much broader charges concerning years of criminal cheating, a proposition that the News dedicates a substantial portion of its brief to defend. Both the law and the Record make that a futile effort. Clearly, the News falsely expanded the scope of the charge brought in federal court, including adding Mr. AIf, as is evident from the plain text and implications of the Articles and the readers' understanding of those Articles. Section 74's protection is also not available for false reports of guilty pleas or admissions. A false report of a guilty plea or admission "cannot be considered such a trivial defect" that the report can be characterized as a "substantially accurate" or "accurate enough" account of a judicial proceeding. Fraser v. Park Newspapers o/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, Fraser makes clear that "that would not tend to prove the truth of the charged libel, namely, that [the libel plaintiff] had pleaded guilty to a crime." Fraser v. Park Newspapers o/St. Lawrence, Inc., 257 A.D.2d 961,962 (3d Dep't 1999). The News' attempts to distinguish Fraser by ignoring its legal analysis that categorically excludes false reports of guilty pleas and false reports of admissions of criminality from the protection of Section 74. The News argues, in effect, that this case is different because the plaintiff in Fraser did not plead guilty to anything while NAC in this case pleaded guilty to 6 7043251.1 submitting a false statement to the government. News' Brief at 41. Yet, just as the plaintiff in Fraser did not plead guilty to any crimes, Mr. AIf did not plead guilty or otherwise admit to committing any crimes, while NAC pleaded guilty only to the single false statement. A false report of a criminal plea or admission by an individual does not get protection under Section 74 merely because his company admitted some other charge. Dibble and Fraser should control the outcome in this case. The News falsely reported the scope of the guilty plea, falsely reported admissions of years of criminal actions by NAC and Mr. AIf, and falsely expanded the scope of the charges brought against NAC to include Mr. AIf; small wonder then that its readers held Mr. AIf responsible as an archetypically corrupt corporate executive. False reports of this magnitude cannot claim the protection of Section 74. B. Readers of the News Understood the Articles to Report that Alf Engaged in and Admitted Multiple Years of Crimes In addition to expanding the scope of the charges and reporting admissions of guilt that Mr. AIf never made, the News also reported that Mr. Air s crimes melited jail time. The News now argues that it merely implied that Mr. AIf should go to jail and such implications are not actionable defamation. The News also persists in its Briefin declaring that Mr. AIf did commit crimes (News' Brief at 4,21-22,28), despite contrary judicial findip.gs that he did no such thing. 1. Nothing in the Record states that AIf was targeted for individual prosecution, charged, spared prison or should have gone to jail The U.S. Attorney never brought any criminal charges against Mr. AIf. Nothing in the Plea Agreement and Plea Colloquy states that he knew of the admitted false statement, let 'alone the years-long criminal activity that the News attributed to him. The allegations in the civil qui tam action were settled with no evidence introduced and both NAC and Mr. AIf expressly denied 7 7043251.1 "any wrongdoing or fault" other than the "conduct specifically admitted in the Plea Agreement." R. at 619. But the News informed its readers, in a complete nlisreading of the court proceedings, that Mr. AIf 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 ajail"); R. at 37 ("a plea deal which spares AIf and other company officials from serving any jail time"); R. at 42 ("neither AIfnor anyone in his company will go to jail"); R. at 48 ("a no-jail plea deal"). Readers clearly understood the News to state that Mr. AIf should have gone to jail but - in some unexplained way used political contributions to buy his way out of jail. R. at 41, 57. 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 Mr. AIf's political contributions, before stating that Mr. Alfdid "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 41. Without true facts to support their charge, these statements are actionable defamation even though they are couched as opinion. See Milkovich v. Lorain 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); Point IV(D), below. The News' baseless hypothesis that federal prosecutors and a federal judge allowed a felon to escape justice as a result of his political contributions to candidates or holders of government offices, without support anywhere in the Record, is not only false but also demonstrate the reckless disregard for truth evident throughout the Articles. 8 7043251.1 2. The News' Statements and Implications Are "Of and Concerning" AIf Contrary to the News' misleading arguments, its defamation was "of and concerning" Mr. AIf and was not limited to some kind of non-actionable implication. News' Brief at 49, 54. The Amended Complaint clearly avers the multiple ways in which Mr. AIfwas defamed. For example, within an article detailing political contributions made by Mr. AIf and his wife, the News reported that "the couple maintains it stopped cheating the government in 2005." R. at 38 (emphasis supplied). As the News never obtained any statements from Mr. AIf(R. at 13), and Mr. AIf never admitted that he had cheated the government (ld.), it is difficult to inlagine a more clear example of explicit defamation "of and concerning" a plaintiff. Common-sense also dictates that a series of articles that feature headlines about and photographs of Mr. AIf and his home are "of and concerning" him; the News cannot evade liability by using photographs of Mr. AIf in lieu of his name. Furthermore, to the extent that the News defamed Mr. AIfby implication, such is actionable under New York law. Armstrong v. Simon & Schuster, 85 N.Y.2d 373 (1995) (recognizing a cause of action for defamation by implication and affirming denial of motion to dismiss where plaintiff alleged verifiably false statements of fact as well as false inferences flowing from those facts). 3. Every court to address the issue has determined that there is no evidence that AIf committed any crimes The lower court found that "[ t ]he judicial proceeding was brought against NAC as a corporate defendant and not AIf individually" and "AIf did not admit to cheating the government over a period of years." R. at 13. The lower court found nothing in the Record that attributed criminal guilt to Mr. AIf. 9 7043251.1 I Tellingly, when the government had the opportunity to attribute criminal conduct to Mr. AIf, in his debannent proceeding, 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 Mr. AIf, the Department of Defense (DOD) attorneys did not dispute the fact that Mr. AIf'did not make the false statement to whi~h NAC pleaded guilty. R. at 635. Yet, the News raises the DOD attorney's vacature brief, filed as part of the settlement of the debannent case, to support its false reports that Mr. AIf is a criminal who should have gone to jail. News' Brief at 21-22. This argument is absurd in light of the settlement of the debarment including the reinstatement of Mr. AIfto his leadership role at NAC, and doubly so when presented on a motion for summary judgment because nothing in the Record (in this case) reveals the issues the DOD's attorneys "would have addressed" in a full hearing. See ide More importantly, those government attorneys had already lost their case: the debarring official's arguments they attempted to support were, per the D.C. District Court, "logically flawed," the debarring official "failed to 'articulate a rational connection between the facts found and the choice made,'" (R. at 643) and also failed to indicate that Mr. AIf"personally participated in the misconduct, had actual knowledge of the misconduct or had information from which a reasonable person could infer that misconduct occurred" (R. at 646). In addition, the DOD attorneys "declined to address" evidence demonstrating timely arrival of shipments. R. at 641. Only afierthatjudicial decision and order finding that Mr. AIfhad not participated in or admitted to any crimes, did those same DOD attorneys, as the case settled, proffer the self-serving, hearsay statements now advanced by the News. 10 7043251.1 POINT II A REPORTER'S MISUNDERSTANDING OF LEGAL TERMS IS NOT A BASIS FOR EXTENDING THE PRIVILEGE OF SECTION 74 TO RESULTING INACCURATE AND MISLEADING NEWS REPORTS The lower court made a fundamental error in granting the News' motion for summary judgnlent based on the Section 74 privilege because denying the motion would "require[] the court to find the reporter knew or should have known the legal meaning and use of the term 'relevant conduct' as it relates to federal sentencing procedures." R. at 15. The lower court compounded its error by further stating that "[t]o hold a newspaper reporter to such a standard as to require technical legal knowledge of specific terms used during a legal proceeding, such as a federal sentencing, in order to submit an article for publication is unreasonable." ld. That holding improperly conflates the "fair and true" privilege of Section 74 with defamation defenses addressing the requisite fault standards. It also improperly resolves a material issue of fact (determining that the News' reporter did not know the legal meaning of "relevant conduct") in favor of the moving party on a motion for summary judgment. If allowed to stand, the lower court's rationale would include all reports involving substantially inaccurate reports of legal terms, thereby creating a license to defame parties to court proceedings, whether criminal or civil, and tum a qualified privilege into a virtually absolute one. See Appellant's Brief, Point II, pp. 43-49. The lower court's unprecedented and unexplained holding threatens a limitless expansion of the Section 74 privilege and has no relationship to the text of the statute which requires at the least "substantially accurate" reports before the privilege applies. See Williams v. Williams, 23 N.Y.2d 592,597-98 (1969) (describing the history of the qualified statutory privilege). The lower court's concenlS regarding the reporter's capacity to understand the judicial proceeding or knowledge of legal terms are misplaced. Whether the News, and its reporters and editors, 11 7043251.1 published the Articles with knowledge that they were false, with reckless disregard as to whether or not they were false, or in good faith based on ignorance, 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 (lst Dep't 1994). However, the News moved for summary judgment before any discovery and the Record is devoid of facts concerning what its reporter or others at the News did or did not know about "relevant conduct." If allowed to stand, the lower court's rationale would privilege all reports involving untrue or substantially inaccurate reports of technical legal terms, or corporate executive/company relationships, whether or not the reporter actually understood the legal issue in question. Accordingly, the lower court's unfortunate d~cision on this point should be reversed and the Section 74 privilege held inapplicable. Since the findings of substantial inaccuracy were correctly made by the lower court, its erroneous decision to award the section 74 privilege, based on a vague and unexplained level of accuracy, and an assumed lack of understanding on the part of the News reporter, should be reversed. POINT III THE RECORD STRONGLY SUPPORTS EACH OF THE LOWER COURT'S FINDINGS OF INACCURACY The lower court correctly found that the News had inaccurately reported on the judicial proceedings in several ways: falsely reporting the Mr. Alfhad admitted to cheating the government over a period of years, falsely reporting admissions to years of criminal cheating based on the unadmitted "relevant conduct" used in sentencing, and as a result, causing readers to inaccurately conclude that Mr. Alfhad admitted to years of crimes. R. at 13-16. These findings alone require reversal of the lower court's unexplained ultimate holding that the Articles 12 7043251.1 are "accurate enough" to secure the protection afforded to "fair and true" reports of judicial proceedings. See Glendora v. Gannett Suburban Newspapers, 201 A.D.2d 620, 620 (2d Dep't 1994); Dibble, 142 A.D.2d at 967. The arguments advanced by the News seeking to establish the truth of the Articles (News' Brief at 62-65), already rejected by the lower court, are without merit. A. AlfDid Not Admit to Cheating the Government Over A Period of Years The lower court reviewed "the entire record" and found that "AIf did not admit to cheating the govenunent over a period of years." R. at 13. Despite this finding of fact, the News continues to assert that Mr. AIf admitted cheating the government over a period of years based on a few snippets from the Plea Agreement and out-of-context quotes from the Plea Colloquy. See News' Brief at 52. The News' arguments are simply wrong, as already decided by the lower court. See R. at 16 ("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."). NAC only admitted to the submission of a single false statement on March 19,2001. Mr. AIf, not a party to the proceeding, only authorized NAC's guilty plea 10 that single charge - the only charge filed against NAC - in the Information dated October 23, 2007. See R. at 173-74. 1. The Satisfaction Provision and Waiver of Prosecution Provision Within the Plea Agreenlent Were Not Admissions By NAC or AIf 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 40), and that NAC admitted "repeatedly overcharging the Defense Department ... between early 1999 and April 2005" (R. at 41). In an attempt to establish the truth of these false reports, the News repeatedly relies on the satisfaction provision (R. at 287, Plea Agreement '2) which states that the guilty plea satisfies the single criminal charge in the Information and any other charges 13 7043251.1 that might have arisen from the investigation charges that, ipso facto, were not brought. See News' Brief at 7, 15, 16, 17,54,60, 8-1, 8-2, 8-3, 8-4, 8-6, 8-8, 8-10, 8-11, 8-14, 8-15, 8-17, 8- 19, 8-22, 8-23, 8-31. The News also repeatedly relies on the Plea Agreement's waiver of prosecution provision which again describes the investigation, in almost identical language as the satisfaction provision, (R. at 297, Plea Agreement ~ 29) and sets forth the government's agreement that it will not prosecute NAC or the individuals who work at or own NAC. See News' Brief at 17, 19, 54, 8-5, 8-9, 8-18, 8-20, 8-21,8-27, 8-28, 8-29, 8-30. This provision, 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 and cannot include admissions by Mr. AIf or otherwise establish the years of criminal cheating by him and NAC reported by the News. To the contrary, the provisions assured NAC, Mr. AIf, and the company's employees that the Plea Agreement terminated the prosecutor's investigation of domestic shipments from 1999 to 2005 and that the agreed plea and monetary payments ended the matter. R. at 287,297. Both provisions were elements of a "global settlement" (R. at 235, 298), were included strictly for the benefit ofNAC, its owner and employees, and provide no support for the News' false reports. It is absurd for the News to argue that provisions bargained for and obtained to settle hotly disputed government claims once and for all, along with any unknown charges the government might have been considering, amounted to an admission of guilt. 2. The Withdrawal Provision within the Plea Agreement Was Not an Admission 80 too with the News' reliance on Plea Agreement ~ 22 (R. at 294), which states that if NAC withdrew its guilty plea it would not assert a statute of limitations defense against any future charges that the prosecution might bring relating to the investigation. See News' Brief 8- 14 7043251.1 5, S-II, S-17, S-23. How in the world this provision of the Plea Agreement establishes an admission of crinlinal wrongdoing is never explained by the News because, obviously, it does not include any admissions. Furthermore, the News' analysis does not and cannot identify the future charges to which it reported Mr. AIf and NAC had admitted guilt because this provision, once again, addresses only the government's description of the scope of its investigation, not admissions to crimes. 3. The Complaint for Forfeiture Was Not an Admission The News' reliance on the uncontested (R. at 178) Civil Forfeiture aspect of the Plea Agreement and global settlement has no weight in justifying its false statements about Mr. AIf. See News' Brief at 8, 14, 18, 54, S-6, S-9, S-22. The amount paid by NAC under this aspect of the plea and settlement was just one of the components, as previously noted, in a negotiated total monetary payment, and a quite fluid one at that as is evident from the last minute shift of funds away from the civil forfeiture amount negotiated in October 2007 to the qui tam settlement component in March 2008. See R. at 299 and R. at 311. 4. Statements Made by Government Attorneys Are Not Admissions by NAC or Mr. AIf The News' also seeks to establish admissions by NAC and Mr. AIfbased on snippets of out-of-context statements made, not by Mr. AIf or a representative of his company, but instead by the prosecuting attorney. It should go without saying that the prosecuting attorney cannot make admissions for NAC or Mr. AIf. In fact, the prosecutor's statements have the opposite effect from that argued by the News: at the Plea Colloquy on October 25,2007, the Assistant~U.S. Attorney ("AUSA") explained that "the facts set forth 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 15 7043251.1 239 (emphasis supplied). To establish the truth of statements within the Articles concerning broad admissions of guilt by NAC and Mr. AIf, the News repeatedly quotes the second half of that statement concerning the scope of the investigation, while omitting from the quoted text the I first half of that statement describing the "single instance that is the criminal charge." See News' Brief at 11, 15, S-3, S-4. But the AUSA's statement should have made clear to anyone in the court that day the precise and limited scope of the prosecution's understanding of the charge and that AIfhad authorized NAC to plead guilty only to "the single instance" of a false statement involving one document submitted to the government. R. at 239-40. In addition to the fact that what the AUSA said or did not say at the Plea Colloquy has no capacity to establish admissions made by NAC or Mr. AIr, Judge Skretny also recited facts relating to the March 19,2001 submission ofa false statement and asked the NAC representative "Is that your understanding of what the charge is?" and "it's also your understanding that that is the charge to which you are authorized to enter a plea of guilty?" R. at 220. The NAC representative responded affirmatively to these questions regarding the single charge in the Information. R. at 221; see also R. at 267 (entry of the plea, which is limited to "committing the crime" of submitting a false statement). Nothing else was admitted by NAC in court that day and Mr. AIfhad authorized only that. R. at 306-308. The lower court properly found that Mr. AIf did not admit that either he or NAC cheated the government over a period of years, and the AUSA's descriptions of the scope ,of an investigation do not establish that he did. } As to the News' reliance on government press releases, whether set out in the News' Briefs overly dramatic verbal frontispiece, or in the arguments later made (News' Brief at 12, 14,44, S-6, S-24, S-25), hearsay, self-serving statements by government attorneys characterizing 16 7043251.1 their investigation simply cannot be used as evidence of the truth of the News' reports of years of crimes committed by Mr. AIf. B. The Reporter's and the News' Brief's Depiction of "Relevant Conduct" As Evidence of Admissions by NA C and Alf Are Themselves Inaccurate The lower court properly found on this Record that the "reporter's depictions of 'relevant conduct' ... as evidence of admissions byNAC and AIfis inaccurate" CR. at 14) 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'" CR. at 16). The News argues that the lower court's findings were wrong and that relevant conduct is evidence of additional admissions by NAC and Mr. AIf. After having its inaccuracies erroneously excused based on its reporter's presumed failure to understand the meaning of "relevant conduct," the News now seems to be arguing that their reporter understood the finest details of the federal guidelines dealing with "relevant conduct" and that the lower court erred in finding the Articles inaccurate on that subject. According to the News, everyone is wrong about the meaning of "relevant conduct" except their veteran reporter, who somehow failed to mention "relevant conduct" in any of the Articles, despite his decades of reporting on federal criminal proceedings. R. at 550. This Court should not accept this display of smoke and mirrors. 1. The Uncontested Government Estinlate of Loss Is Not an Admission of Criminal Liability The Plea Agreement refers to an uncontested government estimate of its loss relating to "relevant conduct," a subject pertaining only to sentencing in federal criminal cases. In the settlement, NAC agreed it would not contest the government estimate of loss for purposes of the Plea Agreement. R. at 289. Specifically, the sole description of "relevant conduct" within the Plea Agreement states that 17 7043251.1 The parties agree that for 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. ld. On its face, this sub-paragraph within the Plea Agreement does not constitute an admission to years of criminal cheating, and nor does the use of the $4,400,000 figure throughout the sentencing guidelines calculations. 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, *4 (E.D.N.Y. 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, *2 (2d Cir. 1996) (unpublished disposition) (relevant conduct includes hearsay evidence). In the Plea Colloquy, 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 AUSA also explained that "[t]he facts set forth here refer only to the single instance that is the criminal charge," even though the "investigation covered more," which became the "relevant conduct." R. at 239 (emphasis added). Neither the Judge nor the AUSA characterized "relevant conduct" as a form of admission. R. at 219, 239. Throughout the colloquy the Judge and attorneys repeatedly clarified that the government estimate of loss was only for the purpose of "relevant conduct." R. at 230-31,239. 18 7043251.1 r Despite these clarifications the News continues to assert that the government's loss estimate of $4,400,000 establishes that both NAC and Mr. Alf admitted to cheating the government out of millions of dollars, an assertion directly contradicted by not only the explicit and narrow factual basis of the Plea Agreement, but also the explanation of the monetary payment provided by the AUSA at the October 25,2007 colloquy. R. at 239. Rather than constituting an admission, the AUSA explained the role of the loss estimate: it "simply relates to the totality of the settlement, which our position is that is the appropriate nutnber." R. at 230. The AUSA's description of how one part of the total monetary payment in a negotiated settlement amount was arrived at simply cannot be reconciled with the News' insistence that the payment constituted an admission of the years of criminal cheating it reported. 2. Later Judicial Documents and Findings Confirm that Relevant Conduct Was Not an Admission of Years of Criminal Cheating The News also ignores the other documents in the Record that establish that the News misreported the effect of "relevant conduct." In March 2008, at NAC's sentencing hearing, the parties further expanded on the origin of the government estimate of loss. At that hearing, the AUSA candidly explained that the loss estimate number was essentially a product of negotiations, stating that "when you're negotiating a resolution, you try to get as nluch as you can that you think you can prove at trial, and you see if the defendant will agree to that, and that is what we have .... " R. at 364. Also at that hearing an attorney for NAC stated, without objection from the AUSA, that the government estimate was based entirely on the long-disputed air-truck issue, and reflected the net difference between the cost to NAC to move cargo by truck and the cost to the government for NAC to provide that service. R. at 365. The NAC attorney went on to explain that "[ fJor purposes of settlement, we're okay with that. If we went to trial I 19 7043251.1 think we'd show the government's losses were substantially less than that, in fact, zero. But we have this negotiated resolution." R. at 365-66. Documents later filed in the plea and global settlement proceedings 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 qui tam case settlement agreement (R. at 616-33), 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 the unproven whistle blower and government allegations, also stated that "[ t ]his Agreement is neither an adnlission of liability by NAC nor a concession by the United States that its claims are not well founded." R. at 619-20. But the News had already falsely reported that NAC and Mr. Alfhad admitted these allegations. R. at 34,37,39. Those reports are conclusively proved false on this Record by NAC's denial of those allegations within the qui tam settlement. 3. Policy Statements and Introductory Commentary Within the Federal Sentencing Guidelines Do Not Support the News' Attempt to Justify "Accurate Enough"; "Relevant Conduct" and Culpability Calculations Are Not Evidence of Admissions of Criminal Liability The News' Briefhas introduced a purported analysis ofa series of policy statements fronl the Federal Sentencing Guidelines in a desperate and ultimately futile effort to establish that the "relevant conduct" in the Plea Agreenlent includes an admission to years of criminal conduct. In view of the fact that the lower court based its erroneous decision on the News' reporter's assumed lack of understanding of the term "relevant conduct" in those Guidelines, this exercise appears to suggest that the reporter and the News got it right after all. 20 7043251.1 But the lower court properly found that "relevant conduct" is not evidence of additional admissions. R. at 15. After all, "relevant conduct," as was the case here, is often nothing nl0re than representations by the government about what it has seen and heard in the course of an investigation. See US. v. Romano, 825 F.2d 725, 728 (2d Cir~ 1987) ("[A] district judge may consider hearsay statements, evidence of uncharged crimes, dropped counts of an indictment and criminal activity resulting in an acquittal in determining sentence."). In 2005, addressing concerns that the use of "relevant conduct" to increase sentences violated constitutional rights of the accused, the Supreme Court decided that, while federal judges must still consider the Guidelines during sentencing, their function is now merely advisory. United States v. Booker, 543 U.S. 220 (2005). The News utterly fails to recognize the advisory nature of the Guidelines as a tool the district court may, but need not, use in sentencing. To regard them as anything else, after Booker, would raise serious due process issues. The flaws within the News' analysis of the Guidelines can be readily exposed. U.S. Sentencing Guideline Manual §6B 1.4( a) is satisfied by Plea Agreement ~ 4, which sets out the factual basis for the guilty plea, and does not support the News' false reports of additional admissions. See News' Brief at 61; R. at 288-89. Analysis of introductory commentary setting forth general principles that "should be" used "ordinarily" or ''whenever practicable" in applying the Sentencing Guidelines does not address which of those general principles were used in reaching the terms of the Plea Agreement, and neither does the Record. See News' Brief at 63. The culpability scores within the Plea Agreement are government calculations used to reach the amounts arrived at during negotiations for a total monetary payment. R. at 364. As the "government's calculations" they cannot be considered admissions by Mr. AIf or NAC, a point clearly illustrated by Plea Agreement ~ 13 which states that NAC disagreed with the government 21 7043251.1 calculation concerning whether or not a person with substantial authority participated in, condoned, or was willfully ignorant of the offense conduct. See R. at 291 (where the government adds points despite NAC's express disagreement). Likewise, the one point culpability deduction in Plea Agreement ~ 15 pursuant to U.S. Sentencing Guideline Manual §8C2.5(g)(3) was not an admission; that deduction was applied simply because the plea was entered prior to trial, in accordance with the relevant Application Note 14. See News' Brief at 65; R. at 291. The News' analytical technique of cherry picking a few sentences from the Sentencing Guidelines cannot withstand scrutiny and certainly does not establish that "relevant conduct" expanded the scope ofNAC's actual and Mr. Alrs alleged admission, as properly determined by the lower court. 4. The E-Mail NAC Sent to the News Prior to Publication of the First Article Was Not an Admission of Criminal Liability The News goes so far as to argue that NAC's October 25 statement was an admission of criminal liability. Once again, the News mischaracterizes NAC's statement. See News' Brief at 18,40, S-7, S-12, S-17. In response to Mr. Herbeck's request for comment on October 25,2007 after the hearing, a NAC lawyer sent him an e-mail 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 was sent before the News ran the October 26,2007 article and made the News aware of the key business issue NAC's survival- driving its decision to settle. R. at 707-10. 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 Plea Agreement and settlement, the News presented an unfair depiction of the reason, by reporting, contrary to the e- 22 7043251.1 mail, that the driving purpose of the settlement was to avoid jail time, rather than saving NAC from a disastrous termination of government business. Id. Now, incredibly, the News argues that the e-mail somehow supports the false statements it attributed to NAC and Mr. Alfbecause it referred to "issues" and the Plea Agreement to "events" that occurred within a small segment of the business years ago. See News' Briefat 18, 40, 8-7, 8-12. The factual basis of the Plea Agreement, specifically ~ 4(h), explains that the submission of a false statement involved a series of "events" in a business relationship leading up to submission of the single false document. R. at 288-89. The pluralized form of the nouns "issue" and "event" to describe the admitted conduct simply does not support the News' reports that "[t]he company maintains that it stopped cheating the government in 2005" and certainly cannot mean that "[t]he couple also maintains that it stopped cheating the government in 2005." While not at issue on the News' motion for summary judgment, the facts involved in these baseless arguments relate much more clearly to the reckless disregard with which the News published its false reports of the October 25 proceeding. C. A Fair Reading of the Articles Leads the Reader to Inaccurately Conclude that NA C and Alf Admitted to Years of Crimes 1. The November 8 Editorial Establishes How a News' Editorial Board Member Understood the Articles The affidavit of Kevin Walter (R. at 558-61) further establishes the appropriateness of the lower court's finding that a fair reading of the articles caused readers to inaccurately conclude that NAC and Alf admitted to years of crimes. Mr. Walter states that he relied exclusively on the previously published articles before writing the November 8, 2007 Editorial. R. at 560-61. Those previously published articles include: "Air cargo executives will avoid jail" (R.at 440); "Christopher J. Alf and other company officials ... will [not] spend so much as a day in jail" 23 7043251.1 (id.); "Christopher J. Alf and fellow executives at National Air Cargo will serve no jail time" (id.); "millions of dollars in inflated bills were submitted to the government" (id.); "the total dollar amount of the thefts ... was not disclosed" (R. at 441); "[ u ]nder the terms of the plea deal, which spares Alf and other company officials from serving any jail time, National Air Cargo admitted that it cheated the Defense Department by overcharging for deliveries of military supplies" (R. at 442); ''the company insists that none of its criminal wrongdoing took place in the Middle East" (id.); "the couple also maintains that it stopped cheating the government in 2005" (id.); "Orchard Park company that admitted overbilling the U.S. Defense Department by millions of dollars will continue doing business for the federal goven1ffi.ent" (R. at 443); ''National Air Cargo admitted that it overbilled the government by millions of dollars for military shipments in the years 1999 to 2005" (R. at 444); and, "none of the officers involved in the fraud committed by National Air Cargo will go to jail" (id.). Mr. Walter was explicit about what he concluded from reading the prior Articles: his editorial stated that "[a] different standard of justice applies to the politically connected," repeating the theme of the October 27, 2007 Article concerning Mr. AlP s political donations; he then asked "[ w ]hy in the name of decency should the leaders of National Air Cargo escape personal punishment for cheating the u.s. Defense Department ... during wartime?" R. at 41. That question adopts two false factual premises reported in the Articles. First, without any evidence, the News falsely reported that the officers ofNAC had been involved in fraud. See R. at 40 ("none of the officers involved in the fraud ... will go to jail"). Nothing in the Record supports the News' reports that Mr. Alf or any other officials were judicially or otherwise determined to have been involved in fraud. Second, adding to the mantra of the prior articles, Mr. Walter wrote that those officers, including Mr. Alf, the only one specifically named, had 24 7043251.1 / escaped a prison sentence, even though none had been charged with crimes and no evidence of individual crimes had been presented or even addressed within the Plea Agreement or in the October 25, 2007 Plea Colloquy. Mr. Walter also clearly stated his understanding of the guilty plea, as reported by the News, which included "repeatedly overcharging the Defense Department for military shipments within the United States between early 1999 and April 2005." R. at 41. The expansion of the temporal aspect of the admitted criminal act fronl a single day to a range of six years significantly affected the reputational injury inflicted by the News' false reports. Without the false report of the date range, Mr. Walter could not allege that NAC and Mr. AIfwere "tak[ing] advantage of the government during wartime" (R. at 41), i.e. war profiteering, because the date of the single false statement in the plea predated both the war in Afghanistan and the war in Iraq. The November 8, 2007 Editorial clearly demonstrates that the preceding articles caused both its own editors and its readers to inaccurately conclude that NAC and Mr. AIfhad admitted to years of cheating the government. As discussed below, the Editorial is also actionable defamation. See Point IV. 2. Comments by the News' Readers Establish Their Understanding of the Articles Not surprisingly, readers of the News developed the same false understanding of the court proceedings as Mr. Walter. Readers' comments, noted in the Introduction, above, obviously based on the false facts reported by the News, expressed intense disgust and anger towards Mr. AIf, even though he was never charged by the government with any crimes and did not admit guilt to any crimes. Specifically, readers understood that Mr. AIf"was caught in a series of criminal acts" (R. at 66), despite the corporate guilty plea to a single criminal act. Readers also understood that Mr. 25 7043251.1 Alf "should go to jail" but did not because of "political contributions" that allow him to "walk away unscathed from bold-faced [sic] thievery." R. at 57. Nothing in the Record supports the News' astounding suggestion that Mr. Alfbenefited from unspecified judicial or prosecutorial lenience facilitated by political donations to candidates or elected officials. Readers also understood the Mr. Alfhad personally engaged in "war profiteer[ing]" (R. at 72) which benefitted "Ossama bin Laden and Mahmoud Ahmadinejad" (R. at 67), and included the crime of "sedition" (R. at 62). These expressions of their understanding by News' readers are nearly identical to the war profiteering charge within the November 8 Editorial and implied throughout the Articles. The readers' understanding demonstrates not only the false impression conveyed by the Articles but also the impact upon Mr. Alr s reputation within his community. News' readers not only understood the Articles to convey the false facts discussed above, but also developed intense animus towards Mr. Alf, describing him as "a thief," "wicked," "disgusting," and "scun1ffiY." R. at 67,69, 72. A reader even hoped that Mr. Alfwould ''rot in a cancer ward." R. at 69. Readers did not feel this way about Mr. Alf because he authorized his company to enter a guilty plea to one charge based on an unnamed employee's submission of a false document to the government. R. at 708. The damage to Mr. Alrs reputation stems directly from the false reports within the News' Articles. 3. The Entire Context of the Articles, Including Headlines and Photographs of Alf, Caused Readers to Understand the Articles Were About Alf As an initial matter, the News again attempts to mislead the Court, this time suggesting that the Amended Complaint's allegations of defamation are limited to a few quoted statenlents. But the Amended Complaint alleged that "in addition to the defamation caused by the statements specifically quoted" the Articles "as a whole, taken in their entire context including headlines, 26 7043251.1 introductory statements, photographs and photograph captions" defamed Mr. AIf. R. at 28-29. The News' efforts to limit Mr. AIf's claim to a few quoted statements seeks to exploit a pleading deficiency that simply is not present in this case. The Amended Complaint also alleged that, to the extent the complained of statements refer to N AC, "they also refer to and concern AIf because, as its founder, owner and CEO, AIf'was and is intimately identified with NAC in the public mind, particularly in the transportation industry and among government agencies that purchase transportation services." R. at 23-24. Mr. AIf's affidavit states that "[a]s the founder and chairman ofNAC, [his] personal identity and reputation are inextricably identified with NAC in the minds of many people, particularly among those who worked in or utilized the national and international transportation and freight forwarding industries." R. at 705-06. On a motion for summary judgment, uncontested facts must be viewed in a light most favorable to the party opposing the motion. See Stanwick v. Meloni, 158 A.D.2d 944, 944 (4th Dep't 1990). Despite the News' denial of the allegation (R. at 84), no facts in the Record contradict the sworn statement of Mr. AIf. Therefore, in fact and for purposes of this motion, headlines referring to NAC also refer to Mr. AIf. Determining whether the defamatory words are "of and concerning" Mr. AIf will be a jury question if this case goes to triaL Bee Publ'ns v. Cheektowaga Times, 107 A.D.2d 382 (4th Dep't 1985). At that time a jury could easily find that all of the Articles, including the headlines, are clearly "of and concerning" Mr. AIf. For example, the headline for the first of the Articles, on October 26, is accompanied by a photograph of him, with a caption that states "AIf and fellow executives at [NAC] will serve no jail time." R. at 36, 440. In addition, extrinsic evidence may be used to establish that published material was "of and concerning" Mr. AIf. Naantaanbuu v. Abernathy, 746 F. Supp. 378 (S.D.N.Y. 1990). The feedback provided by the News' readers, 27 7043251.1 and published by the News and others, as discussed above, establishes definitively that readers understood the Articles to be "of and concerning" Mr. AIf. 4. The News Falsely Attributed Statements to Alf and NAC Admitting to Years of Criminal Cheating The News peppered the Articles with false quotes admitting criminal conduct that it attributed to NAC and Alf. The quotes include: "the company insists that none of its criminal wrongdoing took place in the middle east"; "[t]he couple [the AIfs] also maintains that it stopped cheating the government in 2005"; and, "[ t ]he company maintains that it stopped cheating the government in 2005." R. at 37-38, 40. These quotes, even while reporting denials, all share the same phrasing implying admissions by NAC and Mr. AIf (and his wife) that he or his company had been cheating the government at an earlier time leading up to and finally stopping in 2005. The lower court found that no one from the News obtained statements from Mr. AIf. R. at 13. Nothing on the Record suggests the existence of any such interview. The News' efforts to defend these statements relies on irrelevant portions of the Record. See News' Brief at S-11-12, S-17. Mr. AIf never uttered the words attributed to him by the News, or authorized NAC to utter them. These false statements contributed to readers' inaccurate conclusions that NAC and Mr. AIf admitted to years of cheating and, therefore, constitute actionable defamation. POINT IV ALF'S CROSS MOTION FOR PARTIAL SUMMARY JUDGMENT SHOlTLD BE GRANTED A. The Articles Are False The News falsely reported on the judicial proceedings by describing admissions of criminal conduct by a corporation and its owner and chief executive that were never made and falsely reported on the single, limited admission that was made by the corporation only. The 28 7043251.1 News also omitted from the Articles any discussion of the limited role of "relevant conduct" in the sentencing phase of the plea proceedings, thereby creating a false and defamatory understanding in its readers about the basis of the settlement payments and Mr. Alf's status as a non-party. The side-by-side comparison of the Articles with the source material which the News invited (R. at 105-07) establishes conclusively that there are no material issues of fact regarding the falsity of the News' reporting. Appellant's Brief, Point I covers this and will not be repeated here. The lower court repeatedly found the reports to be inaccurate in ways that can only be described as substantial and also found that those inaccuracies created a false impression in the minds of readers that Mr. Alfhad admitted to crimes. R. at 14, 16. Such inaccuracies cannot be considered minor. Dibble, 142 A.D.2d at 968; Matovcik v. Times Beacon Record Newspapers, 46 A.D.3d 636, 638 (2d Dep't 2007). Accordingly, this Court should reverse the decision below by denying the News' motion, granting Alf's motion for partial summary judgment on the basis that the Articles are false, and striking the News' defenses based on Section 74, substantial truth, and opinion. See Appellant's Brief at 49-51. B. The News' Defense Based on Section 74 Privilege Should Be Stricken For the reasons explained in Appellant's Brief and above, the Articles are neither "fair and true" nor "substantially accurate." Accordingly, the News Section 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[] min.or inaccuracies" in published reports. See Shulman v. Hunderfund, 12 N.Y.3d 143, 150 (2009). The "fair and true report" standard of Section 74 is consistent with the substantial tnlth analysis. Cholowsky v. Civiletti, 69 A.D.3d 110, 114 (2d Dep't 2009); see Jimenez v. United 29 7043251.1 Fedn. of Teachers, 239 A.D.2d 265, 266 (1st Dep't 1997) (providing Section 74 protection where the report was "substantially true"); Posner v. NY. Law Publ. Co., 228 A.D.2d 318 (1st Dep't 1996) (report protected as substantially accurate despite minor inaccuracies). But the News' reports are not "fair and true" and thus cannot be substantially true. See Dibble, 142 A:D.2d at 968; 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. R. at 91. 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 Milkovich v. Lorain Journal Co., 497 U.S. 1, 19 (1990); Gross v. NY. Times Co., 82 N.Y.2d 146, 155 (1993), citing Silsdorfv. Levine, 59 N.Y.2d 8, 16 (N.Y. 1983) (accusations of criminal activity that convey facts capable of being proven untrue are actionable). As noted above, the Editorial is based on "facts" in earlier articles which are proven untrue on this Record. See Point III.C, above. Each of the "facts" expressly or implicitly underlying the Editorial has now been proven false on the Record. Feedback from the News' readers demonstrates beyond dispute that reasonable readers understood the Editorial's and previous Articles' statements as assertions of facts about Alfand his company. 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. It is hardly surprising that reasonable readers encountering those false facts for the fourth time in the November 8 Editorial would understand those statements to be assertions of fact. See Gross v. New York Times Co., 82 N.Y.2d 146, 154 (1993) (reversing grant of motion to dismiss because "there are also actionable charges made in the articles ... that, although couched in the 30 7043251.1 language of hypothesis or conclusion, actually would be understood by the reasonable reader as assertions of fact"); Milkovich v. Lorain Journal Co., 497 U.S. 1 (1990). In such circumstances, the opinion defense does not save the News' editorial, and the privileged opinion defense should be stricken. 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: June 27,2012 7043251.1 CARTER LEDYARD & MILBURN LLP 1, Esq. lchael K. Plumb, Esq. 2 Wall Street New York, New York 10005 Telephone: 212-732-3200 HARRIS BEACH PLLC Richard T. Sullivan, Esq. 726 Exchange Street Suite 1000 Buffalo, New York 14210 Telephone: 716-200-5050 Attorneys for Plaintiff-Appellant 31