Christopher J. Alf, Appellant,v.The Buffalo News, Inc., Respondent.BriefN.Y.June 20, 2013Joseph M. Finnerty Partner 1100 M&T Center – 3 Fountain Plaza – Buffalo, New York 14203 hblaw.com jfinnerty@hblaw.com Direct: 716.566.1471 Fax: 716.846.1229 March 18, 2013 Andrew W. Klein Chief Clerk and Legal Counsel to the Court New York State Court of Appeals 20 Eagle Street Albany, New York 12207 Re: Christopher J. Alf v. The Buffalo News, Inc. Appellate Division Docket No. CA12-560 Supreme Court, Erie County, Index No. I-2008-11720 Dear Mr. Klein: We represent The Buffalo News, Inc. (“The News”) and submit this letter brief pursuant to Rule 500.11 and attach a corporate disclosure statement pursuant to Rules 500.1(f) and 500.11(d). This Court should affirm the November 16, 2012 Memorandum and Order of the Appellate Division, Fourth Department (the “Appellate Decision”). I. FACTUAL BACKGROUND1 AND DECISIONS BELOW This case involves Appellant’s challenge to thirty-six statements within six articles and one editorial (the “Reports” (R. 438-4712)), parts of a larger series of eighteen newspaper stories published by The News concerning the federal investigation of and criminal guilty plea by Appellant’s solely-owned and closely- held company, National Air Cargo (“NAC”), and other related official proceedings.3 The official proceedings and resulting Reports concerned allegations 1 The News’ Appellate Brief (see Counterstatement of Facts at pp. 6-22) and the supporting affidavits of attorney Joseph M. Finnerty (R. 97-170), reporter Dan Herbeck (R. 549-557) and editorial writer Kevin Walter (R. 558-561) in support of The News’ motion for summary judgment present the facts more completely. Pursuant to Rule 500.11(f), The News expressly reserves and incorporates by reference all arguments made in its Appellate Brief. 2 Parenthetical numeric references preceded by “R” are to the Appellate Division Record, which included the entirety of the parties’ submissions to the Trial Court on summary judgment. 3 The official proceedings included: (1) a criminal case against NAC filed October 25, 2007 (R. 173-174); (2) a civil forfeiture claim filed October 23, 2007 (R. 175-181) seeking the -2- that NAC overcharged the Department of Defense by millions of dollars for military air-freight forwarding services. The Plea Agreement and the October 25, 2007 Plea Proceeding At the October 25, 2007 Plea Proceeding (“Plea Proceeding”), NAC, on Appellant’s written authorization (R. 306-308), admitted its felony guilt under 18 U.S.C. § 1001(a)(2), a federal criminal statute, for “…knowingly and willfully …[making a] materially false, fictitious or fraudulent statement or representation …” when dealing with the U.S. Government. See Plea Agreement at ¶1 (R. 286); see also Plea Proceeding transcript at pp. 26-28 (R. 219-221). As Judge Skretny stated during the Plea Proceeding (witnessed by reporter Herbeck (R. 650)), this was a “serious matter,” involving “generally speaking, a charge that is punishable by imprisonment of more than one year.” See Plea Proceeding transcript at pp. 12, 30 (R. 205, 223). NAC’s guilty plea satisfied not only the negotiated single charged felony count but also was entered: … in satisfaction of (a) any and all federal offenses committed for the period of January 1999 to and including April 2005 by the defendant based on facts set forth in ¶4 of this agreement… (R. 287 at ¶2.) In the Plea Agreement, NAC admitted its conduct caused a $4.4 million loss to the government, entitling the government to an order of restitution in that amount. Plea Agreement at ¶¶1, 4(h), 7, 10, 12, 19 and 20 (R. 286-293). NAC also agreed to pay a criminal fine of $8.8 million (R. 293 at ¶20) and penalties and civil forfeitures (related to forfeiture and False Claims Act proceedings) in the amount of $14.8 million (R. 298 at ¶31 and R. 299 at ¶34). Thus, the total amount NAC paid to resolve the criminal prosecution, forfeiture and False Claims Act claims (including those against Mr. Alf individually) was $28 million. disgorgement of $7,429,000.00 alleged “to be the proceeds of specified unlawful activity, to wit, wire fraud, in violation of Title 18, United States Code, Section 1343” (R. 176); and (3) a civil qui tam proceeding against NAC and Appellant, alleging multiple violations of the Federal Civil False Claims Act, 31 U.S.C. §3729 et seq. (R. 182-193). The Plea Agreement (R. 286-308), dated and filed October 25, 2007, concerned not only the criminal case but also included a “Global Settlement” resolving the forfeiture and qui tam proceedings (R. 298-302). -3- The fact that NAC admitted its conduct cost the government millions of dollars is incontrovertible: in addition to the plain language of the Plea Agreement (“… the Court will enter a restitution order for the full amount of the victim’s loss, which is agreed to be $4,400,000” (R. 290 at ¶7)), the Assistant United States Attorney, Gretchen Wylegala, expressly stated and NAC’s “National Counsel,” F. Whitten Peters, expressly admitted during the Plea Proceeding that the monetary loss to the government resulting from NAC’s conduct ran into the millions: THE COURT: And that given that, the base fine would be $4,400,000, which I guess is described as the pecuniary gain to the organization from the offense. Ms. Wylegala, is there agreement on that? MS. WYLEGALA: Yes. Or loss to the Government, a loss to the victim. THE COURT: Or loss to the victim. MS. WYLEGALA: Yes. THE COURT: Mr. Peters? MR. PETERS: We agree that the 4.4 is the loss to the victim, Your Honor …. Plea Proceeding transcript at pp. 50-51 (R. 243-244) (emphasis added). Moreover, while it was acknowledged by the Court and NAC (and, indeed, repeatedly and accurately reported by The News (see, e.g. R. 35, 42, 48, 440, 446, 448, 451)) that the company’s formal guilty plea was to a “one-count information,” it was clear the government’s case against Appellant’s company involved multiple falsifications, proofs of delivery and other fraudulent behavior of NAC that spanned a period of years: MS. WYLEGALA: […] the investigation covered more than that one single charge and by agreement and after much consultation, the parties are agreed that the loss to the Government based upon similar and related conduct as is evidenced by what we are not going to prosecute further is the $4,400,000 lost to the United States Department of Defense. -4- Plea Proceeding transcript at pp. 46-47 (R. 239-240); see also Plea Proceeding transcript at p. 63 (R. 256) (Ms. Wylegala expressing in open court that the Plea Agreement encompassed “conduct between January of 1999 until April of 2005 and, additionally, any Federal criminal offenses that are based upon the documents that are in our possession”). Significantly4, the Plea Agreement also included a provision insulating Appellant and other NAC officers from prosecution and jail time: The government agrees that neither the defendant National Air Cargo, Inc., its affiliated companies, nor its present or former owners, directors, officers, or employees will be prosecuted by the office of the United States Attorney for the Western District of New York for (a) any the criminal offenses committed for the period between January 1999 to and including April 2005… . Plea Agreement at ¶29 (R. 297); see also Plea Proceeding transcript at p. 63 (R. 256). Absent from the Plea Agreement and the Plea Proceeding was an express or implied declaration of innocence or a denial of liability on the part of NAC or Mr. Alf. Nowhere in the Plea Agreement did it state, and at no time during the lengthy Plea Proceeding did NAC or its lawyers claim (as the Appellant later asserted in other post-plea contexts and now asserts on this appeal, see, e.g., Appellant’s letter brief at pp. 1, 8, 9), that NAC was the innocent victim of confusing or conflicting regulations, or that the settlement was a business decision made purely for economic reasons. To the contrary, by the express terms of the Plea Agreement and its open-court admissions, NAC expressly admitted that it perpetrated a fraud and that its conduct cost the government $4,400,000.00. See discussion, supra. Despite the above, Appellant says the scope of the admissions made by NAC in the Plea Agreement and during the Plea Proceeding was “narrow” (see, e.g., Appellant’s letter brief at pp. 2), limited to making a single false statement (id. at p. 4 This provision of the Plea Agreement is significant given the content of Appellant’s letter brief and the Amended Complaint: in his letter brief, Appellant repeatedly takes issue with The News’ reporting that neither Appellant nor any of NAC’s other officers would be prosecuted or face any jail time in connection with the company’s criminality (see, e.g., Appellant’s letter brief at pp. 2, 6, 10, 11, 13, 14); in the Amended Complaint, nine of the thirty-six statements (see Amended Complaint at ¶¶19.J., 19.S., 19.V., 19.W., 19.BB., 19.CC., 19.FF., 19.GG., 19.HH (R. 24-27)) focus on this accurately reported aspect of the plea deal. See also fn. 6, infra. -5- 3) involving only a “minor offense” (id. at p. 5). Accordingly, Appellant argues, The News’ reporting was not fair and true because it “far exceed[ed]” (id. at p. 5) or “wildly inflated” (id. at p. 6) the scope and import of the underlying judicial proceeding by inaccurately reporting that NAC and Appellant had admitted cheating the government out of millions of dollars over a period of years (id. at pp. 3, 4, 5, 6, 7). In this regard, Appellant’s letter brief conflates The News’ Reports concerning the acts of, allegations against, and admissions by NAC with those concerning himself, improperly and unjustifiable equating the two. This characterization of the Reports is unsustainable because, as the Appellate Division majority correctly observed, a plain reading of the articles clearly establishes that it was NAC that was reported to have been criminally charged and to have pleaded guilty, and not Appellant individually. See Appellate Division Memorandum and Order (“Appellate Decision”) at p. 2. This was clearly reported in the initial article: headline (“Orchard Park company admits cheating U.S. Military” (emphasis added)(R. 34, 440)); first paragraph (“A local air cargo company […] took a guilty plea in Buffalo’s federal court…” (emphasis added)(id.)); second paragraph (“Under the terms of its corporate plea deal…” (emphasis added)(id.)); eighth paragraph (“The company […] was investigated for more than two years by the Defense Department’s Criminal Investigative Service and the FBI…” (emphasis added)(id.)); ninth paragraph (“According to court papers, the company repeatedly overcharged the Defense Department for military shipments…” (emphasis added)(id.)); headline on ‘jump-page’ (“Company still has chance to withdraw its guilty plea” (R. 441)); eleventh paragraph (“If Skretny decides to fine the company more than the $28 million that was agreed upon, National Air Cargo can withdraw its guilty plea and insist on going to trial.” (emphasis added)(id.)); eighteenth paragraph (“But the company’s guilty plea came as no major surprise to James W. Moorman, president of Taxpayers Against Fraud…” (emphasis added)(id.)). -6- Moreover and indeed, The News expressly reported on multiple occasions that neither Appellant nor any other company officials would ever be criminally charged. See, e.g., R. 447 (“no charges were filed by the government against Alf or any other individual”); R. 448 (“Christopher J. Alf, by the numbers: $28 million – Fines and restitution National Air Cargo will pay; 0 – Charges against company employees”); R. 449 (“Nobody at National Air Cargo was charged; no one will go to jail”); R. 450 (“No individuals were charged, and the company was allowed to plead guilty as an entity”); R. 453 (“…neither Alf nor anyone at his company will be charged…”); R. 456 (“…no company officials – including Alf, the cargo company’s sole stockholder – will be charged as individuals…”). Thus, counsel’s claim that the Reports inaccurately reported to the public (or otherwise led readers to believe5) that both NAC and Appellant had been charged with, and admitted to, wrongdoing is unsupportable. 5 Appellant refers to on-line reader comments, none of which are at issue in this case, as indicators of how the reading public interpreted the articles. Appellant’s letter brief at p. 8. Appellant’s position is unavailing for two reasons. First, nowhere in the comments does any reader state that he or she believed Appellant had been charged with or admitted to criminal activity; to the contrary, the only thing demonstrated by the comments is that some readers (but certainly not all – see, e.g., comments of: “G.G.” (R. 65); “Janet Morris” (R. 65-66); “tom” (R. 66); “McBea” (R. 67); “Georgia from Lancaster” (R. 68, 70); Kathy (R. 68); “P.C.” (R. 69)) were of the non-actionable opinion that Appellant, as the owner and sole stockholder of a company that admitted both that it criminally defrauded the government and that its conduct caused the government $4.4 million in losses, should have been held accountable for the company’s misconduct. Second and in any event, it is well settled that it is the courts themselves that routinely determine the average reader’s likely interpretation of the publications at issue, see, e.g., Brian v. Richardson, 87 N.Y.2d 46 (1995) (Court determined that average reader would interpret statements at issue as opinion, not fact) and, indeed, that it is for the court to decide whether a publication is capable of the meaning ascribed to it, see, e.g., Tracy v. Newsday, Inc., 5 N.Y.2d 134, 136 (1959), citing Crane v. New York World Tel. Corp., 308 N.Y. 470, 479-480 (1955) and Julian v. American Business Consultants, 2 N.Y.2d 1, 14 (1956). In doing so, the publications “must be read as a whole,” and “the words and phrases must be construed together with their context.” Julian, 2 N.Y.2d at 14. This is precisely what the Appellate Division majority did in interpreting the Reports: “We agree with defendant that the articles, read as a whole, including all of the allegedly defamatory statements, would lead the average reader to conclude that NAC, not plaintiff himself, had cheated the government.” Appellate Decision at p. 2 (citations omitted) (emphasis added). (This is a question for the court, not a jury: the average reader’s interpretation only becomes a jury question when the issue is whether the words are susceptible of a defamatory meaning, for example, on a motion to dismiss predicated on the claim that the words are not defamatory. In that context – which is not presented in this case – the court first determines whether the words are capable the defamatory construction ascribed to it by the -7- Appellant’s mischaracterization of The News’ reporting is illustrated by his assertion to this Court that the newspaper falsely “reported that Mr. Alf was ‘involved in the fraud.’” Appellant’s letter brief at p. 5 (citing to R. 28). The News made no such report. The News accurately reported – consistent the terms of the Plea Agreement (see R. 297 at ¶29) – that “[u]nder the terms of the corporate plea deal, none of the officers involved in the fraud committed by National Air Cargo will go to jail.” (R. 40) (emphasis added). The Appellant misleadingly has taken language from an article that was not specific to him and made it appear that the report was about him personally when in fact this never appeared in the pages of the paper.6 Following the conclusion of the Plea Proceeding, the reporter contacted Mr. Alf’s office for comment. (R. 555 at fn. 2.) Appellant did not return the reporter’s call; instead, the reporter received a short, cryptic email statement from one of NAC’s Washington, D.C. attorneys. (Id; and see R. 531.) Nowhere in this plaintiff. If the court finds that they are not, it is the end of the inquiry. See, e.g., Ava v NYP Holdings, Inc., 64 A.D.3d 407 (1st Dep’t 2009); Nekos v. Krauss, 62 A.D.3d 1144, 1145 (3d Dep’t 2009) (statements in publication that “may, to some, suggest plaintiff’s guilt” were found to be non-actionable because “innuendo or adverse inferences are insufficient to establish libel.”) In this case, Appellant presented no evidence to substantiate his claims regarding the average reader’s interpretation of the Reports, nor is any such evidence necessary or even appropriate in this case as the Reports are clear and unambiguous on their face: the newspaper reported that only NAC had been charged with and pleaded guilty to a federal felony offense; it expressly reported that the Appellant had not been. 6 This is the height of irony. The News did not report Mr. Alf was “involved in the fraud,” but the Appellant is splicing language to make it appear the paper had. This irony is heightened by the fact, established in the Record, that during later proceedings to debar Mr. Alf personally from further business dealings with the government, the Air Force Office of the General Counsel expressly determined Mr. Alf was personally involved in and directed the fraud. (See, e.g., findings of Steven A. Shaw, Deputy General Counsel for the Department of the Air Force (R. 474-475 at ¶¶17-20; R. 476 at ¶¶28, 2; R. 477 at ¶¶7, 8; R. 496-497 at ¶¶12, 13; R. 498-499; R. 500 at ¶¶1, 3). See also Finnerty Affidavit at ¶¶205-207 (R. 167-168). Moreover, NAC itself – Mr. Alf’s own Company—signed an Agreement with the government in which it expressly endorsed these findings and thus formally acknowledged Mr. Alf’s personal involvement in the fraud. (R. 478-479 at ¶5). Additionally, Mr. Alf personally was accused of direct involvement in the fraud in the government’s False Claims Act Complaint against him. (R. 182-191.) (In a later court challenge, Mr. Shaw’s methodology of extrapolating incidents of fraud was successfully questioned. The court decision itself was withdrawn, however, and the parties settled; but the factual findings Mr. Shaw made never were successfully challenged or changed in any way.) (R. 164-169.) -8- statement (parts of which were quoted in the October 26, 2007 Article (see R. 441 and compare R. 531)) did NAC (or Appellant) deny any wrong-doing. (R. 531.) On the above, anyone attending the October 25, 2007 Plea Proceeding or reviewing the Plea Agreement would have heard or seen for themselves that: (a) while NAC was pleading guilty to a single felony count, the admitted losses to the government ran into the millions of dollars; (b) the official proceedings related to conduct spanning a period of years; (c) as part of the Plea Agreement, the government agreed to not prosecute Appellant or any other NAC officials for “criminal offenses” committed during this period; and (d) as part of the Plea Agreement, NAC agreed to pay $13.2 million in restitution and criminal fines, plus and additional $14.8 million to resolve the forfeiture and False Claims Act claims. This is exactly what The News reported on October 26, 2007 and subsequently. Indeed, a comparison between the challenged statements and the official-proceedings source material conclusively establishes the fairness and accuracy of The News’ reporting. See The News’ Appellate Brief at pp. 13-20; see also the “Schedule” annexed to The News’ Appellate Brief at S-1 through S-34.7 It was not until the eve of NAC’s sentencing in March 2008, months after The News’ initial (i.e., 2007) reports concerning NAC’s plea that Appellant (through his attorneys who provided written responses to The News’ inquiries (R. 532-541)) publicly began to suggest a different spin, articulating to The News the position that neither he nor NAC really did anything wrong. When this happened, The News fairly, promptly and prominently reported Appellant’s denial of wrongdoing and even included it in the sub-headline of the March 2, 2008 Article: “Orchard Park firm to pay $28 million in fines and restitution, as owner avoids jail time, insists he did nothing wrong.” (R. 448) (emphasis added). 7 When reviewing multiple statements that are alleged to be defamatory, it is appropriate for a reviewing court to individually and contextually analyze and dispose of each challenged statement. See, e.g., Church of Scientology International v. Time Warner, Inc., 806 F.Supp. 1157 (S.D.N.Y. 1992), 903 F.Supp. 637 (S.D.N.Y. 1995) and 932 F.Supp. 589 (S.D.N.Y. 1996), aff’d, 238 F.3d 168 (2d. Cir. 2001), cert. denied, 534 U.S. 814, 122 S. Ct. 40, 151 L. Ed. 2d 13 (2001); see also, e.g., Saleh v. New York Post, 78 A.D.3d 1149, 1152 (2d Dep’t 2010). To this end, included in support of The News’ motion for summary judgment was an exhaustively detailed analysis tying each challenged statement to its underlying source material from the official proceedings. See the Affidavit of Joseph M. Finnerty at ¶¶ 23-190 (R. 107-163) and its Exhibits 3-33 (R. 173-471). The “Schedule” annexed to The News’ Appellate Brief provides this information in chart form, correlating in a visually efficient way each challenged statement to its basis in the federal documents and transcripts. -9- The Trial Court Decision Having before it a complete record of the official proceedings source materials and the entirety of The News’ reporting, the Trial Court (Hon. Gerald J. Whalen, J.S.C., Erie Co.) correctly determined that The News’ Reports were protected by the absolute privilege afforded by § 74.8 (R. 12-16.) In doing so, the Trial Court made several findings. First, it stated that the Appellant had “concede[d] [he] was the founder, sole shareholder and former president and chief executive officer of NAC, acknowledge[d] that NAC is closely identified with [him] and that [his] personal identity and reputation were and are inextricably identified with NAC in the minds of the general public.” (R. 14.) Second, it properly determined that that in preparing the Reports, The News had relied on information sourced from the official proceedings including: the negotiated criminal information; the Plea Agreement; the transcript of the Plea Proceeding; the forfeiture and qui tam complaints; and the Justice Department’s official press release. (R. 15-16.) Third, while the Trial Court misread the Reports so as to conclude 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 years” 9 (R. 14) (emphasis 8 In addition to moving for summary judgment on the basis of § 74, The News argued that certain of the statements at issue were non-actionable because they were not “of and concerning” Mr. Alf. While the Trial Court did not reach this issue, The News preserved it and argued it on appeal. See The News’ Appellate Brief at pp. 49-51. The Reports also included an “Editorial” published on the “Opinion” page of the newspaper. Accordingly, The News argued both on summary judgment and appeal that certain of the complained-of statements were non-actionable under the privilege afforded to statements of opinion. See, e.g., The News’ Appellate Brief at pp. 65-70. Neither the Trial Court nor the Appellate Division reached this issue, but this Court may, and it should. 9 Justice Whalen’s misreading (which Appellant states is a finding of fact (see Appellant’s letter brief at p. 4)) is patent from the face of his Decision and Order: in each of the three exemplars offered by Justice Whalen to support his conclusion, only NAC (and not Appellant) is identified as having admitted to anything: In the October 26, 2007 article the News said that NAC admitted cheating the U.S. military out of millions of dollars by overcharging it from 1999 through 2005. In a subsequent article on October 27, 2007, the News states that under a plea deal, which spared Alf and others jail time, NAC admitted it cheated the -10- added), it nonetheless correctly held that, “[w]hen 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” (R. 16). This result – even if one were to accept the Trial Court’s misreading of the Reports – was entirely consistent with established § 74 jurisprudence including this Court’s decision in Holy Spirit Association for the Unification of World Christianity v. The New York Times Company, 49 N.Y.2d 63 (1979). In that case, the plaintiff claimed he was libeled by a series of New York Times articles stating he was connected to the Korean Central Intelligence Agency. The newspaper’s articles were based on three intelligence documents compiled and released by a Congressional investigative committee. 49 N.Y.2d at 65. While the disclosures in the documents were made by an allegedly unreliable informant and were labeled in the intelligence documents as “unevaluated,” the Times reported that the information had been “confirmed and elaborated on” and was otherwise legitimate. Id. at 67. This Court held that the articles were nonetheless privileged under § 74, stating that while they may have ascribed “a sense of legitimacy which, in Defense Department by overcharging for deliveries of military supplies within the continental U.S. Then in a November 1, 2007 article, the News said NAC admitted to overbilling the Defense Department by millions of dollars and will continue doing business for the federal government. Trial Court Decision and Order at p. 9 (R. 14) (emphasis added). This obvious flaw was, however, apparent to (and corrected by) the Appellate Division majority, who in contrast to the Trial Court concluded that “[w]e agree with defendant that the articles read as a whole, including all of the allegedly defamatory statements, would lead the average reader to conclude that NAC, not plaintiff himself, had cheated the government.” Appellate Decision at p. 2 (citations omitted, emphasis added) and see discussion, infra. This non-reviewable (see fn.11, infra) determination undermines Appellant’s claim that “[t]he Appellate Division majority affirmed the Supreme Court’s decision as ‘proper[],’ without modification of any of the lower court’s findings of substantial inaccuracies.” Appellant’s letter brief at p. 3. In this regard, it is appropriate also to note that nowhere in its 11-page Decision and Order did the Trial Court describe any of the Reports’ alleged inaccuracies as “substantial.” To the contrary, the language used by the Trial Court in describing the reporting (“the content of all of the aforementioned information [relied on by the reporter] in addition to Alf being the chairman and sole shareholder of NAC could fairly lead one to report this story as it was prepared by the News despite it being not technically accurate” (R. 16)(emphasis added)) leads to the conclusion that the Trial Court itself viewed the supposed inaccuracies as insubstantial, as opposed to “substantial.” -11- hindsight, could be characterized as imprudent given the unverified nature of the reports, this observation does not, in and of itself, render the newspaper articles unfair.” Holy Spirit Ass’n, 49 N.Y.2d at 68. In engaging in its § 74 review, the Trial Court – just at this Court had done in the Holy Spirit case – rejected Appellant’s hyper-technical attack on The News’ reporting, holding that when undertaking such a review, “newspaper accounts of legislative or other official proceedings must be afforded some degree of liberality … [w]hen determining whether an article constitutes a ‘fair and true’ report, the language used therein should not be dissected and analyzed with a lexicographer’s precision” (R. 15.) The Trial Court concluded that Mr. Alf’s arguments ultimately were “unpersuasive” and that, consistent with well-settled case law, “[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 federal sentencing, in order to submit an article for publication is unreasonable.” (Id.) Despite its misreading of the Reports, the Trial Court applied the appropriate analytical apparatus and reached the correct result, dismissing Appellant’s claims. On appeal, The News challenged the Trial Court’s ‘average reader’ determination, while defending the award of summary judgment. The Appellate Division Decision By Memorandum and Order entered November 16, 2012, the Appellate Division (Centra, J.P., Peradotto and Lindley, JJ.; Carni and Sconiers, JJ., dissenting in part) affirmed the Trial Court’s award of summary judgment to The News. See Appellate Decision at p. 1. While the Trial Court dismissed the case only on the § 74 aspect of The News’ motion, the Appellate Division dismissed the claims on two separate legal bases. First, the Court was unanimous in dismissing Appellant’s claims regarding all of the challenged statements that did not mention him by name.10 10 Contrary to Appellant’s suggestion that there existed a divide between the majority and the dissent on the issue (see Appellant’s letter brief at p. 10 (“The Appellate Division majority created a new bright line rule for “of and concerning”…) (emphasis added)), there was no disagreement among the Appellate justices that all of those challenged statements that were not “of and concerning” him should have been dismissed. See majority opinion, Appellate Decision at p.2 (“the statements referencing NAC only, and not plaintiff, were not ‘of and concerning’ -12- Second, consistent with the historically “liberal interpretation” and application of the statute as well as this Court’s decision in Holy Spirit, supra, the Appellate Division majority properly determined that in context all of the challenged statements were privileged pursuant to § 74. See generally Appellate Decision at pp. 1-2. In doing so, the majority rejected the Trial Court’s reading of the articles (discussed supra), finding instead that “We agree with defendant that the articles read as a whole, including all of the allegedly defamatory statements, would lead the average reader to conclude that NAC, not plaintiff himself, had cheated the government.” 11 Appellate Decision at p. 2 (emphasis added). plaintiff, and the amended complaint therefore was subject to dismissal to the extent that the allegedly defamatory statements did not name plaintiff, apart from the defense of absolute privilege under Civil Rights Law § 74”) and compare the partial dissent, Appellate Decision at p. 3 (“We conclude that the statements that were ‘of and concerning’ plaintiff were ‘reasonably susceptible of a defamatory connotation’ and that the defendant is not entitled to the protection afforded by Civil Rights Law § 74 for those statements. Thus we would modify the order by denying defendant’s motion to the extent that it concerns the statements pertaining specifically to plaintiff, and we would strike the affirmative defense of Civil Rights Law § 74 as to those statements.”) (citations omitted, emphasis added). 11 If, as Appellant claims, the Trial Court’s determination of the average reader’s interpretation is factual (Appellant’s letter brief at p. 4), then the Appellate Division’s determination of the average reader’s interpretation is factual, as well (and Appellant’s premise – that the Appellate Division majority’s decision was based on “the trial court’s unmodified findings of fact” (id.) – cannot withstand scrutiny). This is significant because it would mean that the Appellate Court’s determination in this regard is not reviewable by this Court. As observed in KARGER, Powers of the New York Court of Appeals § 13:8, at 474-475 (Rev. 3d Ed.): In view of the additional requirement that there shall have been a reversal or modification by the Appellate Division together with new findings of fact, there can be no review by the Court of Appeals of any questions of fact where the Appellate Division has affirmed the judgment or order appealed from. The rule is the same even though the Appellate Division may have substituted new findings of its own in place of those of the lower court but nevertheless affirmed that court’s judgment or order. (emphasis added). In this case, there was no reversal or modification of the Trial Court result by the Appellate Division. Rather, by the express terms of its Decision, the majority “affirmed” the Trial Court’s legal determination that § 74 bars the action. See Appellate Decision at p.1 -13- Dissenting in part, Justices Carni and Sconiers disagreed with the majority only concerning the application of the § 74 privilege as to those statements “specifically concerning plaintiff.” See generally Appellate Decision at pp. 3-4. II. ARGUMENT The News’ Position Regarding Rule 500.11 Review The primary issue on this appeal is whether the Appellate Division majority was correct in concluding that The News’ reporting was privileged under § 74. The parties fully briefed and argued this question before the lower courts; indeed, all of the authority cited and substantively discussed by Appellant in his letter brief concerning this issue was included in his briefs to the Fourth Department. Moreover, the lower courts’ determinations that The News’ reporting was well within the scope of the privilege afforded by § 74 are entirely consistent with established case law and solidly within the broad sphere of protection jurisprudentially established by this Court and others. See discussion, infra. In the circumstances (and assuming, without conceding, this case is one in which an appeal to this Court is proper12), The News does not object to Rule 500.11 review. 12 The jurisdiction of this Court is primarily limited to the review of questions of law. See CPLR ' 5501(b); New York Const., Art. VI, ' 3, subd. a. The Court’s review of questions of fact is limited to death penalty cases (id.), cases where the Appellate Division, in reversing or modifying a judgment or order, finds new facts on which it enters a final judgment or order (id.), and matters concerning the Commission on Judicial Conduct (Const. Art. VI, ' 22, subd. d). None of these is applicable in this case. See fn. 11, supra. Appeals are permitted as of right when two justices of the Appellate Division dissent on a question of law. See CPLR §5601(a). While the determination of the applicability of § 74 is a legal one, this does not mean there exists in every § 74 case the requisite ‘question of law’ to warrant this Court’s review. This is because a § 74 determination also may involve a dispute over the contextual analysis of what the reports said, and the connotative import of these statements and their effect on the average reader. This type of disagreement may be factual, not legal. The Appellant seems to be taking this position. See Appellant’s Preliminary Appeal Statement, Response Sheet addressing Item 12; Appellant’s letter brief at p. 4 (asserting the Trial Court’s determination in this regard is a finding of fact). In this case, if, as Appellant claims, this determination is one of fact, see fn. 11, supra, then the disagreement between the majority and the dissent was based not on the scope of § 74, but on their respective readings and interpretations of the Reports. This undermines the viability -14- The Trial Court and Appellate Division Majority were Correct in Awarding Summary Judgment to The News Appellant’s argument13 that The News’ Reports were not “fair and true” for purposes of § 74 because they falsely expanded the scope of the charges against and admissions by NAC and him (see e.g., Appellant’s letter brief at pp. 2, 3, 5, 6, 7; Appellant’s principal Appellate Brief at pp. 13-14; see also Amended Complaint at ¶ 10 (R. 20)), is factually infirm and legally unsustainable. Factually, Appellant mischaracterizes the record and Reports. See, e.g., fn.6 and related text, supra. As demonstrated above and in The News’ Appellate Brief, the newspaper accurately reported only that NAC – not Appellant – had been charged with and pleaded guilty to a single-count criminal information. Nowhere in any of the many newspaper reports did The News overstate the charges against NAC, nor did it ever report that Appellant had been criminally charged or that Appellant had pleaded guilty to any crime. To the contrary, The News expressly reported that Appellant was not criminally charged. See discussion, supra. of the appeal because the dissent must be on a question of law and not based on a differing view of the underlying facts. See, generally, KARGER, § 6:5 at pp. 203-207. Indeed, even if the appeal presents a mixture of fact and law, it would not be properly reviewable by this Court. See KARGER, § 6:5 at p. 207 (citing this Court’s decision in Gillies Agency, Inc. v. Filor, 32 N.Y.2d 759, 760 (1973)): There are occasions when it does not clearly appear whether a particular dissent is based on a question of fact or discretion or a mixed question of fact and law, which would not be reviewable by the Court of Appeals, or on a properly preserved question of law which would be reviewable by that Court. The rule in such a case is that “[w]here it is equivocal whether a dissent rests upon disagreement in fact or law, the dissent is not on a question of law within the meaning of CPLR 5601 (subd. [a]). (emphasis added); see also, e.g., People v. Thatch, 71 N.Y.2d 906 (1988). 13 Citing the decisions in Dibble v. WROC TV Channel 8, 142 A.D.2d 966 (4th Dep’t 1988), Daniel Goldreyer Ltd. v. Van De Wetering, 217 A.D.2d 434 (1st Dep’t 1995), Glendora v. Gannett Suburban Newspapers, 201 A.D.2d 620 (2d Dep’t 1994), Ocean State Seafood v. Capital Newspaper, 112 A.D.2d 662 (3d Dep’t 1985), Calvin Klein Trademark Trust v. Wachner, 129 F.Supp.2d 248 (S.D.N.Y. 2009), and Fraser v. Park Newspapers of St. Lawrence, Inc., 246 A.D.2d 894 (3d Dep’t 1998). See Appellant’s letter brief at pp. 4-9; see also Appellant’s principal Appellate Brief at pp. 5, 19-26, 43-46. -15- Accordingly, this most elemental basis of Appellant’s argument plainly lacks merit. When viewed in the context of the applicable case law, it is equally clear that the legal conclusions of the Trial Court and Appellate Division majority regarding the applicability of the § 74 privilege are well within the sphere of established jurisprudence. Holy Spirit Ass’n, 49 N.Y.2d 63, supra; Gurda v. Orange County Publications Div. of Ottaway Newspapers, Inc., 81 A.D.2d 120, 133 (2d Dep’t 1981) (Mollen, P.J. and Titone, J., concurring in part and dissenting in part), rev’d on concurring and dissenting opinion below, 56 N.Y.2d 705 (1982) (citations omitted).14 Like the defense of truth generally, all that is necessary for the § 74 privilege to attach is that the article be “substantially accurate.” Holy Spirit Ass’n, 49 N.Y.2d at 67. See also, McDonald v. East Hampton Star, supra, 10 A.D.3d 639, 640 (2d Dep’t 2004); Misek-Falkoff v. American Lawyer Media, Inc., 300 A.D.2d 215 (1st Dep’t 2002), leave to appeal denied, 100 N.Y.2d 508 (2003), reargument denied, 100 N.Y.2d 616 (2003), cert. denied, 541 U.S. 939, 124 S.Ct. 1693, 158 L.Ed.2d 360 (2004). As demonstrated above, in The News’ Appellate Brief (with Schedule), and by the evidence and arguments presented to the Trial Court, the Reports in this case are accurate in all substantive respects. Geiger v. Town of Greece and Gannett Company, Inc., et al., 2007 U.S. Dist. LEXIS 87466 (W.D.N.Y. 2007), reargument and reconsideration denied, 2007 U.S. Dist. LEXIS 87464 (W.D.N.Y. 2007), aff’d, 2009 U.S. App. LEXIS 3358 (2d Cir. 2009),15 is instructive. The plaintiff claimed the newspaper article 14 See The News’ Appellate Brief at pp. 26-28 for a fuller discussion of Gurda. In Gurda, the plaintiffs argued – just as Appellant in this case – that the newspaper’s report should have been beyond the scope of the § 74 privilege because it implied criminal wrongdoing where none had been found. While the Appellate Division majority did not go so far as to reject the privilege outright (holding instead that a jury should decide the issue, 81 A.D.2d at 126), it agreed with the plaintiffs that “the faults of the newspaper article in question were neither minor nor omissions” and that the “several prominently printed words and phrases [] might very well imply to layman readers that the Gurdas had committed a criminal offense.” Id. at 125-126. The minority soundly rejected this analysis and holding in their dissenting opinion, which this Court embraced in its entirety. See Gurda, supra, 56 N.Y.2d 705. In the present case, the roles of the appellate panel members are reversed: the majority (Justices Centra, Peradotto and Lindley) reflect the wisdom of the Gurda minority ultimately adopted by this Court; while the minority (Justices Carni and Sconiers) echo the ultimately rejected thinking of the Gurda majority. 15 See The News’ Appellate Brief at pp. 30-33 for a fuller discussion of Geiger. -16- did not fairly and truly report what happened (2007 U.S. Dist. LEXIS 87466 at *12; 2007 U.S. Dist. LEXIS 87464 at *7), that the paper’s statements “impute more serious conduct than that which was stated in the press release,” that the wrongdoing described in the settlement agreement was merely an “allegation,” and that he had not admitted any wrongdoing (2007 U.S. Dist. LEXIS 87466 at *17). Mr. Geiger also argued that he “simply made an economic decision that it was better to settle than pay attorney fees and get involved in probably protracted litigation.” 2007 U.S. Dist. LEXIS 87466 at fn.4. (Compare with Appellant’s position in this case: he claims there was no gross misconduct, but rather a single minor offense by a low-level employee; the bulk of the allegations against NAC were just that: mere allegations; neither he nor NAC ever admitted to any pattern of wrongdoing, nor was any ever proven; and the decision to settle the case was made purely for economic reasons. Appellant’s letter brief at pp. 5, 6, 7, 8 and 9.) The newspaper moved to dismiss pursuant to § 74, arguing its article substantially mirrored the settlement agreement and the Attorney General’s press release. The Court agreed, dismissing the case prior to discovery. 2007 U.S. Dist. LEXIS 87466 at *16-19. In doing so, the Court rejected the plaintiff’s after-the- fact revisionism (i.e., that there was no admission of guilt and the settlement was made purely for economic reasons), noting, among other things, that the settlement neither expressed Mr. Geiger’s profession of innocence nor included a non- admission of liability. (Compare again with the present matter: the Plea Agreement is equally devoid of exculpatory or non-admission language; rather, it expressly admits felonious conduct (R. 286); during the Plea Proceeding NAC expressly admitted it had committed a crime (R. 221), its conduct cost the government millions (R. 243-244), and it did not profess a reservation of innocence or non-liability.) The same result should apply in the present case. See also cases discussed in The News’ Appellate Brief at pp. 28-36. Case law has established “a liberal interpretation of the ‘fair and true report’ standard of Civil Rights Law § 74 so as to provide broad protection to news accounts of judicial or other official proceedings,” and that imprecision or omission does not vitiate the privilege when the overall context of the reporting as a whole substantially comports with the gist of the official proceedings. Becher v. Troy Publ. Co., Inc.,183 A.D.2d. 230, 234 (3d Dep’t 1992); accord, Cholowsky v. Civiletti, 69 A.D.3d 110, 114 (2d Dep’t 2009); Holy Spirit Ass’n, supra, 49 N.Y.2d at 68; Tenney v. Press-Republican, 75 A.D.3d 868 (3d Dep’t 2010); Millennium of Rochester, Inc. v. Town of Webster, 305 A.D.2d 1014 (4th Dep’t 2003); Freeze Right Refrigeration & Air Conditioning Serv., Inc. v. City of New York, 101 -17- A.D.2d 175, 183 (1st Dep’t 1984); and see cases discussed in The News’ Appellate Brief at pp. 36-40.. Even publications containing express errors have been found to be within the scope of the privilege. See, e.g., Posner v. New York Law Publ. Co., 228 A.D.2d 318 (1st Dep’t 1996) (inaccuracies in article did not take it outside the scope of § 74); Grab v. Poughkeepsie Newspapers, Inc., 91 Misc.2d 1003 (Sup. Ct. Duchess Co. 1977) (newspaper entitled to summary judgment under § 74 despite error in article reporting that plaintiff had been convicted of bank robbery and sentenced to prison when in fact he had pleaded guilty, was sentenced as a youthful offender and did not serve his sentence in prison); Komarov v. Advance Magazine Publishers, Inc., 180 Misc.2d 658, 661 (Sup. Ct. New York Co. 1999) (holding that “none of [the] departures from the exact language used by the FBI in its report and affidavit serve to remove the magazine article from the protection of Civil Rights Law § 74.”) The Courts’ decisions in Fraser v. Park Newspapers, 246 A.D.2d 894 (3d Dep’t 1998) and Dibble v. WROC TV Channel 8, 142 A.D.2d 966 (4th Dep’t 1988), the two primary cases relied on by Appellant (see Appellant’s letter brief at pp. 6-9), are inapposite to the instant case and distinguishable from the line of authority set forth above. In Fraser, the newspaper’s very brief, single article expressly reported both in text and in its headline that plaintiff had pleaded guilty to a charge of public lewdness when in fact he had been granted an ACOD (acquittal in contemplation of dismissal). Mr. Fraser had not pleaded guilty to anything; indeed, he entered no plea at all and never signed a plea of guilty to his criminal charge, and the ACOD contemplated there would never be a conviction. In this case, by contrast, The News did not report that Mr. Alf had ever been charged with, let alone pleaded guilty to, anything; rather, the paper accurately reported that NAC was charged with and pleaded guilty to a single federal felony charge and that neither Appellant nor any other company officials would be charged. See discussion, supra. Similarly, in Dibble, the television station, in an extremely abbreviated report broadcast during the evening news telecast, erroneously reported that the plaintiff, an attorney, had been “indicted on charges of fraud, embezzlement and securities violations” and was “accused of misuse of clients’ escrow accounts and stock fraud.” In fact, Mr. Dibble had only been charged with one count of larceny. 142 A.D.2d at 966. On these facts, the courts found the broadcast was not a substantially accurate report of the charges and granted the plaintiff’s motion to -18- preclude the statutory privilege defense. 142 A.D.2d at 967-968. In this case, by contrast, not only did the The News not over-report the charges against NAC, it also expressly reported that Appellant was not, and would never be, charged with anything. See discussion, supra. A further and crucially important point of distinction between this case, on the one hand, and Fraser and Dibble, on the other, arises from the “critical role of context”16 with regard to reading the statements at issue. Both Fraser and Dibble involved gross errors in extremely brief reports; there simply was no factual “context” or larger contextual framework provided for the reader (or, in the case of Dibble, the viewer) to turn to correct or clarify any factual misimpression created by the errors within the reports.17 As the Court stated in Fraser: “[g]iven the brevity of the relevant portion of the subject article, the misrepresentation at issue, which was repeated in the article’s prominent headline, cannot be considered such a trivial defect” for purposes of the § 74 analysis.” 246 A.D.2d at 896. The News’ reporting in this case, by contrast, was extensive and detailed, accurately reporting (repeatedly) that it was NAC that had been charged and pleaded guilty. At no time did The News report – either in text or in headline – that Appellant had pleaded guilty; to the contrary, the paper prominently reported Appellant’s insistence that he did nothing wrong. (R. 448.) In other words, none of the factors which in Fraser warranted the denial of summary judgment are present in the instant case. Appellant argues that the Appellate Division majority’s finding that “one statement…directly asserted that plaintiff cheated the government” should have been sufficient take the reports at issue outside the scope of the privilege, and that its refusal to do so (instead reading the Reports as a whole) was improper. See Appellant’s letter brief at pp. 3-4. While the majority did not specify which of the thirty-six statements it was referring to, discussion during oral argument suggests the following: “The couple also maintains that it stopped cheating the government in 2005.” Amended Complaint at ¶19.L (R. 25). When read in its immediate context, however, it is respectfully submitted that this reading of the statement (i.e., that the statement directly asserted that plaintiff admitted personally cheating the government) is 16 Appellant’s letter brief at p. 11. 17 It is also noted that in Fraser, the focus of the Court’s attention was not § 74, but defendant’s “primary argument” that the article should not be actionable because the defamatory gist or “sting” of the article resulted not from the error in the report, but instead from the undisputed facts underlying the plaintiff’s arrest. 246 A.D.2d at 895-896. -19- questionable because the “it” in the statement is more logically not a reference to Mr. Alf personally but, rather, to NAC. This is demonstrated from the context of the statement within the report itself, which is as follows: “National Air Cargo says it supplies 75 percent of the commercial air cargo service used by the military in Iraq and Afghanistan, and the company insists that none of its criminal wrong- doing took place in the Middle East. The couple also maintains that it stopped cheating the government in 2005.” (R. 442.) From this context and the detailed reporting in the previous day’s story on the Plea Proceeding, the referent in the statement is NAC.18 Moreover, even if one were to both read the “couple” statement as Appellant does and conclude that the statement was erroneous, the majority’s opinion in this regard does not in any way create a “new rule” (see Appellant’s letter brief at p. 4); rather, it is perfectly consistent with established jurisprudence regarding the importance of context. As the Court held in Becher, supra:19 The presence of such a misstatement in an article does not necessarily mean, however, that there is a triable issue of fact as to whether the article was false and unfair. The article as a whole may nevertheless be substantially accurate so as to qualify as a fair and true report. […] At most, therefore, the misstatements may have created some ambiguity in the mind of a reader, which would have been satisfactorily resolved for purposes of Civil Rights Law § 74 upon 18 I.e., “the couple also maintains that [the company] stopped cheating… .” Indeed, if the statement were referring to the two separate individuals named elsewhere in the article (as opposed to the company), it would have been more appropriate to write, for example, “The couple also maintains that they stopped cheating the government in 2005.” Regardless and in any event, when read in the larger contexts of its paragraph and of the reporting as a whole, it is clear (as the Appellate Division majority found) that NAC was charged with and admitted to cheating the government. See discussion supra; see also Finnerty Affidavit at ¶107 (R. 135) and see Schedule annexed to The News’ Appellate Brief at S-11,12 (noting the Finnerty Affidavit paragraph referenced therein should be ¶107). But it is clear, see above, that The News’ reportage specified NAC as having pleaded guilty, repeatedly indicating that individuals within the company were not charged. Indeed, its Editorial emphasized this point by questioning the propriety of not holding individuals in any way responsible for the company’s wrongdoing. And the newspaper included Appellant’s belated protestations of having done “nothing wrong” in its articles, and it even headlined them. See, e.g., R. 448. 19 See The News’ Appellate Brief at pp. 28-30 for a fuller discussion of Becher. -20- reading the full article where the charges against each named defendant, including plaintiff, were accurately treated in detail. 183 A.D.2d at 236-237, 589 N.Y.S.2d at 648. See also, e.g., Ford v. Levinson, 90 A.D.2d 464, 465 (1st Dep’t 1982). Indeed, in its majority decision the Appellate Division considered this specific statement and concluded that, in context of the entirety of the paper’s coverage, its effect did not vitiate the privileged accuracy of the reporting: We agree with defendant that the articles read as a whole, including all of the allegedly defamatory statements, would lead the average reader to conclude that NAC, not plaintiff himself, had cheated the government. Appellate Decision at p. 2 (citations omitted). This analysis and conclusion are consistent with this state’s § 74 jurisprudence.20 20 Equally distinguishable is the line of authority presented by Appellant in citing to Calvin Klein Trademark Trust v. Wachner, 129 F.Supp.2d 248 (S.D.N.Y. 2009), Daniel Goldreyer Ltd. v. Van De Wetering, 217 A.D.2d 434 (1st Dep’t 1995), and Ocean State Seafood v. Capital Newspaper, 112 A.D.2d 662 (3d Dep’t 1985) for the propositions that a report cannot be “substantially accurate” for § 74 if it would have a different effect on the mind of the recipient than the actual truth (Appellant’s letter brief at p.4, citing Goldreyer), or if the statements, when considered in their context, “suggest[] more serious conduct than that actually suggested in the official proceeding” (Appellant’s letter brief at pp. 5-6). The Reports in this case present no such ‘over-reporting’ infirmities; rather, as the Trial Court and Appellate Division correctly found, they accurately presented a detailed portrayal of the official proceedings at issue. In Calvin Klein the District Court found that the comments (concerning allegations of fraud and “counterfeiting”) went “well beyond anything reasonably suggested by the allegations of the Complaint, which relate to contractual breaches, trademark violations, and unauthorized distribution practices.” 128 F.Supp.2d at 253. This case, by contrast, presents no such infirmities because The News simply did not misreport any of the allegations of criminal proceedings. See discussion, supra. To the extent that The News editorialized and reported the comments of corporate fraud experts questioning why company officials were not called to account for NAC’s misconduct, this is not only fair comment and protected opinion (see discussion, infra) but is also consistent with the official proceedings, which were not limited solely to the criminal proceeding against NAC, but included settlement of False Claims Act claims against Appellant individually. And see fn. 6, supra. Goldreyer presents a similar case of exaggerated over-reporting: several defendants reported on an official proceeding concerning plaintiff’s restoration of a Barnett Newman painting. The report of the official proceeding, which was “couched in highly technical language -21- The Appellate Court was Correct in its “Of and Concerning” Determination Of the thirty-six challenged statements in the case, four are headlines, but none use Appellant’s name: October 26, 2007 headline “Orchard Park company admits cheating U.S. military” (Amended Complaint at ¶ 19A, R. 24.); November 8, 2007 Editorial headline “Taxpayers are cheated” (Amended Complaint ¶ 19T, R. 25.); March 2, 2008 headline “Orchard Park firm to pay $28 million in fines and restitution, as owner avoids jail time, insists he did nothing wrong” (Amended Complaint ¶ 19BB, R. 26); and March 3, 2008 headline “‘Dream team’ wins no- jail plea deal” (Amended Complaint ¶ 19GG, R. 27). As The News argued in the courts below, a headline that does not name the plaintiff as a matter of law is not separately actionable. See The News’ Appellate Brief at pp. 49-51, citing and discussing White v. Berkshire-Hathaway, Inc., 10 Misc.3d 254, 802 N.Y.S.2d 910 (Sup.Ct., Erie Co., 2005); Chaiken v. VV Publishing Corp., 907 F.Supp. 689 (S.D.N.Y. 1995), aff’d, 119 F.3d 1018 (2d Cir. 1997), cert. denied, 522 U.S. 1149, 118 S.Ct. 1169, 140 L.Ed.2d 179 (1998); and dispassionately notes differences in chemical composition between the original paints used and those used by plaintiffs in the restoration,” was reported by Time as follows: “[a]fter microscopic tests on 30 samples of Newman’s work, the lab concluded that Goldreyer had not matched the original oils” and “[i]nstead, the lab reported, the restorer had used alkyd, a synthetic paint commonly used on window frames.” 217 A.D.2d at 435. This reporting was held to be privileged under § 74. Id. at 435-436. The reporting by The Wall Street Journal, however, was not. Going well beyond anything suggested in the official proceeding, The Journal reported the restoration as using “house paint” and “roller brushes.” Id. at 436. In Ocean State, the newspaper reported that numerous guests who had eaten clams sourced from plaintiffs’ business had become ill. 112 A.D.2d at 663. Describing the story as one of “greed and sickness on the half shell,” the newspaper, without attribution, reported that the clams had come from a number of “contaminated bushels,” many of which were “still at large” and were sufficient “to contaminate a medium-sized crowd.” Id. The story concluded by reporting that plaintiffs were fined $ 25 as a “civil compromise.” What the newspaper failed to report, however, was that the $25 fine was wholly unrelated to the issue of the contaminated clams; rather, it related solely to a past violation of labeling requirements. Id. at 666. On summary judgment the primary issue before the Court was not whether the published article was privileged under § 74, but whether it was susceptible of a defamatory meaning and/or was otherwise non-actionable as opinion. 112 A.D.2d at 663-664. The Court rejected the defendants’ arguments in this regard. With regard to the § 74 defense (which was limited to the reporting on the $25 fine), the Court held that the newspaper’s failure to report that the fine was unrelated to the contamination issue took it outside the scope of the privilege. In this case, The News accurately reported not only the exact scope of the monetary penalties imposed, but their basis as well. -22- Trudeau v. Plattsburgh Pub. Co., 11 A.D.2d 852, 202 N.Y.S.2d 412 (3d Dep’t 1960); Mattingly v. News Syndicate Co., 192 Misc. 610, 81 N.Y.S.2d 30 (Sup. Ct. New York Co. 1948), aff’d, 277 A.D. 842, 97 N.Y.S.2d 914 (1st Dep’t 1950). Accordingly, the Appellate Division’s unanimous determination to dismiss these statements as a matter of law was entirely correct. With regard to the thirty-two remaining statements, Appellant’s arguments concerning the propriety of the Appellate Court’s unanimous determination of the “of and concerning” issue are equally infirm. Appellant argues that whether a statement is “of and concerning” a particular plaintiff is a question of fact for the jury. This broad, sweeping statement is unsustainable in light of the decisions in Carlucci v. Poughkeepsie Newspapers, Inc., 57 N.Y.2d 883 (1982) and Springer v. Viking Press, 60 N.Y.2d 916 (1983), cases in which this Court determined as a matter of law that the report (Carlucci) or statements (Springer) were not of and concerning the respective plaintiffs. Certainly, and as evidenced by the authority cited in Appellant’s letter brief at pp. 11-12, there may be cases in which it may be appropriate to allow the “of and concerning” issue to proceed to a jury, cases involving, for example, ambiguous reports or group libel. This, however, is not such a case because many of the statements at issue in this case expressly referred only to NAC (which is not a party to the action), thereby clearly distinguishing the actions and admissions of NAC from those of Appellant and removing any ambiguities.21 21 Only six statements expressly referred to Appellant by name (see Amended Complaint at ¶ 19.J., 19.CC., 19.DD., 19.EE., 19.FF., 19.HH.). None of these statements, however, serves to establish a valid claim against The News in any event: 19.J., CC., FF and HH each state that neither Appellant nor any other company officials would see any jail time as a result of the company’s misdeeds; this is absolutely true and is privileged under § 74 because the Plea Agreement expressly included a provision that no company officials would be prosecuted (see discussion, supra); and 19.DD. and EE. refer to Appellant having made “a fortune” or been “made wealthy” by the war in Iraq; these statements are, by very their nature, non-actionable opinion (see discussion, infra) and, in any event, have not been proven false. Indeed, Appellant has not even tried to challenge their truthfulness in this Record. The News recognizes that other statements in the Reports generically refer to NAC’s “officers” (19.S.), its “leaders” (19.V., 19.AA.), its employees (19.W.) or its “owner” (19.BB.). Even assuming for the sake of argument that these statements are “of and concerning” Appellant, -23- In the final analysis, the Appellate Division was correct in unanimously determining that the statements not of and concerning Appellant were separately dismissible on this basis. The News’ Reports are also Protected by the “Opinion” Privilege Certain of the statements (see Amended Complaint at ¶¶ 19. U., V., X., Y., Z., AA., DD., and EE) within The News’ reporting are also protected by the opinion privilege. See The News’ Appellate Brief, Point IV at pp. 65-70. Although not reached by the lower courts, this Court may properly address this issue. See, e.g., Mann v. Abel, 10 N.Y.3d 271, 856 N.Y.S. 2d 31 (2008), cert. denied, 555 U.S. 1170, 129 S. Ct. 1315, 173 L. Ed. 2d 584 (2009) (opinion privilege argued by defendants but not addressed by lower courts; Court of Appeals held that defamatory statements were non-actionable opinion and complaint should have been dismissed on that basis). In this case, the Editorial appeared on The Buffalo News’ editorial page, under the banner headline “Opinion” and the subhead “EDITORIALS” (R. 445), a contextual placement that creates a strong presumption that material it contained is opinion, as opposed to fact. See Brian, supra, 87 N.Y.2d at 53; accord, Cancer Action N.Y. v. St. Lawrence County Newspapers Corp, 12 A.D.3d 880, 881 (3d Dep’t 2004); Pinero v. N.Y.P. Holdings, Inc., 17 Misc. 3d 1102A (Sup. Ct. New York Co. 2007). It expressly referenced and included true and accurate facts, previously reported in the Reports and restated in the Editorial for the purpose of demonstrating a basis for the opinions asserted and questions raised. Its content, context and tone -- which questioned why, given the deplorable conduct of NAC and the federal government’s investigation and prosecution, no Company officials they likewise do not serve to establish a claim: 19.S., 19.V., 19.W. and 19.BB each state that neither Appellant nor any other company officials would see any jail time as a result of the company’s misdeeds; as set forth above this is absolutely true and is privileged under § 74 because the Plea Agreement expressly included a provision that no company officials would be prosecuted (see discussion, supra); 19.AA. stated in an Editorial that the leaders of NAC “didn’t measure up” and had “failed America and America’s taxpayers;” these statements are, by very their nature, non-actionable opinion (see discussion, infra). -24- faced any jail time in a case described by federal prosecutors as involving “the largest criminal recovery, in terms of dollars, in the history of Western New York” -- provided clear indication that it represented the newspaper’s opinion. See Walter Affidavit at ¶ 19 (R. 561); Finnerty Affidavit at ¶¶ 163-189 (R. 154-163). Its concluding paragraphs expressed the newspaper’s disappointment in the conduct of the Company and its operators, conduct characterized in precisely the types of terminology courts routinely have protected as inherently subjective and non-actionable statements of opinion. See, e.g., Hollander v. Cayton, 145 A.D.2d 605, 606 (2d Dep’t 1988) (describing physician as “immoral” and “unethical”); Balderman v. American Broadcasting Companies, Inc., supra, 292 A.D.2d at 72 (stating doctor “wasn’t representing where he had finished” and was “not being upfront” with patients with regard to a surgical scorecard published by the New York State Department of Health); Jessel Rothman v. Sternberg, supra, 207 A.D.2d at 439 (accusing attorney of “unethical business practices”); Pinero v. N.Y.P. Holdings, Inc., supra, (Op-Ed piece questioning how plaintiff and an associate “got away scot free for their involvement in the tax scandal, yet others were ferociously prosecuted for their involvement”); Polish American Immigration Relief Committee, Inc., v. Relax, 189 A.D.2d 370 (1st Dep’t 1993) (asserting immigrant relief organization was a “madhouse” made up of “false do-gooders” and “thieves who should have been put to prison long ago”). Accordingly, the Editorial is absolutely privileged opinion. CONCLUSION This Court should affirm the award of summary judgment to The News on the grounds that the statements are privileged pursuant to § 74, are not “of and concerning” Appellant, or are protected by the opinion privilege. Respectfully submitted, HISCOCK & BARCLAY, LLP By: s/Joseph M. Finnerty Joseph M. Finnerty Karim A. Abdulla, Esq. 1100 M&T Center Three Fountain Plaza Buffalo, New York 14203 Telephone: (716) 566-1471 Attorneys for The Buffalo News, Inc. -25- TO: John J. Walsh, Esq. Michael Plumb, Esq. CARTER, LEDYARD & MILBURN, LLP 2 Wall Street New York, NY 10005 Richard T. Sullivan, Esq. HARRIS BEACH PLLC 726 Exchange Street, Suite 1000 Buffalo, NY 14210 Attorneys for Appellant 6882017.2 Corporate Disclosure Statement Pursuant to the Disclosure Statement provision set forth in Rule 500.1(f) of the Rules of Practice for the Court of Appeals, this Disclosure Statement is made on behalf of Defendant-Respondent The Buffalo News, Inc. The Buffalo News, Inc., a Delaware corporation licensed to do business in New York, is a wholly-owned subsidiary of Berkshire Hathaway Inc., a publicly- traded corporation whose shares are traded on the New York Stock Exchange and whose business is investment. The Buffalo News, Inc. owns no other entities and has no subsidiaries. A schedule of the operating companies of Berkshire Hathaway Inc., derived from its 2011 Annual Report, is attached. BERKSHIRE HATHAWAY INC. OPERATING COMPANIES INSURANCE BUSINESSES Company Employees Company Employees Berkshire Hathaway Homestate Companies . . . . 594 General Re . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,317 Berkshire Hathaway Reinsurance Group . . . . . . . 685 Kansas Bankers Surety . . . . . . . . . . . . . . . . . . . . 14 Boat America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 372 Medical Protective . . . . . . . . . . . . . . . . . . . . . . . . 538 Central States Indemnity . . . . . . . . . . . . . . . . . . . . 269 National Indemnity Primary Group . . . . . . . . . 398 GEICO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,140 United States Liability Insurance Group . . . . . 591 Insurance total . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,918 NON-INSURANCE BUSINESSES Company Employees Company Employees Acme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,096 Kern River Gas (2) . . . . . . . . . . . . . . . . . . . . . . . . . 149 Adalet (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 Kirby (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499 Altaquip (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 Larson-Juhl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,576 Applied Underwriters . . . . . . . . . . . . . . . . . . . . . . . . 439 Lubrizol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,115 Ben Bridge Jeweler . . . . . . . . . . . . . . . . . . . . . . . . . . 769 The Marmon Group (4) . . . . . . . . . . . . . . . . . . . . . 16,278 Benjamin Moore . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,280 McLane Company . . . . . . . . . . . . . . . . . . . . . . . . . 15,340 Borsheims Jewelry . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 MidAmerican Energy (2) . . . . . . . . . . . . . . . . . . . 3,481 Brooks Sports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346 MidAmerican Renewables (2) . . . . . . . . . . . . . . . . 273 BNSF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,000 MidAmerican Energy Holdings (2) . . . . . . . . . . . 27 The Buffalo News . . . . . . . . . . . . . . . . . . . . . . . . . . . . 672 MiTek Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,064 Business Wire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499 Nebraska Furniture Mart . . . . . . . . . . . . . . . . . . . 2,581 CalEnergy Philippines (2) . . . . . . . . . . . . . . . . . . . . . 62 NetJets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,098 Campbell Hausfeld (1) . . . . . . . . . . . . . . . . . . . . . . . . 419 Northern Natural Gas (2) . . . . . . . . . . . . . . . . . . . 847 Carefree of Colorado (1) . . . . . . . . . . . . . . . . . . . . . . 207 Northern Powergrid Holdings (2) . . . . . . . . . . . . . 2,324 Clayton Homes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,973 Omaha World-Herald . . . . . . . . . . . . . . . . . . . . . 1,660 Cleveland Wood Products (1) . . . . . . . . . . . . . . . . . . 52 PacifiCorp (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,113 CORT Business Services . . . . . . . . . . . . . . . . . . . . . . 2,113 Pacific Power (2) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,175 CTB International . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,408 The Pampered Chef . . . . . . . . . . . . . . . . . . . . . . . . 715 Dairy Queen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459 Precision Steel Warehouse . . . . . . . . . . . . . . . . . . 169 Douglas/Quikut (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Richline Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,808 Fechheimer Brothers . . . . . . . . . . . . . . . . . . . . . . . . . 568 Rocky Mountain Power (2) . . . . . . . . . . . . . . . . . . 2,121 FlightSafety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,877 Russell (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,060 Forest River . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,985 Other Scott Fetzer Companies (1) . . . . . . . . . . . . 163 France (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 See’s Candies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 Fruit of the Loom (3) . . . . . . . . . . . . . . . . . . . . . . . . . 27,633 Shaw Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,650 Garan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,389 Stahl (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 H. H. Brown Shoe Group . . . . . . . . . . . . . . . . . . . . . 1,335 Star Furniture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 Halex (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 TTI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,374 Helzberg Diamonds . . . . . . . . . . . . . . . . . . . . . . . . . . 2,283 United Consumer Financial Services (1) . . . . . . . 196 HomeServices of America (2) . . . . . . . . . . . . . . . . . . 2,178 Vanity Fair Brands (3) . . . . . . . . . . . . . . . . . . . . . . 2,284 Iscar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,067 Wayne Water Systems (1) . . . . . . . . . . . . . . . . . . . 188 Johns Manville . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,532 Western Enterprises (1) . . . . . . . . . . . . . . . . . . . . . 280 Jordan’s Furniture . . . . . . . . . . . . . . . . . . . . . . . . . . 952 R. C. Willey Home Furnishings . . . . . . . . . . . . . . 2,338 Justin Brands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 939 World Book (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 XTRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443 Non-insurance total . . . . . . . . . . . . . . . . . . . . . . . . 238,916 Corporate Office . . . . . . . . . . . . . . . . . . . . . . . . . . 24 270,858 (1) A Scott Fetzer Company (2) A MidAmerican Energy Holdings Company (3) A Fruit of the Loom, Inc. Company (4) Approximately 140 manufacturing and service businesses that operate within 11 business sectors.