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United States Court of Appeals for the DISTRICT of COLUMBIA <<The pagination in this PDF may not match the actual pagination in the printed slip opinion>> USCA Case #95-7201 Document #217899 Filed: 08/16/1996 Page 1 of 21 UnitedÿStatesÿCourtÿofÿAppeals FORÿTHEÿDISTRICTÿOFÿCOLUMBIAÿCIRCUIT ArguedÿAprilÿ18,ÿ1996ÿÿÿÿÿÿDecidedÿAugustÿ16,ÿ1996 No.ÿ95-7201 ROBERTÿC. MCFARLANE, APPELLANT v. SHERIDANÿSQUAREÿPRESS, INC., APPELLEE AppealÿfromÿtheÿUnitedÿStatesÿDistrictÿCourt forÿtheÿDistrictÿofÿColumbia (No.ÿ93cv01304) ForrestÿA.ÿHainline,ÿIII arguedÿtheÿcauseÿandÿfiledÿtheÿbriefsÿforÿappellant. MelvinÿL.ÿWulf arguedÿtheÿcauseÿforÿappellee,ÿwithÿwhomÿDanielÿM.ÿKummer wasÿonÿtheÿbrief. Before:ÿÿWILLIAMS,ÿGINSBURG,ÿandÿROGERS,ÿCircuitÿJudges. OpinionÿforÿtheÿCourtÿfiledÿbyÿCircuitÿJudgeÿGINSBURG. GINSBURG, Circuit Judge: InÿSeptemberÿ1992ÿSheridanÿSquareÿPressÿpublishedÿAriÿBen- Menashe's Profits ofÿWar, aÿbookÿconcerningÿtheÿinvolvementÿofÿtheÿUnitedÿStates and of Israel in the international trade in arms. Inÿt heÿpartÿhereÿrel evant,ÿtheÿbookÿsetsÿoutÿBen-Menashe's controversial allegationsÿofÿanÿ"OctoberÿSurprise"aÿByzantineÿconspiracyÿinvolvingÿcandidate George Bush, high-ranking Republicans working on the 1980 Reagan-Bush campaign, and officials of the Government of Iran.ÿÿTheÿpurposeÿofÿtheÿallegedÿconspiracyÿwas,ÿonÿtheÿRepublicanÿside,ÿto delay until after the U.S. election the release ofthe American hostages held in Iran, thereby increasing the probability thatÿRonaldÿReaganÿwouldÿdefeatÿthen-PresidentÿJimmyÿCarter.ÿÿInÿexchange,ÿthe Iranians would receive cash, promises of future arms sales, and the release of Iranian funds that had been frozen in U.S. banks. IncludedÿinÿBen-Menashe'sÿaccountÿofÿthisÿelaborateÿconspiracyÿisÿthe allegation that former National Security Adviser Robert C. McFarlane not only played an important roleÿinÿtheÿOctoberÿSurpriseÿnegotiationsÿbutÿwasÿanÿIsraeliÿspyÿtoÿboot. <<The pagination in this PDF may not match the actual pagination in the printed slip opinion>> USCA Case #95-7201 Document #217899 Filed: 08/16/1996 Page 2 of 21 Four months after the book was published, the entire October Surprise story was thoroughly discredited in the Joint Reportÿof theÿTaskÿForce to Investigate Certain Allegations Concerning the Holding of AmericanÿHostagesÿby Iran in 1980, H.R. REP. NO. 1102, 102d Cong., 2d Sess. (1993). WhenÿSheridanÿSquareÿfailedÿtoÿpublishÿa retraction based upon the conclusions of the TaskÿForce, McFarlane filed this defamation suit against bothÿBen-MenasheÿandÿSheridan Square. Theÿdistrict courtÿgrantedÿsummary judgment in favorÿofÿSheridanÿSquareÿonÿtheÿgroundÿthatÿMcFarlaneÿcould not show that the defendant published the book with actual malice. Weÿaffirmÿtheÿdecisionÿofÿthe districtÿcourt. I.ÿBackground Sheridan Square received the manuscript for Profits of War inÿJanuary 1992.ÿÿWilliamÿH. Schaap, who is in effect the co-chief operating officer of Sheridan Square, assumed responsibility for theÿproject.ÿ By his own account, Schaapÿ"personallyÿtookÿpartÿinÿeveryÿstageÿofÿtheÿpublicationÿof Profits of War from its very inception, including the decision to publishÿthe book, working with the author, seeing the book through the editorial process, and seeing the book through its publication and distribution." McFarlane figures prominently in Ben-Menashe's account of the alleged OctoberÿSurprise negotiations: heÿappearsÿatÿfourÿcriticalÿmeetingsÿwithÿIranianÿofficialsinÿTehran,ÿMadrid, Washington, and Paris, all in 1980that supposedly led to an agreement to delay the release of the hostages. ÿPW at 53-55, 59-60, 71-72, 73-76. AccordingÿtoÿBen-Menashe'sÿaccount,ÿMcFarlaneÿhad a "special relationship" with Rafi Eitan, id. at 105, 169, an Israeli intelligence officerÿwhoÿhad allegedly built a network of spies in the United States, id. atÿ313.ÿÿMcFarlaneÿisÿdescribedÿasÿ"an Israelimole," id. at 176, who provided Eitan with intelligence about U.S. activities in and negotiations with Iran, id. at 55, 69, 174-75. TheÿbookÿalsoÿidentifiesÿMcFarlaneÿasÿtheÿseniorÿU.S.ÿofficialthe notorious "Mr. X"who "had been providing computer access codes of intelligence reports" to Israeli intelligence, thereby facilitating Jonathan Pollard's espionage activities. ÿId. at 174. According to Ben-Menashe, McFarlaneÿ"cameÿunderÿFBIÿcounterintelligenceÿinvestigationÿinÿearlyÿ1991 regardingÿhisÿrelationship with RafiÿEitanÿandÿIsraeliÿintelligenceÿandÿhisÿinvolvementÿinÿtheÿPollard <<The pagination in this PDF may not match the actual pagination in the printed slip opinion>> USCA Case #95-7201 Document #217899 Filed: 08/16/1996 Page 3 of 21 case," but "the results of thatÿinvestigation have never been made public." ÿId. at 345. Finally,ÿthe author suggests that McFarlane's suicide attempt during the 1987 congressional hearings on the Iran- Contra affair was brought on by McFarlane's fear that "his role with the Israelis would surface." ÿId. atÿ194. Schaap acknowledges being awareÿfrom theÿoutsetÿthatÿBen-Menasheÿwasÿaÿcontroversial figure: "Atÿeveryÿstageÿofÿtheÿpublicationÿofÿtheÿbookÿ...ÿIÿwasÿalertÿtoÿtheÿquestionÿofÿtheÿcredibility ofÿAriÿBen-Menasheÿ...ÿbecauseÿIÿhadÿlearnedÿheÿwasÿaÿcontroversialÿfigure,ÿandÿthatÿthereÿwere different opinions about his credibility." WhenÿSchaapÿwasÿreviewingÿtheÿmanuscript,ÿthereÿwereÿin circulation a number of articles casting doubt upon Ben-Menashe's credibility. McFarlaneÿcontends that Schaap must have had at least a passing familiarity with the widespread skepticismÿaboutÿthe author. See,ÿe.g., Tim Weiner, DeathlyÿArsenal:ÿÿHow IsraelÿBuiltÿtheÿBomb, PHILADELPHIA INQUIRER, Nov. 10,ÿ1991,ÿatÿH1ÿ(bookÿreview)ÿ(Ben-Menashe's "reputation among most reporters is,ÿtoÿputÿitÿpolitely,ÿnotÿofÿtheÿhighestÿorder");ÿÿWhoÿDid It?, PHOENIXÿGAZETTE,ÿJulyÿ27,ÿ1991,ÿat A10ÿ(Ben-Menasheÿreferredÿtoÿasÿ"aÿprovenÿfraudÿandÿimposter"). Although Ben-Menashe had been the subject ofmuch criticism when Schaap was considering the manuscript of Profits of War, his claims had nonetheless attracted a great deal of attention, both fromÿtheÿmedi aÿandÿfromÿgovernmentÿinvestigators.ÿÿBen-Menasheÿhadÿbeenÿtheÿsourceÿfor information explored in several television programs shown as part of PBS's Frontline series. Inÿ1991 Gary Sick, a member of the National Security Council staff under President Carter, published a book entitledÿOctoberÿSurprise: America'sÿHostagesÿinÿIranÿandÿtheÿElectionÿofÿRonaldÿReagan, which set out at length the alleged Republican-Iranian conspiracy and relies to a large extent upon Ben- Menashe as a source ofinformation. DuringÿthatÿsameÿyearÿPulitzerÿprize-winningÿjournalistÿSeymour Hersh published The Samson Option whichagain relying in large partÿupon Ben- Menashepurports to describe Israel's nuclear capabilities and to implicate the late publisher Robert Maxwell as an Israeli spy. TheÿallegationsÿaboutÿMcFarlaneÿthatÿappearÿinÿProfits of War were also repeatedÿinÿaÿ1991ÿarti cleÿwrittenÿbyÿCraigÿUngerÿforÿEsquireÿMagazine;ÿÿthatÿarticle,ÿtoo,ÿrelies extensively upon Ben-Menashe. ÿSeeÿMcFarlaneÿv.ÿEsquireÿMagazine, 74 F.3d 1296 (D.C. Cir. <<The pagination in this PDF may not match the actual pagination in the printed slip opinion>> USCA Case #95-7201 Document #217899 Filed: 08/16/1996 Page 4 of 21 1996).ÿÿInÿaÿlaterÿarticle,ÿwhichÿSchaap says he read before theÿbookÿwasÿpublished,ÿUngerÿclaimed to have corroborated many of Ben-Menashe'sÿOctoberÿSurpriseÿallegations; heÿalsoÿconfirmedÿthat Ben- Menashe worked for Israeli intelligence, quotingÿaÿhi gh-rankingÿIsraeliÿmilitaryÿintelligence officer as saying, "Ben-Menashe served directly under me. HeÿworkedÿforÿtheÿForeignÿFlowÿdeskÿin External Relations. Heÿhadÿaccessÿtoÿvery,ÿvery,ÿsensitiveÿmaterial."ÿÿCraigÿUnger,ÿThe Trouble with Ari, VILLAGE VOICE, July 7,ÿ1992,ÿatÿ33,ÿ35.ÿÿMoreover,ÿtheÿCongressÿtookÿanÿi nterestÿinÿBen- Menashe'sÿstories; theÿSenateÿForeignÿRelationsÿCommitteeÿheldÿhearingsÿonÿtheÿOctoberÿSurprise allegations, and the House ofRepresentatives convened the aforementioned Task Force to investigate theÿcharges.ÿÿBen-Menasheÿtestifiedÿbeforeÿbothÿbodiesÿunderÿoath. In an affidavitÿsubmittedÿtoÿtheÿdistrictÿcourtÿinÿsupportÿofÿSheridanÿSquare'sÿmotionÿfor summary judgment, Schaap swears that to ensure that the book was "factually accurate and safe from aÿlibelÿpoint of view," he "went to great lengths to look into Mr. Ben-Menashe's reputationÿandÿto verify his manuscript as well as [he] could," devoting in excess of 100 hoursÿtoÿtheÿtask.ÿÿSchaap's research included efforts to confirm some of the specificÿal legationsÿinÿtheÿbookÿ(thoseÿabout McFarlane not among them) through books and articles on the subject and discussions with experts; reading articles by reputable journalists who had relied upon and to some degree verified Ben- Menashe's knowledgeability; andÿdiscussingÿBen-Menasheÿandÿhisÿcredibilityÿwithÿaÿnumberÿofÿthese journalists. Schaap'sÿresearchÿwasÿlimitedÿforÿtheÿmostÿpartÿtoÿsecondaryÿsources,ÿthoughÿheÿdid telephone a former Iranian Defense Minister and confirm that he knew Ben-Menashewho claimed the man was one of his contacts for arms salesÿandÿtheÿexchangeÿofÿintelligence.ÿÿFollowingÿBen- Menashe's acquittalÿinÿaÿcriminalÿprosecutionÿforÿillegalÿarmsÿdealing,ÿSchaapÿobtainedÿtheÿtrial transcript, a series of documents confirming Ben-Menashe's associationÿwithÿIsrael iÿmilit ary intelligence, and copies of Ben-Menashe's civilian passportsÿforÿ1985ÿtoÿ1989,ÿwhichÿshowedÿthat Ben-Menashe had traveled frequently to many of the locationsÿinvolvedÿinÿtheÿOctoberÿSurprise allegations. (Schaapÿdidÿnot,ÿhowever,ÿhaveÿaccessÿtoÿBen-Menashe'sÿpassportÿforÿ1980,ÿwhichÿmight
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