Schiavone Construction Co. and Ronald A. Schiavone,individually, Appellants in 86-5839, v. Time, Inc., Appellants in 86-5920, 847 F.2d 1069 (3d Cir. 1988)

This is an appeal from the grant of summary judgment for defendant Time, Inc. in a highly publicized defamation case arising out of media coverage of an investigation of former United States Secretary of Labor Raymond Donovan. Plaintiffs, Ronald Schiavone (Schiavone) and Schiavone Construction Company (SCC), in which Schiavone owned a controlling interest and Donovan formerly owned a minority interest, brought a libel suit against Time on account of an article in Time magazine. The challenged portion of the article was based on a confidential memorandum of former FBI chief William Webster. Relying on the memorandum, the article asserted that "the name of Schiavone appeared several times in the bureau's reports on the 1975 disappearance of former Teamster Boss Jimmy Hoffa." In reporting on this confidential memo, the article did not, however, include the important statement that appeared in the memo that "none of these [appearances in the Hoffa execution files] suggested any criminality, or organized crime associations." Immediately following its report of the Webster memorandum, the article stated: "That detail would surely have intrigued both the Senate committee that approved Donovan's nomination in February 1981, and the special prosecutor this year."

Time asserts that the article focused on the Donovan investigation and that any incidental references to the plaintiffs merely recounted the plaintiffs' Mafia associations, which had been publicized countless times before. Plaintiffs, however, contend that the article does much more--that it purports to tie them to the notorious disappearance and suspected murder of Jimmy Hoffa. We consider in this opinion six interesting legal issues, at least two of which depend in some measure on whether the "sting" of the article concerns Mafia associations or innuendos of involvement with Jimmy Hoffa's disappearance. Several of these issues emerge from the murky ground where state (New Jersey) tort law ends and first amendment protection of the press begins. The "unhappy cohabitation" of the two competing values requires us to balance society's desire to protect an individual's good name and its interest in promoting the rights of a vigorous press. Sisler v. Gannett Co., 104 N.J. 256, 516 A.2d 1083, 1086 (1986).

First, we consider the district court's holding that Schiavone and SCC are public figures. We conclude that even if plaintiffs did not intend to achieve limited purpose public figure status by their activities, they nevertheless did so by thrusting themselves into the forefront of the debate about Secretary of Labor Donovan. As a consequence of their status as public figures, they must, according to New York Times v. Sullivan, 376 U.S. 254, 84 S. Ct. 710, 11 L. Ed. 2d 686 (1964), prove with convincing clarity that Time acted with " 'actual malice'--that is, with knowledge that it was false or with reckless disregard of whether it was false or not." Id. at 280, 84 S. Ct. at 726.

Second, we consider the district court's summary judgment that plaintiffs are libel proof as a matter of law which resulted in the dismissal of the entire case against Time. Although we intimate no general view as to the viability of the libel proof plaintiff doctrine, we hold that under the facts of this case, depending on how a jury determines the sting of Time's article, the plaintiffs may indeed be able to secure compensatory damages and hence could not be libel proof as a matter of law. We expressly decline to consider the related question of plaintiffs' ability to secure punitive damages in the absence of compensatory damages, given the uncertainty that the jury will even have to reach this issue.

Third, we discuss the question whether the Time article is defamatory as a matter of law. We will reverse the district court's partial summary judgment in favor of Schiavone on this issue. We believe that the assertion that the name of Schiavone appeared in the HOFFEX file is capable of non-defamatory as well as defamatory meaning and hence must go to the jury.

Fourth, after noting that plaintiff, as a matter of constitutional law, must prove the article's falsity, we address the question whether Schiavone deserves summary judgment on the question of the falsity of the article. We note that the determination of falsity depends in large part on the "sting" of the article, which, as we mentioned above, is a question for the jury. We nevertheless address the district court's determination that the name of Schiavone simply does not appear in the FBI files concerning Jimmy Hoffa's disappearance, and its grant of partial summary judgment for Schiavone on this issue. Although plaintiffs have presented affidavits from FBI agents who searched the files and found no reference to Schiavone, we nonetheless believe that the question is unripe for summary judgment at this juncture. We find persuasive Time's arguments concerning logistical problems in demonstrating that plaintiffs' names appear in the files to which Time has no access. We instruct the district court to allow Time the discovery it requested and then consider any motions for summary judgment on this specific issue.

Fifth, after explaining our grave doubts that New Jersey would apply its fair report privilege to an unauthorized leak of an internal FBI memorandum, and our observation that under New Jersey tort law the fair report privilege may be entirely subsumed by the malice inquiry, we ultimately conclude that, under the facts of this case, Time's report of the Webster memorandum was so inherently unfair that it has forfeited the privilege as a matter of law. We therefore affirm the grant of partial summary judgment for Schiavone on this issue.

Finally, we consider whether, under the facts, including the intentional deletion of exculpatory material from the Webster memorandum, the question of malice should go to the jury. Applying Anderson v. Liberty Lobby, 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986), we affirm the district court's denial of Time's motion for summary judgment on the question of malice. We hold that a reasonable jury could find by clear and convincing evidence that Time acted with New York Times actual malice.

We therefore affirm in part, reverse in part, and remand for proceedings consistent with this opinion.

The following facts, except where noted, are undisputed.¹  On August 23, 1982, Time Magazine published an article about the reopening of Special Prosecutor Leon Silverman's investigation of Secretary of Labor Donovan. Donovan had been vice-president and a 38% shareholder of SCC. Donovan's association with Ronald Schiavone and with SCC formed the basis of many allegations of Donovan's connections with organized crime.

pThe article read in full:

JURY STILL OUT

Donovan probe is reopened

Only seven weeks ago, when Special Prosecutor Leon Silverman released a 1,025-page report stating that there was "insufficient credible evidence" to prosecute the Labor Secretary, Raymond Donovan quickly declared that his troubles were over. Not quite. Silverman has reopened his investigation, and Time has learned that he will present fresh allegations about Donovan's conduct to grand juries in New York and elsewhere.

Phase II of the inquiry centers on the charge that Donovan, then part owner of New Jersey's Schiavone Construction Co., met near Miami in January 1979 with two known mobsters: William Masselli, a member of the Genovese Mafia family and head of an excavation firm that did business with Schiavone; and Albert ("Chink") Facchiano, a convicted loan shark and former capo (captain) in the Genovese clan. The purpose of the Miami get-together was reportedly to set up no-show jobs for Genovese Mob members on Schiavone construction sites. Although Donovan refused to comment on the new inquiry, he has repeatedly denied meeting with any mobsters. He contends he had run into Masselli only about three times, always at job sites, and says he does not know Facchiano at all.

In the first probe, Silverman received so many reports about Donovan's alleged conferences with mobsters in Miami that Facchiano, one of several gangsters mentioned in the allegations, escaped any questioning. Almost all the others had denied knowing the Labor Secretary, and Silverman says that summoning Facchiano then seemed pointless. But Facchiano, who is serving time in an Alabama prison for loan sharking, will now be called to testify. Silverman will also attempt to interrogate two men closely connected with Masselli who were not questioned during the first probe: Joseph Verlezza, an associate of Genovese gangsters, and Alfred Ditraglia, who watches over Masselli's interests in the Miami area, including an oceanfront condominium. During the initial inquiry, Verlezza claimed he was too ill to testify; Ditraglia could not be found by Silverman's staff.

The FBI faces some tough questioning of its own. The Senate Labor Committee is investigating the bureau's handling of Donovan's confirmation probe 18 months ago. The personal files of FBI Director William Webster, forwarded to the committee last month, reveal that the name of Schiavone appeared several times in the bureau's reports on the 1975 disappearance of former Teamster Boss Jimmy Hoffa. That detail would surely have intrigued both the Senate committee that approved Donovan's nomination in February 1981, and the special prosecutor this year. But neither learned about it until last month.

(emphasis added).

Sandy Smith, author of the article and a veteran reporter for Time, based the last paragraph of the article on confidential information he received from three separate sources at the FBI. The sources informed him of a confidential memorandum by FBI Director Webster concerning the FBI's investigation of Donovan. Although Smith never actually saw a transcript of the Webster memorandum, he wrote it down word for word as it was read to him over the phone by a source within the FBI. As the following excerpt from the Webster memorandum demonstrates, Smith omitted from his article certain exculpatory language that appeared in the Webster memorandum itself. In discussing his inquiry into "Pat Donovan," Webster noted in the memorandum:

I checked with Mr. Revell and based on information which he supplied, as well as my recollection of the conversation with Mr. Mullen ... that we had reviewed all our indices and had checked with all field offices and nothing negative had been disclosed [about Donovan]. I advised that a company, Chivone [sic] (PH), in which he apparently had a very substantial interest, had appeared a number of times in reports in our HOFEX [sic: HOFFEX (Hoffa execution) ] case, but that none of these suggested any criminality or organized crime associations.

619 F. Supp. at 687 (emphasis added) (ellipses added).

Smith, at a deposition, admitted that he knew that the exculpatory language appeared in the Webster memorandum, but testified that he consciously chose to omit it from the article because he did not believe the disclaimer. Time focuses considerable attention on Smith's reasons for omitting the material. Smith cited confidential information that "totally contradicted" the other assertions in Webster's memorandum and hence discredited, in Smith's mind, Webster's exculpatory remarks. 619 F. Supp. at 688 (quoting from Smith's deposition). Smith knew, and presented evidence of his knowledge, that Schiavone and SCC had been linked to organized crime in other FBI files, but that those appearances had been originally withheld from the Senate Committee investigating Donovan. Because the Webster memorandum was incorrect about the fact that nothing negative appeared about plaintiffs in the other FBI files, and because Smith knew from other sources that all field offices had not been checked, Smith doubted the veracity of Webster's other conclusions, including the exculpatory explanation of Schiavone's appearance in the HOFFEX files. In addition, Smith testified that he omitted the exculpatory phrase because he did not find it central to the thrust of the article and because it was ambiguous. Id. at 691.

Smith's three attempts to corroborate the existence of Schiavone's and SCC's names in the HOFFEX files independently were unsuccessful; all three confidential sources explained that such references were "missing," that "they could not be found," and that "nobody could find [them]." 619 F. Supp. at 689 (quoting from Smith's deposition).

Before publishing the article, Smith met with Special Prosecutor Leon Silverman, who had investigated charges against Donovan, to inform him that the name of Schiavone appeared in the HOFFEX files. Id. Silverman looked into the matter and on August 12, 1982, eleven days before the article was published, Silverman met with Smith to tell him that Schiavone and SCC in fact were not mentioned in the HOFFEX files. There is much dispute as to what Silverman said to Smith. The Assistant Special Counsel, Gregory N. Joseph, who also attended the meeting, claims that Silverman clearly informed Smith that the reference to Schiavone and SCC simply did not exist. Smith claims that Silverman informed him that "the Director [Webster] was in error," and that Smith understood the error to be the exculpatory language and not the existence of the reference itself. 619 F. Supp. at 690 (quoting from Smith's deposition).

Two days before the article was published, Mr. Mullen, executive assistant director of the FBI, who is mentioned by name in the FBI director's memorandum, testified before the committee concerning the appearance of the name of Schiavone in the HOFFEX file. Although Mullen testified that he knew no details concerning the appearance of Schiavone in the file, did not know who informed the director, and had not checked any references himself, he nevertheless lent credence to the existence of the memorandum. Furthermore, five weeks after the Time article appeared, FBI director Webster insisted that his own agents had supplied him with the information, saying "I know what they told me and now they can't find it. It's one of those things." 619 F. Supp. at 692.

Schiavone and SCC brought this libel action against Time in the district court for the District of New Jersey, on the basis of the last paragraph of Time's article. Time moved to dismiss, Fed. R. Civ. P. 12(b) (6), on the grounds that Time's article was protected by a fair report privilege. The district court granted the motion. Schiavone Constr. Co. v. Time, Inc., 569 F. Supp. 614 (D.N.J. 1983) (Schiavone I) . This court reversed, holding that the complaint raised a factual question as to the fairness of the report that precluded granting such a motion. We remanded for development of a factual record. Schiavone Constr. Co. v. Time, Inc., 735 F.2d 94 (3d Cir. 1984). The district judge recused himself and the case was reassigned to Judge H. Lee Sarokin.

On October 1, 1985 Judge Sarokin issued the first of two opinions on the matter. In the first opinion, which we will call Schiavone II, he made five rulings relevant to this appeal. First, Judge Sarokin ruled that Schiavone and SCC were public figures. Second, he granted partial summary judgment for Schiavone because he concluded that, as a matter of law, Time could not assert a fair report privilege under New Jersey common law. Third, Judge Sarokin granted partial summary judgment for Schiavone on the question whether Time could assert a truth defense: he held, also as a matter of law, that since the references to Schiavone in the HOFFEX files never existed, Time could not assert such a defense. Fourth, Judge Sarokin granted partial summary judgment for Schiavone on another issue, holding that Time's article was defamatory as a matter of law. Finally, he denied Time's summary judgment motion on the issue of Time's actual malice, holding that a genuine question of material fact remained for the jury on that issue. 619 F. Supp. at 684.² 

On November 6, 1986 Judge Sarokin issued a second opinion, which we will call Schiavone III, holding as a matter of law that Schiavone was "libel proof"; i.e., the reputations of Schiavone and SCC were so bad that Time's article could not further damage them. 646 F. Supp. 1511, 1516 (D.N.J. 1986). Judge Sarokin also held that because plaintiffs could not obtain compensatory damages, they were not entitled to punitive damages, as a matter of federal constitutional law, even though New Jersey law would have permitted a punitive damage award. Id. at 1520. Judge Sarokin therefore granted summary judgment and dismissed plaintiffs' complaint.

Schiavone and SCC appeal from the final order in Schiavone III holding them libel proof and thereby dismissing their claims. They contend that the "sting" of the article is its insinuation that plaintiffs were involved in a notorious murder. They further contend that, in view of: (1) the omission of the exculpatory material (i.e., the failure to report that none of the HOFFEX references suggested criminality); (2) the innuendo of criminality in the last sentence of the article; and (3) the fact that Schiavone and SCC have never before been identified as having been involved in such nasty business as the Hoffa execution, it cannot be said that they are libel proof. There is, they therefore say, an actionable claim for libel. Schiavone and SCC also appeal the district court's determination in Schiavone II that they are public figures.

Time, of course, supports the district court on these last two points. On the other hand, Time has filed a cross-appeal from the district court's order accompanying Schiavone II, granting summary judgment to Schiavone on the issues of fair report privilege, the truth defense, defamation per se, and malice. Time notes, however, that given the district court's holding in Schiavone III, if we agree that Schiavone and SCC are libel proof, and that they are ineligible for nominal or punitive damages as well, these other questions become irrelevant and the cross appeal becomes moot.³ 

II. ARE PLAINTIFFS PUBLIC FIGURES?

In New York Times Co. v. Sullivan, 376 U.S. at 279-80, 84 S. Ct. at 725-26, the Supreme Court held that a public official may recover for libel only if "he proves that the statement was made with 'actual malice'--that is, with knowledge that it was false or with reckless disregard of whether it was false or not." The plaintiff must prove malice with "convincing clarity," i.e., by clear and convincing evidence.⁴  Id. at 285-86, 84 S. Ct. at 728-29. The Court has extended this constitutional standard beyond public officials to include public figures. See Curtis Pub. Co. v. Butts, 388 U.S. 130, 155, 87 S. Ct. 1975, 1991, 18 L. Ed. 2d 1094 (1967) (plurality opinion). It specifically refused, however, to extend the New York Times standard to private persons. See Gertz v. Robert Welch, Inc., 418 U.S. 323, 342-50, 94 S. Ct. 2997, 3008-12, 41 L. Ed. 2d 789 (1974).⁵ 

The Supreme Court in Gertz offered general guidance as to how we should define the term public figure, identifying two types of public figures.⁶  First, there are all-purpose public figures, such as politicians who have become household names. They "occupy positions of such persuasive power and influence that they are deemed public figures for all purposes." Gertz, 418 U.S. at 345, 94 S. Ct. at 3009. The second and more common type of public figures are limited purpose public figures, who, although they are not well known throughout the country or on every issue, are nonetheless sufficiently involved in one particular arena to qualify as public figures for that purpose.⁷  Such limited purpose public figures have usually "thrust themselves to the forefront of particular public controversies in order to influence the resolution of the issues involved." Id.⁸  The Court has also noted that, " [h]ypothetically, it may be possible for someone to become a public figure through no purposeful action of his own, but the instances of truly involuntary public figures must be exceedingly rare." Id.; see Wolston v. Reader's Digest Ass'n, 443 U.S. 157, 168, 99 S. Ct. 2701, 2707, 61 L. Ed. 2d 450 (1979) (holding that plaintiff who refused to testify before a grand jury had not "engaged the attention of the public in an attempt to influence the resolution of the issues involved").

Twice recently this court has confronted the question of limited purpose public figure status and both times has held that the plaintiffs who had appeared frequently in the news could not escape limited public figure status. In Marcone v. Penthouse International Magazine for Men, 754 F.2d 1072, 1086 (3d Cir.), cert. denied, 474 U.S. 864, 106 S. Ct. 182, 88 L. Ed. 2d 477 (1985), we concluded that the plaintiff, an attorney who represented members of notorious (and infamous) motorcycle gangs, and who also was shown to have social contacts with their members, was a limited purpose public figure on the issue of his alleged participation in a drug conspiracy with those members. Although acknowledging that it was "a close case," the panel found that the plaintiff's underworld associations were "bound to attract attention and comment," id., and observed that " [i]n the typical limited purpose public figure case, the plaintiff actively participates in the public issue in a manner intended to obtain attention." Id. at 1083. Furthermore, the panel held that if plaintiff's "actions [were] sufficient to transform him into a limited public figure, it is of no moment that Marcone did not desire such status." Id. at 1086.

Similarly in McDowell v. Paiewonsky, 769 F.2d 942 (3d Cir. 1985), we held that an architect who had participated in numerous publicized and controversial building projects on St. Thomas, one of which he had (successfully) bid upon despite knowing its controversial nature, was a limited purpose public figure as to his participation in those projects, and that to prevail in a libel suit for allegedly false remarks about his professional competence as a builder and engineer, plaintiff had to prove malice. Id. at 949-50. We reiterated that the plaintiff could not escape public figure status simply because he wished not to be one. Id. at 950 ("the voluntariness requirement may be satisfied even though an individual does not intend to attract attention" if he "undertakes a course of conduct that invites attention") (citing Marcone and Rosanova v. Playboy Enterprises Inc., 580 F.2d 859 (5th Cir. 1978)); see Steaks Unlimited, Inc. v. Deaner, 623 F.2d 264, 273-74 (3d Cir. 1980).⁹ 

As we read Gertz, Marcone and McDowell, we must perform a case-by-case determination, scrutinizing the nature and scope of the plaintiffs' involvement in the controversy. As the Gertz Court instructed, " [i]t is preferable to reduce the public-figure question to a more meaningful context by looking to the nature and extent of an individual's participation in the particular controversy giving rise to the defamation." 418 U.S. at 352, 94 S. Ct. at 3013.

In Schiavone II, the district court did so and concluded that plaintiffs were public figures because: 1) they campaigned for President Reagan; 2) they conducted a private investigation of the Special Prosecutor and other investigators of Donovan; 3) they wrote numerous letters to the editor in various national and local publications complaining about the treatment of Donovan; 4) in their own promotional literature they bragged about their close ties with Donovan; and 5) SCC worked exclusively on public projects. 619 F.2d at 704-05.

Schiavone and SCC contend that their activities are insufficient to transform them into even limited purpose public figures. They argue that they never sought status as public figures and note that although Gertz mentioned the possibility of an involuntary limited purpose public figure, that status is rare. However, Schiavone's activities just described and the promotional brochure of SCC are plainly sufficient to categorize the plaintiffs as public figures under our jurisprudence.¹⁰  Schiavone thrust himself into the controversy surrounding Donovan and his company by letter campaigns and his active investigation into the private lives of the committee members investigating Donovan.¹¹  Donovan, of course, was the U.S. Secretary of Labor, having been confirmed despite an avalanche of rumors of underworld ties, and so the underlying public controversy was a veritable vortex into which it was not difficult for Schiavone and SCC to be drawn.

The short of it is that Schiavone and SCC, like the plaintiffs in Marcone and McDowell, have, by their actions and associations, invited limited public figure status. Volumes of clippings concerning Donovan and his connections with the plaintiffs attest to the fact that questions concerning Schiavone and SCC were in the public eye long before Time's challenged article appeared. Schiavone's partnership with Donovan and Donovan's substantial interest in SCC enhanced the plaintiffs' status as public figures. We note, however, that not only plaintiffs' passive status as Donovan's partner, but their active participation in the controversy renders Schiavone and SCC limited purpose public figures. Finally, we observe, as did the district court, that Schiavone and SCC have obtained unusual exposure to the media. A high proportion of their letters to the editor have been published, and the editors of one New Jersey paper met with Schiavone concerning its coverage of the Donovan confirmation. Therefore, the justification for conferring the New York Times malice standard on public figures applies in full force. See supra note 6.

The libel proof plaintiff doctrine prohibits a plaintiff from recovering for libelous statements where the plaintiff's "reputation in the community was so tarnished before the publication that no further harm could have occurred." Marcone, 754 F.2d at 1078. To hold a plaintiff libel proof, the court must determine as a matter of law that the plaintiff would not be able to prove compensatory damages.¹²  In Schiavone III the district court adopted Time's view that the "sting" of the article was not the Hoffa execution innuendo but the allegation that Schiavone and SCC were involved with the mob. It thereupon found that the tremendous publicity before the publication of the Time article concerning Schiavone and SCC's alleged mob connections rendered them libel proof as to allegation of Mafia association and corruption. The district court held that:

In light of the hundreds of published reports tying Schiavone to organized crime, including the unchallenged statements in the Time article itself reporting on Schiavone's underworld connections, Time argues that the challenged statement cannot further injure plaintiffs' reputation.

The court agrees.

Schiavone III, 646 F. Supp. at 1515-16.

Plaintiffs argue that the libel proof plaintiff doctrine is bad law.¹³  They also contend that, even assuming that this court recognizes the doctrine, it cannot apply in this case because the plaintiffs have suffered compensable losses. Plaintiffs explain that the reason the district court found that they would not be able to demonstrate compensatory damages is that without giving any reasons it altered its theory of the case; in Schiavone III, the district court read the sting of the article to lie in Schiavone's mob associations, not plaintiffs' alleged connections with Hoffa's murder, as it had in Schiavone II.¹⁴  Schiavone and SCC argue that they are not libel proof in view of the new and startling allegation in the last paragraph of the article implying their involvement with Hoffa's disappearance and that the jury could award them compensatory (including presumed) damages.¹⁵ 

Time argues that the district court, in Schiavone III, correctly assessed the sting of the article to be Mafia associations and that Schiavone and SCC are libel proof as to those allegations.¹⁶  Furthermore, Time argues that in answers to interrogatories and at oral argument before the district court plaintiffs agreed that they could not seek compensatory damages. But as the district court notes in Schiavone II, so much conflict revolves around these alleged concessions that they cannot stand alone to support the application of the libel proof plaintiff doctrine in this case. Schiavone III, 646 F. Supp. at 1515. The district court proceeded on the assumption that Schiavone and SCC would try to prove compensatory damages, but ultimately found that they would not be able to do so. Given the arguments before us, it is clear that the plaintiffs seek compensatory damages and, like the district court, we will consider that possibility.

This court was confronted with the libel proof plaintiff doctrine in Marcone. We did not rule affirmatively on the viability or wisdom of the doctrine, but simply refused to apply it to the facts of the case. 754 F.2d at 1079. We held that defendant introduced evidence that although plaintiff's "reputation was sullied before the article was published, we cannot say as a matter of law that Marcone was libel proof." Id. (citations omitted). Instead, the court observed that Marcone's allegedly tarnished reputation could be used as evidence to mitigate compensatory damages.

We will do what we did in Marcone and decline to rule on the libel proof plaintiff doctrine, concluding here as we did there that under the facts of the case, we cannot determine the plaintiffs to be libel proof. We agree with plaintiffs that a jury could find the sting of the article to lie in the connection with the Hoffa disappearance, i.e., that it could find that the last paragraph of the article presents a new and distinct allegation that departs significantly from the rest of the piece and from allegations against the plaintiffs from other sources.

Although this is not the only possible interpretation of the sting, we believe that it is a reasonable one. While we find the district court's skepticism about the plaintiffs' ability to recover such damages perfectly understandable, nevertheless, we do not believe that it can be asserted as a matter of law that under every reasonable interpretation of the sting the plaintiffs would be unable to recover compensatory damages. If a jury were to find the sting to be the association with Hoffa's disappearance, then it might find that Schiavone and SCC had suffered actual or presumed damages. We hold then that the doctrine cannot apply.

The district court also considered the question of the availability of nominal and punitive damages in the absence of compensatory damages (libel proof plaintiffs by definition can receive no compensatory damages). Although it believed that such damages were available under New Jersey law, the court ultimately concluded that federal constitutional law prohibits granting of punitive damages to a public figure where no compensatory damages exist.

Plaintiffs argue that the district court erred in its constitutional analysis and that New Jersey tort law controls. Plaintiffs argue that any contrary result would declare open season on libel proof plaintiffs. Unscrupulous media, they say, could report defamatory material with knowledge of its falsity and not be held accountable.

Time counters with policy arguments, emphasizing the importance of a free and vigorous press, and arguing that the availability of punitive damages against newspapers threatens the system of a free and fearless press that is essential to democracy.¹⁷  Furthermore, it disputes the district court's interpretation of New Jersey law. We agree with the district court, however, that fairly read, New Jersey would permit a punitive damage award even where the plaintiff could only recover nominal damages for libel. See Nappe v. Anschelewitz, Barr, Ansell & Bonello, 97 N.J. 37, 477 A.2d 1224, 1229-31 (1984) (holding punitive damages available in absence of compensatory damages in action for legal fraud and citing libel actions as an example of the common law's willingness to allow punitive damages in certain actions without proof of compensatory damages); see also Vassallo v. Bell, 221 N.J.Super. 347, 534 A.2d 724, 738 (App.Div.1987) (citing Schiavone III favorably on the question of the availability of punitive damages under New Jersey law).¹⁸ 

The breadth of the district court's constitutional discussion indicates that (notwithstanding New Jersey law) it would hold as a constitutional matter that no punitive damages were available to plaintiffs if the jury were to award nominal damages only. However, we will resist the invitation to play leapfrog in this constitutional minefield.¹⁹ 

We resist because any advice we could give on this issue would be contingent on the concatenation of many separate contingencies. First, the jury would have to find malice under the New York Times standard by clear and convincing evidence. See infra section VII (discussion of malice). Second, the jury would have to find that Schiavone and SCC qualify for punitive damages under N.J.S.A. Sec. 2A:43-2, an 1898 statute which requires that plaintiff either demand a retraction in writing or demonstrate that the defendant was motivated by malice in fact, ill-will or personal animus.²⁰  Third, the jury would have to find that despite Time's liability, Schiavone and SCC suffered no compensable injuries (including, at least in the case of Schiavone, presumed damages). Therefore, we believe at this juncture, the wisest course is to await the resolution of these various contingencies before confronting this thorny problem.²¹ 

IV. WAS THE ARTICLE DEFAMATORY PER SE?

" [A]lthough replete with First Amendment implications, a defamation suit fundamentally is a state cause of action." Jenkins v. KYW, 829 F.2d 403, 405 (3d Cir. 1987) (quoting Marcone, 754 F.2d at 1077). To determine whether Time's article was defamatory per se, that is, whether it was incapable as a matter of law of any non-defamatory meaning, we therefore must apply New Jersey law. Under New Jersey law "words that clearly 'sound to the disreputation' of an individual are defamatory on their face." Lawrence v. Bauer Publishing & Printing Ltd., 89 N.J. 451, 446 A.2d 469, 473 (citation omitted), cert. denied, 459 U.S. 999, 103 S. Ct. 358, 74 L. Ed. 2d 395 (1982). Where the language can be interpreted in both a defamatory and nondefamatory manner, the question is one for the jury to decide. Id; see also Marcone, 754 F.2d at 1078. But where a statement is "not reasonably susceptible of a nondefamatory interpretation," the court may rule as a matter of law that the statement is defamatory per se. Lawrence, 446 A.2d at 473.

For example, in Lawrence, the New Jersey Supreme Court held that newspaper reports "that plaintiffs 'may be' charged with criminal conduct diminishe [d] their standing in the community." Id. The court therefore concluded that the statements in the articles were not susceptible of nondefamatory interpretation. Id.; see Dunn v. Gannett New York Newspapers, Inc., 833 F.2d 446, 449 (3d Cir. 1987) (quoting Lawrence) . Similarly, in Molnar v. Star-Ledger, 193 N.J.Super. 12, 471 A.2d 1209, 1212 (App.Div.1984), the court held that an allegation that a landlord had refused to take a lie detector test concerning the loss of his building because of suspected arson was defamatory per se.

In applying New Jersey's standard, we cannot affirm the district court's decision in Schiavone II that Time's report was defamatory per se. Although there is evidence pointing to a defamatory interpretation of the information that the name of Schiavone appears in the HOFFEX files, this information could also be construed as non-defamatory. In the previous section we discussed two possible versions of the sting of the article. Nevertheless, we must also acknowledge that the assertion is capable of a non-defamatory meaning. For example, the appearance of Schiavone in the files could indicate knowledge of facts relevant to the investigation, or past associations with Hoffa (neither of which necessarily sound to the plaintiffs' disreputation). On the other hand, information that the name of Schiavone appeared in the HOFFEX files, coupled with the innuendo that the committee and the special prosecutor would have been intrigued, could clearly be read by the jury as defamatory. Therefore, a genuine issue of material fact exists as to this question and hence, it resides with the jury.

The district court determined that the "truth" of Time's allegations revolved around the truth of the underlying information, i.e., that the name of Schiavone appears in the HOFFEX files. The district court concluded, on the basis of statements by Special Prosecutor Leon Silverman and numerous affidavits from FBI agents, that the names of Schiavone and SCC do not so appear, hence that Time's assertion was false as a matter of law. Schiavone II, 617 F.2d at 701.

Before engaging the district court's conclusions and the parties' arguments, we must first delineate the appropriate burden of persuasion concerning the question of "truth" in a libel trial. In Philadelphia Newspapers v. Hepps, 475 U.S. 767, 106 S. Ct. 1558, 89 L. Ed. 2d 783 (1986), a case decided after the district court's opinion in Schiavone II, the Supreme Court placed the burden of persuasion as to the veracity of the defamation squarely on the plaintiff. In discussing the burden of proving falsity by a private figure on an issue of public concern the Court noted that a "public-figure plaintiff must show the falsity of the statements at issue in order to prevail in a suit for defamation." 475 U.S. at 775, 106 S. Ct. at 1563 (citing Garrison v. Louisiana, 379 U.S. 64, 74, 85 S. Ct. 209, 215, 13 L. Ed. 2d 125 (1964)). Furthermore, any prior New Jersey caselaw to the contrary cannot override this constitutional rule.

Therefore, the question we must confront is whether Schiavone has proved the falsity of the defamatory statement so conclusively that, as a matter of law, no genuine question of material fact exists as to the report's falsity.

In so reviewing the district court's summary judgment, we once again are faced with the pervasive question of "sting." Even though we reject New Jersey's allocation of the burden of proof, we nevertheless believe, as the district court correctly noted, that, in considering the question of truth, " 'the truth must be as broad as the defamatory imputation or "sting" of the statement.' " Schiavone II, 619 F. Supp. at 700 (quoting Lawrence, 446 A.2d at 473). Therefore, the first question we must ask in determining whether Time's assertions are true is: what did Time say?

We perceive a range of possible answers. The "truth" to be perceived could be the existence vel non of the name Schiavone in mob files in general, the appearance of plaintiffs' names in the HOFFEX files in particular, plaintiffs' involvement with the mob, or their involvement with a notorious suspected murder. As we have stated above, a jury must resolve the question of the sting because reasonable persons could differ on that question. Obviously, if a jury were to find the sting to be centered on involvement in the Hoffa execution, the question whether Schiavone or SCC appears in the HOFFEX files would be crucial to establishing the falsity of Time's article. If, however, as Time argues, the sting is merely association with Mafia figures or appearance in the FBI files, the focus of the "truth" inquiry would be substantially different.²² 

The district court in Schiavone II held that the "truth" to be disproved was whether, as the article claims, "the name of Schiavone appears in the files on Jimmy Hoffa's disappearance." Time argues that even if this were the "truth" at issue, a genuine question of material fact exists as to the contents of the FBI report. It claims that the FBI affidavits asserting that plaintiffs' names do not appear in the HOFFEX files are self-serving and inherently unreliable.²³  Even though the question of sting must still be resolved by a jury, we nevertheless address the summary judgment determination of the district court that the name Schiavone does not appear in the HOFFEX files. Obviously, the relevance of that information will depend entirely on the sting that the jury imputes to the article, but summary judgment on this question could at least narrow the issues.

In reaching its determination, the court relied on the affidavits of the FBI agents (requested by Time) and the disinterested views of Leon Silverman, all of which provide strong evidence that the names do not appear. For example, the affidavit of Paul Nolan, who has been employed as a Special Agent of the FBI since 1970, indicates that according to his "page-by-page" search of the HOFFEX files " [n]o references to 'Ronald A. Schiavone' or 'Schiavone Construction Company' appeared in the HOFFEX files." J.A. at 111a. Special Prosecutor Silverman faults the FBI for its disorganization and untimeliness, but ultimately concludes that the Webster memorandum was mistaken concerning the appearance of the names of Schiavone in the HOFFEX files. Fed. R. Civ. P. 56(e) requires that in opposing a motion for summary judgment a party must present "specific facts." Time's generalized allegation of the FBI's self-interest does not suffice to raise a genuine question of material fact. See National Union Fire Ins. Co. v. Argonaut Ins. Co., 701 F.2d 95, 97 (9th Cir. 1983) ("neither a desire to cross-examine an affiant nor an unspecified hope of undermining his or her credibility suffices to avert summary judgment"); see generally, Schwarzer, Summary Judgment Under The Federal Rules: Defining Genuine Issues of Material Fact, 99 F.R.D. 465, 481 (1984). However, this case presents special circumstances that counsel that summary judgment is inappropriate at this stage in the proceedings, for Time may have faced unique impediments to its ability to assert its arguments concerning the contents of FBI files and the agents' credibility. Evidence exists that the FBI has, in the past, not been accurate or conscientious in its search of its files for the name of Schiavone.²⁴ 

Because of the posture of this case, Time faces unusual difficulties countering Schiavone's assertions that the names of Schiavone and SCC do not appear in the HOFFEX files. Under Fed. R. Civ. P. 56(f), summary judgment is not available "where the nonmoving party has not had the opportunity to discover information that is essential to his opposition." Anderson v. Liberty Lobby, 477 U.S. 242, 106 S. Ct. 2505, 2511 n. 5, 91 L. Ed. 2d 202 (1986). Time has no access to FBI files and the district court never ruled on its discovery motions. Specifically, Time requests discovery from the FBI and wishes to depose the FBI agents who submitted affidavits, Webster, and Webster's subordinates who originally provided him with the information that the name of Schiavone appeared in the HOFFEX files.

We are not necessarily persuaded that this question must ultimately go to the jury. Nevertheless, at this stage of the proceedings, without the additional discovery Time claims that it needs, we believe summary judgment is premature on this question. Therefore, we will reverse the district court on its judgment that as a matter of law the name Schiavone does not appear in the FBI's HOFFEX files, with instructions to allow additional discovery as the court deems appropriate. If no additional information helpful to Time appears, partial summary judgment for Schiavone on this issue would then be appropriate. As to the broader question of truth, we will reverse and hold that this issue must go to the jury because the truth will depend on the jury's interpretation of the sting.

Under New Jersey law the media enjoy a qualified fair report privilege. Reports shielded by the privilege are immune from a libel suit, even if the underlying substance of the report turns out to be false. The privilege was designed as an exception to the common law rule that reproduction of a defamation is tantamount to making the defamation oneself. The purpose of the privilege is to assure that people who report on official releases about public concerns will not be held responsible for the contents of the reports. See generally W. Prosser & W. Keeton, Prosser & Keeton on the Law of Torts, 835-37 (5th ed. 1984). A defendant forfeits this qualified privilege, however, if the report is inaccurate or unfair.²⁵  The common law privilege has been set out in Sec. 611 of the Restatement (Second) of Torts, which New Jersey has largely adopted. See Lavin v. New York News, 757 F.2d 1416, 1419 (3d Cir. 1985). The Restatement provides:

Sec. 611. Report of Official Proceeding or Public MeetingThe publication of defamatory matter concerning another in a report of an official action or proceeding or of a meeting open to the public that deals with a matter of public concern is privileged if the report is accurate and complete or a fair abridgement of the occurrence reported.

Restatement (Second) of Torts Sec. 611 (1977).

The parties devote their energies to arguing over whether the fair report privilege has been forfeited by Time's omission of the exculpatory part of the Webster memorandum. We must first note, however, the threshold question of whether the fair report privilege is even applicable under the circumstances of this case. We express serious doubt whether the Webster memorandum qualifies at all for the privilege.²⁶ 

We also note that a strong argument exists for the proposition that the fair report privilege essentially drops out of this case. We set out in the margin the argument that the protection Time desires in asserting the fair report privilege will emerge from the application of the constitutional malice requirement regardless of how we decide the fair report privilege issue.²⁷  However, we need not reach the question whether the privilege would apply or whether the privilege has become obsolete, because we agree with the district court that Time has forfeited the privilege as a matter of law.²⁸ 

A plaintiff forfeits the privilege under New Jersey law if he exceeds the bounds of fair reporting. New Jersey libel law relies on the Restatement (Second) of Torts, both for a definition of the privilege and for an explanation of when the privilege is forfeited because a report is unfair. Section 611 of the Restatement provides that a report is privileged if it is "accurate and complete or a fair abridgement of the occurrence reported." Comment f explains:

Not only must the report be accurate, but it must be fair. Even a report that is accurate so far as it goes may be so edited and deleted as to misrepresent the proceeding and thus be misleading. Thus, although it is unnecessary that the report be exhaustive and complete, it is necessary that nothing be omitted or misplaced in such a manner as to convey an erroneous impression to those who hear or read it....

Restatement (Second) of Torts Sec. 611 comment f (1977), quoted in Lavin, 757 F.2d at 1419 (quoting Reilly v. Gillen, 176 N.J.Super. 321, 328, 423 A.2d 311, 315 (App.Div.1980)). The district court found that Time had forfeited its fair report privilege because its omission of the exculpatory language rendered the report incomplete and inherently unfair. Schiavone II, 619 F.2d at 699-700.

Time relies heavily on Lavin, arguing that the court did not suspend the fair report privilege because the thrust of the story--corruption and collusion with the mob--was a fair report. Time argues that the discrepancies between the original report and the actual article were far greater in Lavin than in this case.²⁹  We disagree. We believe just the opposite is true--that the potential for unfairness and distortion is much greater in this case. The deletion of the exculpatory language altered considerably the fairness of the report and seems to fall squarely into Restatement (Second) Sec. 611 comment f.

The question for us now is whether as a matter of law the report was so unfair that the privilege has been forfeited. Time argues instead that the question must go to the jury.³⁰  We disagree.³¹  We do so because we believe that Time's omission presents a clear example of an unfair report that does not deserve the qualified privilege to reproduce a libel. The last paragraph in Time's article combines selective quoting and innuendo to provide a very different message than the article would have conveyed had it included the exculpatory material.³²  Essentially, the added information that none of the references to Schiavone in the HOFFEX records connoted any criminality would have neutralized the last paragraph. Without the exculpatory clause the message, however, is quite different. We find this case very much like the facts of Reilly, where the court relied on Restatement Sec. 611 comment f. See Reilly v. Gillen, 176 N.J.Super. 321, 423 A.2d 311, 315 (App.Div.1980). In that case a political candidate reported that an opponent was accused of wrongdoing, but neglected to note that all allegations were voluntarily dismissed and the accused was exonerated. 423 A.2d at 313. The court found that the privilege was forfeited there, id. at 315, and we believe that that precedent controls here. A report that intentionally excludes information that is as obviously exculpatory as the information Sandy Smith elected to delete simply cannot, under any definition, be deemed either fair or accurate. We therefore affirm the grant of partial summary judgment for Schiavone on the fair report privilege issue.

The district court found the question whether Time acted with New York Times actual malice to be appropriate for jury consideration and therefore refused to grant Time's summary judgment motion on that issue. We agree.

In Anderson v. Liberty Lobby, 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986), the Supreme Court addressed the question of when summary judgment should be available for defendants in libel suits on the question of malice. The Court explained that in determining whether a genuine factual issue exists as to actual malice the district court "must bear in mind the actual quantum and quality of proof necessary to support liability under New York Times." 106 S. Ct. at 2513. " [T]he appropriate summary judgment question will be whether the evidence in the record could support a reasonable jury finding either that the plaintiff has shown actual malice by clear and convincing evidence or that the plaintiff has not." Id. at 2514 (footnote omitted);³³  see Jenkins v. KYW, 829 F.2d 403, 405 (3d Cir. 1987) (quoting Liberty Lobby) .

We must first describe the New York Times actual malice standard.³⁴  The Supreme Court has defined actual malice as "knowledge that [a statement] was false or ... reckless disregard of whether it was false or not." New York Times, 376 U.S. at 280, 84 S. Ct. at 726. The standard is a subjective one, based on the defendant's actual state of mind, and the Supreme Court has cautioned that "reckless conduct is not measured by whether a reasonably prudent man would have published, or would have investigated before publishing." St. Amant v. Thompson, 390 U.S. 727, 731, 88 S. Ct. 1323, 1325, 20 L. Ed. 2d 262 (1968). As we explained in McDowell v. Paiewonsky, 769 F.2d 942 (3d Cir. 1985), "reckless disregard for the truth means that the defendant 'in fact entertained serious doubts as to the truth' of the statement, [St. Amant, 390 U.S. at 731, 88 S. Ct. at 1325,] or that the defendant had a 'subjective awareness of probable falsity.' [Gertz, 418 U.S. at 335 n. 6, 94 S. Ct. at 3044 n. 6.]" Id. at 951.

A plaintiff may "rarely be successful in proving awareness of falsehood from the mouth of the defendant himself." Herbert v. Lando, 441 U.S. 153, 170, 99 S. Ct. 1635, 1645, 60 L. Ed. 2d 115 (1979). A defendant subject to the actual malice standard "cannot, however, ... automatically insure a favorable verdict by testifying that he published with a belief that the statements were true." St. Amant, 390 U.S. at 732, 88 S. Ct. at 1326. Therefore, objective circumstantial evidence can suffice to demonstrate actual malice.³⁵  Such circumstantial evidence can override defendants' protestations of good faith and honest belief that the report was true. Id.³⁶ 

Although the Supreme Court has cautioned that reckless disregard "cannot be fully encompassed in one infallible definition," and that " [i]nevitably its outer limits will be marked out through case-by-case adjudication," id. at 730, 88 S. Ct. at 1325, we can delineate some boundaries. Mere evidence that a media defendant did not investigate properly does not rise to the level of actual malice. Curtis Publishing Co. v. Butts, 388 U.S. 130, 153-54, 87 S. Ct. 1975, 1990-91, 18 L. Ed. 2d 1094 (1967) (plurality opinion); New York Times, 376 U.S. at 287, 84 S. Ct. at 729; McDowell, 769 F.2d at 951. Obviously, actual malice cannot be imputed merely because the information turns out to be false. An erroneous interpretation of the facts does not meet the standard. See Time v. Pape, 401 U.S. 279, 292, 91 S. Ct. 633, 640, 28 L. Ed. 2d 45 (1971) ("it is essential that the First Amendment protect some erroneous publications as well as true ones") (quoting St. Amant v. Thompson, 390 U.S. at 732, 88 S. Ct. at 1326).

However, the actual malice test could be met if the defendant had "obvious reasons to doubt the veracity of the informant or the accuracy of his reports." St. Amant, 390 U.S. at 732, 88 S. Ct. at 1326 (footnote omitted). Where the defendant finds internal inconsistencies or apparently reliable information that contradicts its libelous assertions, but nevertheless publishes those statements anyway, the New York Times actual malice test can be met. Curtis Publishing Co. v. Butts, 388 U.S. at 161 n. 23, 87 S. Ct. at 1995 n. 23 (1967) (plurality opinion); Zerangue v. TSP Newspapers, Inc., 814 F.2d 1066, 1070 (5th Cir. 1987) (citing Curtis and other cases). Neither does an erroneous interpretation of the facts meet the standard. See Time v. Pape, 401 U.S. 279, 290, 91 S. Ct. 633, 639, 28 L. Ed. 2d 45 (1971).

Our challenge here is to apply the New York Times standard by clear and convincing evidence--through the "prism" of summary judgment. Liberty Lobby, 106 S. Ct. at 2513. Even though the standard for actual malice is difficult to meet, and even though it must be met by clear and convincing evidence, we nonetheless must not lose sight of the fact that we decide this question on summary judgment. On summary judgment, " [t]he non-movant's allegations must be taken as true and, when these assertions conflict with those of the movant, the former must receive the benefit of the doubt." Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 97 S. Ct. 732, 50 L. Ed. 2d 748 (1977). This requirement that we draw all inferences in favor of the non-movant is not inconsistent with the letter or spirit of New York Times actual malice determinations. As the Supreme Court explained in Liberty Lobby:

Our holding that the clear-and-convincing standard of proof should be taken into account in ruling on summary judgment motions does not denigrate the role of the jury. It by no means authorizes trial on affidavits. Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions.... The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor. Neither do we suggest that the trial courts should act other than with caution in granting summary judgment or that the trial court may not deny summary judgment in a case where there is reason to believe that the better course would be to proceed to a full trial.

Liberty Lobby, 106 S. Ct. at 2513-14 (citations omitted).

Therefore, on summary judgment we may, as a jury might, discount Time's assertions of subjective belief in the truth of the article. Furthermore, consistent with our posture in reviewing this case on summary judgment, we may discount Time's arguments based on Sandy Smith's good faith in disbelieving the exculpatory clause and hence, omitting it.³⁷  Although we are certainly unwilling to predict a jury's ultimate disposition of this case, marshalling all the arguments on behalf of the plaintiffs and drawing all inferences in their favor, we hold that twelve reasonable people could find by clear and convincing evidence that Time acted with actual malice.

We have already determined that a jury could find the sting of the article to be the connection with Hoffa's disappearance and suspected murder. If a jury found that plaintiffs had proved the falsity of that sting, then it would turn to the question of malice. We present three reasons for our belief that a jury could find by clear and convincing evidence that Time's article was not only false but published with New York Times actual malice.³⁸ 

First, four independent sources with good bases for knowledge contradicted the assertion that the plaintiffs' names appeared in the HOFFEX files. By Smith's own testimony, three separate attempts to check the presence of the names failed. Although there is some debate as to what happened in the meeting with Silverman, drawing all inferences in favor of the plaintiffs, we conclude that a jury could find that even the Special Prosecutor warned Smith that those references did not appear prior to publication.

Furthermore, this contradictory evidence came from highly reliable sources. The three individuals within the FBI whom Sandy Smith called had access to the HOFFEX files. They specifically checked for references to the plaintiffs and found none. Moreover, Special Prosecutor Silverman investigated the allegation after meeting with Smith and concluded that the memo was in error--the names of Schiavone and SCC did not appear in the HOFFEX filesand so informed Smith. Based upon these four sources, a jury could find clear and convincing evidence that Time published the article "despite the publisher's awareness of probable falsity." Curtis, 388 U.S. at 153, 87 S. Ct. at 1991.³⁹ 

Second, a jury could find that Smith's explanation of why he deleted the exculpatory clause created additional clear and convincing evidence of malice. Smith claimed that he deleted the exculpatory clause because he did not believe it. As support for his deletion of the clause he cited other errors in the Webster memorandum. Smith noted, for instance, that the Webster memorandum claimed that all regional indices had been checked, yet Smith had independent knowledge that the name of Schiavone did appear in other FBI regional files. Given the other errors, Smith decided to omit the exculpatory clause that he did not believe. This explanation, however, would only provide evidence that Smith actually knew that the Webster memorandum was unreliable. In such event, his choice to credit only the portions that were damaging to Schiavone and not the portion that would have neutralized those damaging statements bears on his subjective state of mind and may point to actual malice.

Third, Smith's decision to simply delete language that cast a very different and more benign light on the facts he reported, could itself serve as a basis for a jury's finding by clear and convincing evidence that Time acted with knowledge of probable falsity. Even assuming that a jury were to find that Time lacked actual malice in reporting that the name of Schiavone appeared in the HOFFEX files, the jury could nevertheless find by clear and convincing evidence that Time acted with actual malice based on its deletion of the exculpatory clause and its insinuation that the appearance of Schiavone and SCC in the HOFFEX files would have "intrigued" the Senate Committee and Special Prosecutor. The jury could find that Time's alteration implicitly recognized that the story would not "intrigue" its readers without this significant falsification. It could believe that Time recognized the damning implications, and emphasized them by omitting the exculpatory clause and adding editorial comment to draw attention. In other words, the jury could find clear and convincing evidence that Time's omission of the exculpatory clause significantly altered the message of the memorandum, that Time knew its implication was false, and that Time intended that false implication.

In making these observations concerning what a jury could find on the actual malice question, we in no way intimate what we believe the correct resolution of this question should be. Rather, in our limited posture of ruling on the district court's denial of Time's summary judgment motion, we hold that the district court did not commit legal error by allowing the claim to go to the jury. In setting out the argument we outlined the possible scenario by which a jury could find by clear and convincing evidence that Time acted with actual malice. We observe, however, that there are reasonable interpretations of the evidence, suggested by Time, that would preclude such a finding.

For instance, the jury could believe that Smith decided in good faith to print the article without the exculpatory clause because he knew of evidence in other FBI files that directly contradicted the notion that none of the appearances of Schiavone in FBI files connoted criminality. Additionally, the jury could believe that Smith believed the FBI was engaging in a cover-up, and assertions that the references "could not be found" were not credible in light of the memo itself. Indeed, Mullen testified two days before the article was published that he was informed of these references, and even five weeks after the article appeared, FBI director Webster insisted that his own agents had supplied him with the information, saying "I know what they told me and now they can't find it. It's one of those things." Finally, a jury could believe that the focus of the article was on Donovan and that the omitted exculpatory clause applied to him, not Schiavone.

Despite the reasonableness of these conjectures, all of which would indicate that Time would prevail on the question of actual malice, we believe that considering all the arguments mustered in favor of Schiavone above, a sufficient basis exists for a jury to find by clear and convincing evidence that Time acted with actual malice.⁴⁰  We therefore affirm the district court's denial of Time's motion for summary judgment on the malice issue.

For the foregoing reasons we will affirm the district court's partial summary judgments establishing that (1) plaintiffs are public figures; and (2) Time forfeited the fair report privilege. We will also affirm the district court denial of Time's motion for summary judgment on the question of malice.

We will reverse the district court's case-dispositive summary judgment that plaintiffs are libel proof as a matter of law. We will reverse the district court's partial summary judgment that the contested part of the article was defamatory per se, because the jury could interpret the statement in either a defamatory or non-defamatory way. Additionally, we will reverse the district court's partial summary judgment determination as to truth. We hold that the question of truth is one for the jury because the truth depends heavily on the sting, which is itself a question for the jury. Finally, we will reverse the district court's partial summary judgment as to the appearance of the name Schiavone in the HOFFEX files because on the current state of the record Time deserves additional discovery on that issue. We thus will affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.