McFarlane v. Sheridan Square Press, Inc.

• Decision Date: 16 August 1996
• Docket Number: No. 95-7201,95-7201
• Citation: 91 F.3d 1501
• Parties: , 24 Media L. Rep. 2249 Robert C. McFARLANE, Appellant, v. SHERIDAN SQUARE PRESS, INC., Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1501

91 F.3d 1501

320 U.S.App.D.C. 40, 24 Media L. Rep. 2249

Robert C. McFARLANE, Appellant, v. SHERIDAN SQUARE PRESS, INC., Appellee.

No. 95-7201.

United States Court of Appeals, District of Columbia Circuit.

Argued April 18, 1996.

Decided Aug. 16, 1996.

Appeal from the United States District Court for the District of Columbia (No. 93cv01304).

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

Melvin L. Wulf, argued the cause, for appellee, with whom Daniel M. Kummer, New York City, was on the brief.

Before: WILLIAMS, GINSBURG, and ROGERS, Circuit Judges.

Opinion for the Court filed by Circuit Judge GINSBURG.

GINSBURG, Circuit Judge:

In September 1992 Sheridan Square Press published Ari Ben-Menashe's Profits of War, a book concerning the involvement of the United States and of Israel in the international trade in arms. In the part here relevant, the book sets out Ben-Menashe's controversial allegations of an "October Surprise"--a Byzantine conspiracy involving candidate George Bush, high-ranking Republicans working on the 1980 Reagan-Bush campaign, and officials of the Government of Iran. The purpose of the alleged conspiracy was, on the Republican side, to delay until after the U.S. election the release of the American hostages held in Iran, thereby increasing the probability that Ronald Reagan would defeat then-President Jimmy Carter. In exchange, the Iranians would receive cash, promises of future arms sales, and the release of Iranian funds that had been frozen in U.S. banks. Included in Ben-Menashe's account of this elaborate conspiracy is the allegation that former National Security Adviser Robert C. McFarlane not only played an important role in the October Surprise negotiations but was an Israeli spy to boot.

Four months after the book was published, the entire October Surprise story was thoroughly discredited in the Joint Report of the Task Force to Investigate Certain Allegations Concerning the Holding of American Hostages by Iran in 1980, H.R. REP. NO . 1102, 102d Cong., 2d Sess. (1993). When Sheridan Square failed to publish a retraction based upon the conclusions of the Task Force, McFarlane filed this defamation suit against both Ben-Menashe and Sheridan Square. The district court granted summary judgment in favor of Sheridan Square on the ground that McFarlane could not show that the defendant published the book with actual malice. We affirm the decision of the district court.

I. Background

Sheridan Square received the manuscript for Profits of War in January 1992. William H. Schaap, who is in effect the co-chief operating officer of Sheridan Square, assumed responsibility for the project. By his own account, Schaap "personally took part in every stage of the publication of Profits of War from its very inception, including the decision to publish the 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 October Surprise negotiations: he appears at four critical meetings with Iranian officials--in Tehran, Madrid, Washington, and Paris, all in 1980--that supposedly led to an agreement to delay the release of the hostages. PW at 53-55, 59-60, 71-72, 73-76. According to Ben-Menashe's account, McFarlane had a "special relationship" with Rafi Eitan, id. at 105, 169, an Israeli intelligence officer who had allegedly built a network of spies in the United States, id. at 313. McFarlane is described as "an Israeli mole," id. at 176, who provided Eitan with intelligence about U.S. activities in and negotiations with Iran, id. at 55, 69, 174-75. The book also identifies McFarlane as the senior U.S. official--the notorious "Mr. X"--who "had been providing computer access codes of intelligence reports" to Israeli intelligence, thereby facilitating Jonathan Pollard's espionage activities. Id. at 174. According to Ben-Menashe, McFarlane "came under FBI counterintelligence investigation in early 1991 regarding his relationship with Rafi Eitan and Israeli intelligence and his involvement in the Pollard case," but "the results of that investigation have never been made public." Id. at 345. Finally, the 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." Id. at 194.

Schaap acknowledges being aware from the outset that Ben-Menashe was a controversial figure: "At every stage of the publication of the book ... I was alert to the question of the credibility of Ari Ben-Menashe ... because I had learned he was a controversial figure, and that there were different opinions about his credibility." When Schaap was reviewing the manuscript, there were in circulation a number of articles casting doubt upon Ben-Menashe's credibility. McFarlane contends that Schaap must have had at least a passing familiarity with the widespread skepticism about the author. See, e.g., Tim Weiner, Deathly Arsenal: How Israel Built the Bomb, PHILADELPHIA INQUIRER, Nov. 10, 1991, at H1 (book review) (Ben-Menashe's "reputation among most reporters is, to put it politely, not of the highest order"); Who Did It?, PHOENIX GAZETTE, July 27, 1991, at A10 (Ben-Menashe referred to as "a proven fraud and imposter").

Although Ben-Menashe had been the subject of much criticism when Schaap was considering the manuscript of Profits of War, his claims had nonetheless attracted a great deal of attention, both from the media and from government investigators. Ben-Menashe had been the source for information explored in several television programs shown as part of PBS's Frontline series. In 1991 Gary Sick, a member of the National Security Council staff under President Carter, published a book entitled October Surprise: America's Hostages in Iran and the Election of Ronald Reagan, which set out at length the alleged Republican-Iranian conspiracy and relies to a large extent upon Ben-Menashe as a source of information. During that same year Pulitzer prize-winning journalist Seymour Hersh published The Samson Option which--again relying in large part upon Ben-Menashe--purports to describe Israel's nuclear capabilities and to implicate the late publisher Robert Maxwell as an Israeli spy. The allegations about McFarlane that appear in Profits of War were also repeated in a 1991 article written by Craig Unger for Esquire Magazine; that article too, relies extensively upon Ben-Menashe. See McFarlane v. Esquire Magazine, 74 F.3d 1296 (D.C.Cir.1996). In a later article, which Schaap says he read before the book was published, Unger claimed to have corroborated many of Ben-Menashe's October Surprise allegations; he also confirmed that Ben-Menashe worked for Israeli intelligence, quoting a high-ranking Israeli military intelligence officer as saying, "Ben-Menashe served directly under me. He worked for the Foreign Flow desk in External Relations. He had access to very, very, sensitive material." Craig Unger, The Trouble with Ari, VILLAGE VOICE, July 7, 1992, at 33, 35. Moreover, the Congress took an interest in Ben-Menashe's stories; the Senate Foreign Relations Committee held hearings on the October Surprise allegations, and the House of Representatives convened the aforementioned Task Force to investigate the charges. Ben-Menashe testified before both bodies under oath.

In an affidavit submitted to the district court in support of Sheridan Square's motion for summary judgment, Schaap swears that to ensure that the book was "factually accurate and safe from a libel point of view," he "went to great lengths to look into Mr. Ben-Menashe's reputation and to verify his manuscript as well as [he] could," devoting in excess of 100 hours to the task. Schaap's research included efforts to confirm some of the specific allegations in the book (those about 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; and discussing Ben-Menashe and his credibility with a number of these journalists. Schaap's research was limited for the most part to secondary sources, though he did telephone a former Iranian Defense Minister and confirm that he knew Ben-Menashe--who claimed the man was one of his contacts for arms sales and the exchange of intelligence. Following Ben-Menashe's acquittal in a criminal prosecution for illegal arms dealing, Schaap obtained the trial transcript, a series of documents confirming Ben-Menashe's association with Israeli military intelligence, and copies of Ben-Menashe's civilian passports for 1985 to 1989, which showed that Ben-Menashe had traveled frequently to many of the locations involved in the October Surprise allegations. (Schaap did not, however, have access to Ben-Menashe's passport for 1980, which might have cast doubt upon his claim to have been in Paris during the alleged 1980 meeting there.) Schaap also served as Ben-Menashe's attorney at the closed hearings of the House Task Force and of the Senate Foreign Relations Committee in June and August 1992. In that capacity, Schaap contends, he was able to observe Ben-Menashe's demeanor and to hear Ben-Menashe repeat, under oath, the allegations about McFarlane that were in the manuscript of his book.

Based upon his observations and his research, Schaap concluded that Ben-Menashe's story was credible, and he proceeded to publish even those allegations that he could not verify. He declares, "I did verify so many of the controversial passages and so many of Ben-Menashe's factual assertions, and was so assured by the large number of journalists I had consulted that they had found Ben-Menashe's information credible, I felt confident about leaving in the book material that...