text:
    [649 NE2d 811, 625 NYS2d 463]
    In the Matter of New York State Clinical Laboratory Association, Inc., Appellant, v Gregory Kaladjian, as Acting Commissioner of Social Services of the State of New York, Respondent.
    Argued January 5, 1995;
    decided February 23, 1995

      POINTS OF COUNSEL

      Harter, Secrest & Emery, Rochester (Thomas G. Smith of counsel), for appellant.

      Dennis C. Vacco, Attorney-General, Albany (Daniel Smirlock, Jerry Boone and Peter H. Schiff of counsel), for respondent. I.
   OPINION OF THE COURT

Ciparick, J.

The issue presented on this appeal is whether a partially prevailing petitioner may recover attorney’s fees from the State pursuant to CPLR article 86, the Equal Access to Justice Act (State EAJA). This petitioner is not entitled to a fee award because it is not a "prevailing party” within the meaning of the State EAJA and the State’s position in this litigation was substantially justified.

In October 1991, respondent Department of Social Services amended 18 NYCRR 505.7, changing the Medicaid payment methodology for certain diagnostic laboratory tests performed by independent laboratories. 18 NYCRR 505.7 (g) (4) provides:

"Payment for laboratory services provided by independent laboratories will be made only for individually ordered tests. No payment will be made for tests ordered as groupings or combinations of tests or for individual tests ordered on a laboratory order form issued by an independent laboratory which also contains an order for one or more groups or combinations of tests. Each test must be separately ordered by a qualified practitioner as defined in paragraph (b) (3) of this section.”

Prior to the amendment, independent laboratories were entitled to receive payment for tests ordered by physicians on preprinted laboratory requisition forms containing "panels” or "profiles.” Panels are groups of tests conducted on a single specimen, and profiles are groups of tests performed for the purpose of assessing the function of a particular body organ or tissue. Although laboratory tests could be ordered singularly, the practice of ordering entire groups of tests in panels and profiles had become widespread, leading respondent to conduct an investigation which revealed that laboratories were creating panels and profiles, some of which included as many as 15 tests, that physicians were ordering out of convenience rather than medical necessity. In an effort to curb this wasteful practice, which inured to the benefit of independent laboratories at taxpayer expense, respondent amended 18 NYCRR 505.7.

Petitioner, an association of independent laboratories, and an opponent of the amendment throughout the promulgation process, requested an interpretation of the amendment prior to its implementation, submitting the following question:

"1. May tests be ordered informally by grouping them together under a profile heading so long as each component test is individually ordered?”

Respondent answered the question by stating that American Medical Association-approved testing categories would be considered acceptable as "headers” on preprinted order forms; however, all tests included in such categories would have to be individually ordered for reimbursement purposes.

Petitioner commenced this CPLR article 78 proceeding alleging that the amended regulation lacked a rational basis, violated the Equal Protection Clauses of the State and Federal Constitutions, and was being interpreted by respondent in a manner inconsistent with its plain language. Supreme Court granted the petition to the extent of declaring section 505.7 (g) (4) null and void on the ground that it violated petitioner’s equal protection rights. The Court also declared that respondent’s interpretation of the amended regulation was arbitrary and capricious. Petitioner was awarded costs, disbursements and attorney’s fees pursuant to 42 USC §§ 1983 and 1988.

The Appellate Division modified by reversing so much of Supreme Court’s judgment as declared 18 NYCRR 505.7 (g) (4) to be invalid and awarded counsel fees to petitioner. The Appellate Division declared that the challenged regulation "has not been shown to be invalid or unconstitutional” (194 AD2d 189, 194). The appellate Court held that a rational basis existed for the amended regulation, and for distinguishing between independent and hospital laboratories therein: "[T]he regulation’s focus on independent laboratories is based upon the proportion they contribute to the problem and it being clear that such is a valid basis for disparate treatment, we discern no equal protection violation” (194 AD2d, at 192 [citations omitted]).

The Court, however, agreed with petitioner that respondent’s interpretation of its regulation as permitting the grouping of tests only in categories approved by the AMA was irrational and inconsistent with the plain language of the amended regulation, which "contains no prohibition of any particular grouping on laboratory order forms and, in fact, DSS had stated previously that the amendment would not require any change in the groupings of tests on an order form as long as they were ordered individually” (id., at 193). Finally, the Court concluded that there was no basis for an award of counsel fees pursuant to 42 USC § 1988 because petitioner was denied no constitutional right. Nor was it persuaded under the circumstances that petitioner was entitled to counsel fees pursuant to CPLR article 86 (id.).

I

The State EAJA provides that "a court shall award to a prevailing party, other than the state, fees and other expenses incurred by such party in any civil action brought against the state, unless the court finds that the position of the state was substantially justified or that special circumstances make an award unjust” (CPLR 8601 [a]). The statute was enacted to "improv[e] access to justice for individuals and businesses who may not have the resources to sustain a long legal battle against an agency that is acting without justification” (Governor’s Approval Mem, L 1989, ch 770, 1989 NY Legis Ann, at 336). The State EAJA was modeled on the Federal Equal Access to Justice Act (28 USC § 2412 [d] [1] [A]) "and the significant body of case law that has evolved thereunder” (CPLR 8600).

II

Prevailing Party

Petitioner contends that it meets all of the requirements for an award of counsel fees under the State EAJA. Petitioner argues that it is a "prevailing party” within the meaning of the State EAJA because it succeeded in correcting respondent’s overbroad interpretation of its own regulation.

Four requirements must be met before a court can award fees to a private litigant under the Federal EAJA: (1) the claimant must demonstrate that it is an eligible party under the statute (see, 28 USC § 2412 [d] [2] [B]); (2) the claimant must be a "prevailing party”; (3) the Government’s position must not be "substantially justified”; and (4) there must not exist any special circumstances that would make an award unjust (see, Commissioner, Immigration & Naturalization Serv. v Jean, 496 US 154, 158). The "prevailing party” standard has been described as a "generous formulation that brings the plaintiff only across the statutory threshold” (Hensley v Eckerhart, 461 US 424, 433). Congress intended that the term "prevailing party” be given a definition "consistent with the law that has developed under existing statutes” (HR Rep No. 96-1418, 96th Cong, 2d Sess, at 11, reprinted in 1980 US Code Cong & Admin News 4984, 4990; see, Hensley v Eckerhart, 461 US 424 [same standard is generally applicable in all cases in which Congress authorized fee shifting to the "prevailing party”]), and contemplated that a party could be deemed prevailing "even if he does not ultimately prevail on all issues” (1980 US Code Cong & Admin News, at 4990).

The case law formulation that has developed around the term "prevailing party” considers whether the parties " 'succeeded] on any significant issue in litigation which achieve[d] some of the benefit the parties sought in bringing suit’ ” (Hensley v Eckerhart, 461 US 424, 433 [quoting Nadeau v Helgemoe, 581 F2d 275, 278-279]; see, Texas Teachers Assn. v Garland School Dist., 489 US 782; Green v Bowen, 877 F2d 204; Matter of Centennial Restorations Co. v Abrams, 202 AD2d 721; Matter of NANCO Envtl. Servs. v New York State Dept. of Envtl. Conservation, 149 Misc 2d 991, 994-995). Despite the Supreme Court’s decision in Hensley (supra), the Fifth and Eleventh Circuit Courts of Appeals developed a stricter standard for determining prevailing party status, which required that a party succeed on the "central issue” in the litigation and receive the "primary relief sought” (see, Texas Teachers Assn. v Garland School Dist., 489 US 782, 784 [citing Simien v San Antonio, 809 F2d 255; Martin v Heckler, 773 F2d 1145]).

The Supreme Court rejected this approach in Texas Teachers Assn., noting that the "central issue” test was "directly contrary to the thrust” of its decision in Hensley, and was inconsistent with congressional intent contemplating fee awards to partially prevailing parties who succeeded on an important matter in the course of litigation (489 US, at 790). The Court opined that the central issue test, with its corresponding search for the primary and tangential issues in the lawsuit, "is essentially unhelpful in defining the term 'prevailing party’ ”, because it requires "focusing on the subjective importance of an issue to the litigants”, and would mire courts in questions which depend largely on the mental state of the parties (id., at 791). The Court reaffirmed that the standard set forth in Hensley is the appropriate one for determining whether a party has "crossed the threshold to a fee award of some kind” (id., at 792).

We must yet determine whether the Federal EAJA’s "generous formulation” for ascertaining prevailing party status should also govern under the State EAJA and for purposes of this case. This inquiry is necessary because, although the State EAJA purports to be modeled after the Federal act, the Legislature departed from the Federal model in certain significant respects.

For example, the State EAJA defines the term "prevailing party” as a "plaintiff or petitioner in the civil action against the state who prevails in whole or in substantial part where such party and the state prevail upon separate issues” (CPLR 8602 [f]). This language is not derived from the Federal EAJA, which contains no statutory definition of "prevailing party”. Although the legislative history is silent regarding the import of the definitional phrase at issue, the Legislature’s reference to success on separate issues is significant because it indicates that the degree of success obtained by a plaintiff in relation to the other goals of the lawsuit is a threshold factor in determining eligibility for a fee award of any kind.

As to the degree of success required, i.e., the meaning of the term "in substantial part”, a problem of statutory construction is presented. As the Supreme Court noted in construing the word "substantial” in the context of the EAJA’s "substantially justified” requirement,

"the word 'substantial’ can have two quite different — indeed, almost contrary — connotations. On the one hand, it can mean '[considerable in amount, value, or the like; large,’ Webster’s New International Dictionary 2514 (2d ed. 1945) — as, for example, in the statement, 'He won the election by a substantial majority.’ On the other hand, it can mean '[t]hat is such in substance or in the main,’ ibid. — as, for example, in the statement, 'What he said was substantially true’ ” (Pierce v Underwood, 487 US 552, 564).

Although the legislative history offers no definitive elucidation regarding which of the two possible meanings of the word "substantial” the Legislature intended, the Legislature’s departure from the Federal EAJA in our view evinces an intent to impose a stricter standard for demonstrating prevailing party status under the State EAJA than under its Federal counterpart. In approving the bill, the Governor stated that "a program of providing recompense for the cost of correcting official error is highly desirable as long as it is limited to helping those who need assistance, it does not deter State agencies from pursuing legitimate goals and it contains adequate restraints on the amount of fees awarded” (1989 NY Legis Ann, at 336 [emphasis added]). The Governor noted that he had vetoed similar bills in the past because they lacked "necessary safeguards”. This bill was different because it contained "appropriate limits on the types of individuals and organizations that may recover attorneys’ fees” (id.).

Among the "appropriate limits” to which the Governor specifically referred was the fact that only "plaintiffs or petitioners (not defendants)” may recover fee awards (id.). The Federal EAJA, by contrast, provides for fee shifting against the United States without distinguishing whether the successful litigant was the plaintiff or defendant in the action (see, 28 USC § 2412 [d] [1] [A]). Additionally, the Governor noted with approval that only a limited class of plaintiffs could seek fee awards under the statute: "1) individuals who have a net worth of less than $50,000 (excluding the value of their primary residence); 2) owners of businesses with fewer than 100 employees; and 3) not-for-profit corporations” (1989 NY Legis Ann, at 336). Indeed, one of the prior bills vetoed by the Governor provided that "small businesses” employing up to 500 employees and possessing a net worth of up to $5 million would be eligible for fee awards (see, 1983 S434-A, Veto No. 71). It is noteworthy that the Federal EAJA defines an eligible party more expansively than the State EAJA: "(i) an individual whose net worth did not exceed $2,000,000 at the time the civil action was filed, or (ii) any owner of an unincorporated business, or any partnership, corporation, association, unit of local government, or organization, the net worth of which did not exceed $7,000,000” (28 USC § 2412 [d] [2] [B]).

Thus, as it specifically relates to the term "prevailing party”, the legislative history suggests that the State EAJA’s departure from the Federal model was intended to limit the State’s liability for fee awards. The methodology chosen to effectuate this intent was the constriction of the class of plaintiffs eligible for counsel fees. We conclude that a construction of the term "in substantial part” which is consistent with that intent is appropriate under the circumstances. Therefore, we hold that a party has "prevailed” within the meaning of the State EAJA if it has succeeded in acquiring a substantial part of the relief sought in the lawsuit. Thus, a "prevailing party” is not one who has succeeded on merely "any significant issue” in the litigation which achieved only "some of the benefit” sought in bringing the lawsuit — which is the Federal standard (Hensley, supra, at 433). Rather, it is a plaintiff who can show that it succeeded in large or substantial part by identifying the original goals of the litigation and by demonstrating the comparative substantiality of the relief actually obtained. Lower court decisions which have applied the more generous Federal “prevailing party” standard are not to be followed in that respect (see, e.g., Matter of Centennial Restorations Co. v Abrams, 202 AD2d 721, supra; Matter of NANCO Envtl. Servs. v New York State Dept. of Envtl. Conservation, 149 Misc 2d 991, 994-995, supra).

Applying this standard, we conclude that petitioner was not a prevailing party. The dominant focus of this litigation from its inception was securing the continued availability of Medicaid reimbursement for independent laboratory tests ordered as panels and profiles. Indeed, petitioner sought to invalidate respondent’s amended regulation on either of two grounds— that it lacked a rational basis or was violative of equal protection. Petitioner was unsuccessful on both those grounds. The one issue upon which petitioner ultimately prevailed did not affect the validity of the amended regulation. Rather, it established that respondent’s interpretation of the regulation as permitting the grouping of tests on order sheets only in categories approved by the American Medical Association was not in harmony with the plain language and administrative history of the regulation. Thus, although petitioner succeeded in correcting an improper interpretation of the amended regulation, it failed to win a substantial part of the relief originally sought in bringing the lawsuit.

III

Substantially Justified

Even assuming arguendo that petitioner satisfied the prevailing party threshold to fee recovery under the State EAJA, the State’s position in this litigation was substantially justified. The phrase "substantially justified” has been interpreted by the Supreme Court as meaning "justified to a degree that could satisfy a reasonable person”, or having a " 'reasonable basis both in law and fact’ ” (Pierce v Underwood, 487 US 552, 565, supra). Moreover, absent an abuse of discretion, a determination by the lower courts that the Government’s position was substantially justified is entitled to deference (id., at 562-563). The legislative history of the State EAJA indicates that New York courts should look to the Pierce decision when determining whether the State’s position was "substantially justified” (see, Assembly Mem, 1989 NY Legis Ann, at 335 ["The test of whether or not a government action is substantially justified is essentially one of reasonableness. Where the government can show that its case had a reasonable basis both in law and fact, no award will be made”]; Governor’s Approval Mem, op. cit., 1989 NY Legis Ann, at 336 [indicating that Pierce’s interpretation of "substantially justified” should be followed in interpreting State statute]).

Petitioner argues that respondent’s position in this case cannot be considered "substantially justified” in light of its irrational interpretation of the amended regulation. In Roanoke Riv. Basin Assn. v Hudson (991 F2d 132, cert denied — US —, 114 S Ct 182), as in this case, the plaintiff prevailed on one issue while the government agency prevailed on all others. The Court of Appeals for the Fourth Circuit affirmed the District Court’s denial of attorney’s fees on the ground that the position of the government agency was substantially justified, rejecting "a per se rule that whenever a petitioner clearly prevails on any issue, a fee award follows” (id., at 139). The court concluded that it was appropriate to consider the government’s position in the case as a whole when determining the reasonableness of its position:

"We do not think these two prongs of the EAJA— whether the petitioner is a prevailing party and whether the government’s position is substantially justified — were intended to be so closely linked. * * * The focus when determining whether a petitioner is a prevailing party is aimed at the degree of success obtained by the petitioner. Whether the government’s ’position in the litigation’ is substantially justified, in contrast, focuses, not on the government’s success or failure, but on the reasonableness of its position in bringing about or continuing the litigation. While the EAJA redresses governmental abuse, it was never intended to chill the government’s right to litigate or to subject the public fisc to added risk of loss when the government chooses to litigate reasonably substantiated positions, whether or not the position later turns out to be wrong. In short, the policy considerations underlying these two prongs of the EAJA differ, justifying the different scopes of focus” (id.; see, Commissioner, Immigration & Naturalization Serv. v Jean, 496 US 154, 161-162, supra [’’While the parties’ postures on individual matters may be more or less justified, the EAJA — like other fee-shifting statutes — favors treating a case as an inclusive whole, rather than as atomized line-items”]).

We agree with the Fourth Circuit Court of Appeals that an issue-by-issue analysis of the government’s posture in the litigation should be rejected in favor of ”a more broadly focused analysis that would reject the view that any unreasonable position taken by the government in the course of litigation automatically opens the door to an EAJA fee award” (Roanoke, supra, at 139; see also, Assembly Mem, op. cit, 1989 NY Legis Ann, at 335 [substantially justified standard ’’should not be read to raise a presumption that the State’s position was not substantially justified simply because it lost the case”]).

Turning to the present case, we note that the central controversy concerned the validity of the change in payment methodology embodied in the amended regulation. In this respect, respondent’s position was completely vindicated. Although petitioner gained the benefit of an ameliorative measure — correction of respondent’s overbroad interpretation of the amended regulation — when respondent’s position is considered in its entirety, the only logical conclusion is that it was substantially justified, i.e, it had a reasonable basis in both fact and law (see, Pierce, supra). Thus, the Appellate Division did not abuse its discretion in refusing to award attorney’s fees under the circumstances of this case.

Finally, we conclude that the remaining issues raised by petitioner were correctly resolved by the Appellate Division.

Accordingly, the order of the Appellate Division should be affirmed, with costs.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa, Smith and Levine concur.

Order affirmed, with costs.


source: Caselaw Access Project

author: Titone, J.

license: Public Domain

text:
    [649 NE2d 817, 625 NYS2d 469]
    The People of the State of New York, Respondent, v Sammy Geraci, Appellant.
    Argued February 7, 1995;
    decided March 28, 1995

      POINTS OF COUNSEL

      Flamhaft Levy Kamins & Hirsch, Brooklyn (Harold L. Levy and Barry Kamins of counsel), for appellant.

      Charles J. Hynes, District Attorney of Kings County, Brooklyn (Roseann B. MacKechnie and Jane S. Meyers of counsel), for respondent.
   OPINION OF THE COURT

Titone, J.

Defendant was convicted of first degree manslaughter and two counts of first degree assault, primarily on the basis of an eyewitness’s Grand Jury testimony, which was admitted over vigorous defense objection. Although the witness had initially come forward and accused defendant, the witness subsequently left the State and refused to give trial testimony consistent with his earlier story. The issue on this appeal is whether there was sufficient evidence establishing that the witness had been intimidated by defendant to warrant the use of that witness’s Grand Jury testimony as part of the People’s direct case. Concluding that these facts must be established by no less than "clear and convincing evidence,” we hold that the People’s proof in this case sufficed to meet that standard.

On April 20, 1990, following a brief argument in a Brooklyn nightclub, an individual named Anthony Gránese was fatally stabbed. Although many people were present in the club on the night in question, only one individual, Peter Terranova, came forward and identified defendant as the person who had wielded the knife. Terranova, who testified before the Grand Jury, stated that the incident had begun with a shoving match and had ended when defendant pulled a knife out of his waistband and stabbed Gránese in the chest. Terranova also stated that he saw defendant stab another individual, Rocky Giamportone. Giamportone himself was unable to identify the person who stabbed him.

Immediately after the incident, some of the club patrons attempted to aid Gránese while others moved outside. According to Terranova, defendant also ran outside, was met by his brother, Frank Geraci, and the two men sped away in a white car. Some of the club patrons who had moved outside attempted to chase the car, throwing objects at it. One of those patrons later testified that he saw another of defendant’s brothers, Paul Geraci, fire a gun into the air, possibly wounding Anthony Gallo, another patron.

Defendant was indicted principally on the basis of Terranova’s Grand Jury testimony. However, shortly before the trial was scheduled to begin, Terranova left his job and, without notifying his employer or his family, moved out of the State. After making contact with Terranova and learning that he did not wish to testify against defendant at trial, the prosecutor successfully sought a Sirois hearing to establish the cause of Terranova’s change of heart and to obtain an advance ruling as to the admissibility of Terranova’s Grand Jury testimony.

At the hearing, which was commenced on March 16, 1992, two police investigators testified for the People. According to these investigators, Terranova had given a detailed oral statement about the night of the stabbing and had subsequently given a sworn statement to an Assistant District Attorney. Although he had also met with the officers more than once before he gave his Grand Jury testimony, Terranova had never voiced any reluctance to testify.

Soon after the Grand Jury indictment was handed up, Terranova told an investigating officer that defendant, who was at liberty, approached him and said something like: "You were there that night; I want you to come down to my lawyer’s with me.” As the date for the trial drew nearer, the investigating officers learned from Terranova’s mother that she had not seen her son in several months and did not know his whereabouts.

Terranova subsequently called the investigators from Florida and told them: "they showed me my testimony, they showed [or shoved] it in my face.” He also asked the officer how "they found out about me” and stated that someone from the police or the District Attorney’s office "ratted on me.” Terranova expressed fear for himself and his family and told the officer that he would not be available for trial "if this is what it’s going to take to stay alive * * * and keep them away from [his] family.” He stated: "I know for sure I’m gonna have problems with it down the road if I testify * * *. But I don’t know if I’m gonna have problems with him the other way.” While he said he "hate[d] him” and wanted "to see him go to jail,” Terranova stated that he would not repeat the story he told the Grand Jury if he were required to testify at defendant’s trial.

On March 5, 1992, Terranova appeared in New York pursuant to a material witness order. He met with police investigators at that time and identified a redacted police report as the document that he had been "showed [or shoved]” in his face. Terranova also told an investigator that a friend, whom he refused to identify, had intervened with the people who were coming "to break his legs.” At a subsequent meeting with investigators, Terranova stated that a friend of his had talked with defendant’s uncle in Harlem and that, as a result, he (Terranova) had received money "from them or from the defense.” He stated that he had already received $2,000 and was to receive an additional $250 per week until the trial was over, receiving a final lump-sum payment of $10,000 at the end. During this meeting with investigators, Terranova claimed that he had never seen the stabbing and had, in fact, been outside the club at the time of the incident.

During his own Sirois hearing testimony, Terranova contradicted much of the officers’ statements. He denied having been threatened or approached by defendant about changing his testimony and stated that he had previously expressed fear only because of his desire to remain uninvolved in the case and because of his concerns about being prosecuted for perjurious Grand Jury testimony. With respect to the events on April 20, 1990, Terranova denied having seen the stabbing and, in fact, stated that he had been outside the club at the time it occurred.

Finding that Terranova had been "markedly evasive” in his Sirois testimony, the hearing court concluded that "pressures had been brought to bear * * * making him unwilling to testify.” Accordingly, the court held that Terranova was "practically unavailable” because of his unwillingness to testify and that the People had satisfactorily established defendant’s responsibility for the circumstance. On that basis, the court concluded that Terranova’s sworn statements before the Grand Jury could be used as a substitute for his live testimony.

In so ruling, the trial court rejected the defense’s contention, based on People v Banks (146 Misc 2d 601, 605-607), that a finding of culpability could not be reached unless the court first determined that the facts excluded all other hypotheses. Instead, the court opted for the standard set forth in People v Deegan (69 NY2d 976) for reviewing the sufficiency of Grand Jury evidence in a wholly circumstantial case. Finding that standard to be "more applicable than one imported from cases pertaining to a determination of a defendant’s substantive guilt,” the court stated that its review would be limited to whether the facts and inferences that logically flow from the evidence establish that Terranova’s unavailability was procured by defendant or by someone acting on his behalf. The court noted in an extended footnote, however, that it "would reach the same result even were [it] to analyze the evidence under [a] higher standard * * *, since [it could] exclude by clear and convincing evidence every other reasonable inference” (appellant’s appendix, at 406).

Defendant’s subsequent jury trial resulted in a guilty verdict. On his appeal from the judgment of conviction, the Appellate Division upheld the trial court’s Sirois determination, holding that the People had met their burden of proof under the applicable "clear and convincing” evidence standard. In so ruling, the Appellate Division held that defendant’s personal meeting with Terranova, as well as the meeting between defendant’s uncle and Terranova’s friend, sufficed to satisfy that "clear and convincing evidence” standard.

On this appeal, defendant once again raises the propriety of the People’s use of Terranova’s Grand Jury testimony as the centerpiece of their case-in-chief. Although he does not dispute the general principle that a witness’s Grand Jury testimony may be used in lieu of live testimony under certain circumstances, he contends that the foundation proof in his case fell short of what the law demands. Resolution of this claim requires that we explore the principles and standards that have led other courts to admit the out-of-court statements of witnesses who have become unavailable due to the defendant’s act.

As a general rule, the Grand Jury testimony of an unavailable witness is inadmissible as evidence-in-chief (see, People v Green, 78 NY2d 1029; People v Gonzalez, 54 NY2d 729; CPL 670.10). However, the lower courts of this State, as well as the Federal courts, have adopted an exception to this rule where it has been shown that the defendant procured the witness’s unavailability through violence, threats or chicanery (see, Matter of Holtzman v Hellenbrand, 92 AD2d 405, supra; United States v Thai, 29 F3d 785, 814-815, cert denied — US —, 115 S Ct 456; United States v Aguiar, 975 F2d 45, 47-48; United States v Potamitis, 739 F2d 784, 788-789, cert denied 469 US 918; United States v Mastrangelo, 693 F2d 269, 272-273, cert denied 467 US 1204; Steele v Taylor, 684 F2d 1193, cert denied 460 US 1053; United States v Thevis, 665 F2d 616, cert denied sub nom. Evans v United States, 456 US 1008; United States v Balano, 618 F2d 624, 628-629, cert denied 449 US 840; United States v Carlson, 547 F2d 1346, cert denied sub nom. Hofstad v United States, 431 US 914; see also, Reynolds v United States, 98 US 145; cf., People v Hamilton, 70 NY2d 987). In such situations, the courts have held, the defendant may not assert either the constitutional right of confrontation or the evidentiary rules against the admission of hearsay in order to prevent the admission of the witness’s out-of-court declarations (e.g., United States v Aguiar, supra, at 47; United States v Thai, supra, at 814; United States v Mastrangelo, supra, at 272-273).

While the principle is often characterized as involving "waiver by misconduct” (United States v Mastrangelo, supra, at 273; accord, United States v Thevis, supra), it is more realistically described as a forfeiture dictated by sound public policy (see, Steele v Taylor, supra, at 1201, and n 8). Indeed, the courts that have applied the rule have frequently justified it by invoking the maxim that the law will not " 'allow a person to take advantage of his own wrong’ ” (United States v Mastrangelo, supra, at 272, quoting Diaz v United States, 223 US 442, 458). Additionally, the rule is invoked to "[protect] the integrity of the adversary process by deterring litigants from acting on strong incentives to prevent the testimony of an adverse witness” (Steele v Taylor, supra, at 1202). Like all of the other courts that have adopted and applied the rule, we conclude that out-of-court statements, including Grand Jury testimony, may be admitted as direct evidence where the witness is unavailable to testify at trial and the proof establishes that the witness’s unavailability was procured by misconduct on the part of the defendant.

The more difficult question is what standard of proof should be required to establish a foundation for the admission of hearsay evidence under this rule. The Second and Sixth Circuits apply the relatively undemanding "preponderance of the evidence” standard (see, e.g., United States v Mastrangelo, supra, at 273 [2d Cir]; Steele v Taylor, supra, at 1202 [6th Cir]). In contrast, the Fifth Circuit and the lower courts of this State have used the "clear and convincing evidence” standard (United States v Thevis, supra; Matter of Holtzman v Hellenbrand, supra). We conclude that the latter, more exacting standard, which is the one most protective of the truth-seeking process, should be adopted in this State.

Because human fact finders lack the quality of omniscience, the process of determining the truth in adjudicative proceedings necessarily involves some margin of error (see, 2 McCormick, Evidence § 341, at 445 [Strong 4th ed]). The size of the margin of error that the law is willing to tolerate varies in inverse proportion to the importance to the party or to society of the issue to be resolved. On one end of the spectrum are most civil disputes, where, from a societal standpoint, "a mistaken judgment for the plaintiff is no worse than a mistaken judgment for the defendant” (id.). On the other end are criminal determinations of guilt or innocence, "[w]here one party has at stake an interest of transcendent value” (Speiser v Randall, 357 US 513, 525). The rules governing how persuasive the proof must be "[represent] an attempt to instruct the factfinder concerning the degree of confidence our society thinks * * * should [be had] in the correctness of factual conclusions for a particular type of adjudication” (In re Win-ship, 397 US 358, 370 [Harlan, J., concurring]). Viewing the issue in light of this fundamental principle, we deem the "clear and convincing evidence” standard to be the test that best recognizes the gravity of the interest at stake and most effectively balances the need to reduce the risk of error against the practical difficulties of proving witness tampering.

A determination that the defendant has procured a witness’s unavailability results in the admission of hearsay statements and the forfeiture of the right to cross-examine about the substance of those statements. Obviously, a defendant’s loss of the valued Sixth Amendment confrontation right constitutes a substantial deprivation. Additionally, and even more significantly, society has a weighty investment in the outcome, "[b]ecause of the intimate association between the right to confrontation and the accuracy of the fact-finding process” (United States v Thevis, supra, at 631).

In this regard, it is significant that, unlike most exceptions to the rule against hearsay, the exception at issue here is justified not by the inherent reliability of the evidence (see, e.g., Ohio v Roberts, 448 US 56; People v Arroyo, 54 NY2d 567, 571, cert denied 456 US 979), but rather by the public policy of reducing the incentive to tamper with witnesses. Indeed, hearsay evidence such as the Grand Jury testimony at issue here is especially troubling because "although given under oath, [it] is not subjected to the vigorous truth testing of cross-examination” (United States v Thevis, supra, at 629; accord, United States v Salerno, 937 F2d 797 [2d Cir]). Furthermore, Grand Jury testimony is often obtained through grants of immunity, leading questions and reduced attention to the rules of evidence — conditions which tend to impair its reliability (see, e.g., United States v Flores, 985 F2d 770, 776, n 14 [5th Cir]; United States v Fernandez, 892 F2d 976, 981 [11th Cir]; United States v Gonzalez, 559 F2d 1271, 1273 [5th Cir]; see also, Gamer v United States, 439 US 936, 938 [Stewart, J., dissenting from denial of certiorari]).

These factors militate in favor of a standard of proof that is high enough to assure a great degree of accuracy in the determination of whether the defendant was, in fact, involved in procuring the witness's unavailability for live testimony. While we recognize the need for the use of this less trustworthy class of evidence when necessitated by the defendant’s misconduct, we also believe that such use should be authorized only to the extent that the misconduct is clearly and convincingly shown.

Finally, the use of a heightened standard of proof in this context is dictated by our State’s restrictive approach to the use of Grand Jury testimony as direct evidence in criminal trials. CPL 670.10 authorizes the use of a witness’s prior testimony under certain limited conditions, but does not list Grand Jury testimony among its "three carefully worded and enumerated exceptions” (see, People v Harding, 37 NY2d 130, 134). This Court has previously held that the provisions of CPL 670.10 are exclusive (id.; People v Ayala, 75 NY2d 422, 429) and that, consequently, Grand Jury testimony is generally inadmissible (People v Green, 78 NY2d 1029, supra; People v Gonzalez, 54 NY2d 729, supra). Although we have carved out an exception to that general principle for cases in which the witness is unavailable because of the defendant’s wrongful conduct, our statutory and decisional law counsels a cautious approach that permits use of the exception only when the predicate facts are proven with the degree of certainty that the "clear and convincing evidence” test assures (see, Matter of Holtzman v Hellenbrand, supra, at 415, n 2).

This is not to suggest that circumstantial evidence may not be used to establish, in whole or in part, that a witness’s unavailability was procured by the defendant (see, e.g., Steele v Taylor, supra). Circumstantial evidence is not a disfavored form of proof and, in fact, may be stronger than direct evidence when it depends upon "undisputed evidentiary facts about which human observers are less likely to err * * * or to distort” (People v Cleague, 22 NY2d 363, 367; accord, People v Barnes, 50 NY2d 375, 380; People v Harris, 136 NY 423; McCormick, Evidence § 185, at 543, n 17 [Cleary 3d ed]). Further, given the inherently surreptitious nature of witness tampering, the proponent of Grand Jury testimony or other hearsay evidence will often have nothing more to rely upon than circumstantial proof. In light of the important policy considerations at stake, it would be unrealistic and unnecessarily rigid to adopt a formula that would make it impossible to establish the necessary foundation in so many cases.

The evidence in this case provides an example of the type of circumstantial proof that suffices to satisfy the proponent’s foundational burden. Unquestionably, defendant, who was out on bail during the months preceding his trial, had the opportunity to orchestrate Terranova’s intimidation. Further, a fact finder could infer from the proof before it that defendant had a strong motive for rendering Terranova unavailable to testify. Although his brothers may have been subject to criminal prosecution for their roles in the incident, defendant alone was on trial for intentional murder. Additionally, the evidence regarding the postindictment personal encounter between defendant and Terranova supports the inferences that defendant was aware both of Terranova’s value as a potential witness and of Terranova’s unwillingness to cooperate with the defense.

The proof of defendant’s motive and opportunity were not the only circumstances from which an inference of defendant’s involvement could be drawn. There was evidence that Terra-nova had been confronted by an unidentified individual and shown a police document that recorded his accusation against defendant. There also was evidence that Terranova was to receive weekly payments for the duration of defendant’s trial and that he was to receive an additional $10,000 at the close of that trial. This evidence provided a logical basis for a fact finder to single out defendant rather than one or both of his brothers or some other interested party as the moving force behind the attempt to intimidate and bribe this witness.

Moreover, Terranova’s own words to the investigators could rationally be construed to attribute his intimidation to defendant. Terranova’s statement to law enforcement officials that ”1 know for sure I’m gonna have problems with it down the road if I testify * * * [b]ut I don’t know if I’m gonna have problems with him the other way” logically pointed to defendant as the person responsible for Terranova’s evident fear. The witness’s additional statement that "I hate him\f\ I wanna see him go to jail” lends support to the conclusions that the "him” Terranova referred to was defendant and that the strong feelings Terranova expressed were the product of the fear and resentment he felt against the person who had placed him in such jeopardy.

Finally, the likelihood of defendant’s involvement was multiplied dramatically by Terranova’s Sirois hearing statements that it was defendant’s uncle who had offered more than $10,000 to keep Terranova silent for the duration of defendant’s trial. The existence of a financial arrangement made by defendant’s uncle that directly benefitted defendant was certainly a circumstance that bore directly on whether the intimidation and bribery had been initiated or approved by defendant.

In short, the cumulative evidence and the inferences that logically flow therefrom were sufficient to support a determination by a rational fact finder, under the clear and convincing evidence standard, that defendant either was responsible for or had acquiesced in the conduct that rendered Terranova unavailable for trial. The trial court’s conclusion rested not merely on speculation and surmise, but rather on concrete facts from which its conclusions naturally and reasonably could be drawn (cf., People v Hamilton, 70 NY2d 987). Accordingly, using the sufficiency standard appropriate for Court of Appeals review of the lower courts’ factual determinations, we find no basis to upset the trial court’s holding (see, People v Jennings, 69 NY2d 103, 114-115).

In this connection, we note our rejection of defendant’s contention that where the proponent’s foundational case rests exclusively on circumstantial evidence, the proof must exclude to "a moral certainty” every reasonable hypothesis other than the accused’s culpability (see, People v Banks, 146 Misc 2d 601, 605-607, supra). That standard is used in connection with the fact finder’s resolution of the ultimate question of whether the accused’s guilt has been proven. It is, in fact, a specialized variant on the People’s burden of demonstrating guilt beyond a reasonable doubt (e.g., People v Barnes, supra, at 380-381; People v Kennedy, 47 NY2d 196, 201-203; see, People v Jennings, supra, at 114-115). As such, as the trial court correctly held, it has no application in a situation like this, where the trier of fact is called upon to resolve a subsidiary evidentiary question and the burden of proof is measured by the lesser "clear and convincing evidence” test.

Finally, because of the trial court’s statements about the standard for assessing the evidence, we find it necessary to comment briefly upon the difference between the standard for the initial determination of a disputed fact question and the standard that is mandated for purposes of appellate and CPL 210.20 (1) (b) review (see generally, People v Wong, 81 NY2d 600, 608). In People v Deegan, 69 NY2d, at 979, supra), on which the trial court relied, we held that even in a case involving wholly circumstantial Grand Jury evidence, the duty of the court reviewing the viability of an indictment is limited to "determining whether the facts, if proven, and the inferences that logically flow from those facts supply proof of every element of the charged crimes.” As is evident from the Court’s opinion in People v Jennings (supra, at 114-115), that formula is appropriate for judging the legal sufficiency of the circumstantial evidence — an inquiry that is used in appellate review of a jury verdict (see, People v Bleakley, 69 NY2d 490, 495) as well as in a Grand Jury’s assessment of the prosecutor’s proof (see, CPL 190.65 [1] [a]) and in a trial-level court’s decision to sustain or dismiss an indictment (see, CPL 210.20 [1] [b]). It is not appropriate, however, for a trier of fact, whose function is to hear the evidence and reflect upon its persuasiveness under the "reasonable doubt,” "clear and convincing evidence” or "preponderance of the evidence” standard.

Thus, although the trial court was correct in its rejection of the "moral certainty” standard, it erred to the extent that it invoked the People v Deegan (supra) standard for the legal sufficiency of the circumstantial evidence before it. Since the court’s role on this preliminary question was not one of reviewing but rather of initial fact finding, it was bound to consider the circumstantial evidence as a whole and to determine for itself whether it was clearly and convincingly persuaded. This required something more than an assessment of whether defendant’s involvement was more probable than not and something less than a determination that all of the innocent inferences could be excluded to a "moral certainty” (see, People v Cleague, supra). It required a fact-based inquiry that is genetically different in kind from the legal assessment of whether the inference of guilt could be rationally drawn (see, People v Deegan, supra).

However, despite the trial court’s erroneous use of the legal sufficiency standard, it is not necessary to reverse the judgment of conviction under the circumstances presented here. Although the court rested its primary analysis on the inapt Deegan standard, it was careful to note that it would have reached the same ultimate conclusion using even the most exacting standard. Indeed, the court expressly held that, after reviewing the evidence, it could "exclude by clear and convincing evidence every * * * reasonable” hypothesis other than defendant’s involvement in the loss of Terranova’s live testimony. In view of that alternative holding, it would be inappropriate for us to reverse.

In sum, the trial court’s decision to admit the Grand Jury testimony of Peter Terranova was supported by the evidence and furnishes no ground for reversal. Defendant’s remaining contention — that evidence of his brother Paul’s conduct at the crime scene was erroneously admitted — was not preserved by a sufficiently specific objection.

Accordingly, the order of the Appellate Division should be affirmed.

Chief Judge Kaye and Judges Simons, Bellacosa, Smith, Levine and Ciparick concur.

Order affirmed.

      . This type of hearing has been named after the defendant in People v Sirois, the criminal case that was considered in Matter of Holtzman v Hellenbrand (92 AD2d 405). In that case, the Second Department outlined the procedure to be followed "whenever the People allege specific facts which demonstrate a 'distinct possibility’ * * * that a criminal defendant’s misconduct has induced a witness’ unlawful refusal to testify * * * or has caused the witness’ disappearance or demise” (92 AD2d, at 415).

      . A "waiver” ordinarily involves a conscious and voluntary relinquishment of a known right (see, e.g., Johnson v Zerbst, 304 US 458, 464). While the concept arguably could be stretched to encompass this situation, the use of legal fictions is unnecessary here, since the seriousness of the misconduct, if proven, is certainly sufficient to justify the sanction of forfeiture.

      . This strict position differentiates New York from Federal law, which, under certain conditions, allows the use of Grand Jury evidence under a catchall exception to the hearsay rule for "reliable” evidence (see, Fed Rules Evid, rule 804 [b] [5]).

      . Although much of the People’s Sirois evidence consisted of out-of-court statements Terranova had made to investigators, the trial court concluded that the receipt of such hearsay was justified because the hearing concerned only the admissibility of evidence and because ” 'often the only evidence of coercion will be the statement of the coerced person, as repeated by government agents’ ” (appellant’s appendix, at 384, quoting United States v Batano, 618 F2d 624, 629, cert denied 449 US 840, supra; see also, United States v Mastrangelo, supra, at 273; People v Banks, 146 Misc 2d 601, 603, supra; People v Sweeper, 122 Misc 2d 386, 387). The hearsay problem identified by the court has not been raised by the parties in this appeal.


author: Chief Judge Kaye.

text:
    [649 NE2d 825, 625 NYS2d 477]
    Michael F. Armstrong, Respondent, v Simon & Schuster, Inc., et al., Appellants.
    Argued February 14, 1995;
    decided March 28, 1995

      POINTS OF COUNSEL

      Simpson Thacher & Bartlett, New York City (Roy L. Reardon, Robert F. Cusumano and Edward Johnson of counsel), for appellants.

      Lankier Siffert & Wohl, New York City (Roderick C. Lankier and David S. Jones of counsel), for respondent.

      Weil, Gotshal & Manges, New York City (R. Bruce Rich, Linda Steinman and Elizabeth Stotland Weiswasser, of the Illinois Bar, admitted pro hac vice, of counsel), Kay Murray, Stuart D. Karle, Kenneth M. Vittor, Slade R. Metcalf, New York City, Tonda F. Rush, Jeffery R. Keeler, of the Virginia Bar, admitted pro hac vice, George Freeman, Leon Friedman, New York City, J. Laurent Scharff of the District of Columbia Bar, admitted pro hac vice, and Connie Heymann, New York City, for Association of American Publishers, Inc., and others, amici curiae.

   OPINION OF THE COURT

Chief Judge Kaye.

This libel action arises out of the past decade of insider trading scandals and Wall Street intrigue, when the media was filled with reports of arbitrageur Ivan Boesky’s stock schemes, investment banker Michael Milken’s deployment of junk bonds in deals for Drexel Burnham Lambert, and "the country’s most expensive, aggressive lawyers [who] maneuvered frantically on behalf of their powerful clients.” So advertised the dustcover of "Den of Thieves,” a book written by defendant James B. Stewart, edited by defendant Laurie P. Cohen, and published in 1991 by defendant Simon & Schuster. Spanning nearly 450 pages, the book is in two parts — "Above the Law,” detailing the alleged intricate scheme of illegal insider trading crafted by Boesky, Milken and other Wall Street figures, and "The Chase,” describing how law enforcement officials discovered and prosecuted them.

By this action, plaintiff Michael F. Armstrong, a criminal defense attorney who represented individuals involved in these events, now seeks damages for an allegedly defamatory paragraph about him.

The following facts are drawn from the verified amended complaint and its ten exhibits. As Armstrong alleges, he primarily represented Michael Milken’s brother, Lowell, an attorney who worked for Drexel on Michael’s partnership ventures and tax issues. In their corporate dealings, the Milkens were represented by a small in-house firm which included Craig M. Cogut, who mainly worked on partnership issues for Lowell. In 1986, Boesky pleaded guilty to a securities felony and agreed to cooperate with Federal prosecutors in the investigation of the Wall Street community. Lowell Milken and other employees were subpoenaed to appear before both a Federal Grand Jury and the Securities and Exchange Commission. Cogut then hired Armstrong to represent him pursuant to a retainer letter which stated that should a conflict of interest arise, Cogut would obtain other counsel as Armstrong would continue to represent Lowell.

After learning that Cogut recalled overhearing a key 1986 telephone conversation between Lowell and Boesky’s auditors that bore on an alleged improper transfer of funds and was favorable to Lowell, Armstrong conferred with Cogut. Based on their discussions, as well as subsequent memoranda prepared by Armstrong and annotated by Cogut, Armstrong drew up an affidavit for Cogut and submitted it to him. The intention was to send Cogut’s affidavit concerning the telephone conversation to the U.S. Attorney on behalf of Lowell, who had become a target of the investigation, in order to convince the prosecutors that Lowell should not be indicted. Cogut consulted about the affidavit with attorney Thomas Fitzpatrick (recommended by Armstrong), and separately retained his own counsel (Theodore Miller and Thomas Pollack), though Armstrong continued to represent him on routine matters related to the investigation.

After several revisions, on September 28, 1988, Cogut signed an affidavit which, according to the complaint, contained essentially the same facts as the original affidavit Armstrong had prepared. The next day, Cogut sent the signed affidavit to Armstrong with a cover letter authorizing him to present the affidavit to the U.S. Attorney "based upon your assurances that you will place my affidavit in an appropriate context by making it clear to the U.S. Attorney’s Office when you provide the affidavit that I do not recall whether I was present during the entire conversation or all of the conversations between Lowell Milken and the accountants, and that my memory as to the events of that day are necessarily vague.”

Armstrong transmitted Cogut’s affidavit to the U.S. Attorney with a 24-page submission dated October 18, 1988, and signed by Lord Day & Lord (Armstrong’s law firm). The submission stated that "Mr. Cogut recalls being present when Lowell Milken spoke to the accountants,” that "Craig Cogut believes that he was present during all of the 'substantive discussions,’ ” that "Cogut’s careful qualifications of his two and a half year old recollections should not be used to discount his testimony,” and that the "most significant thing about Craig Cogut is the fact that he was there.”

In "Den of Thieves,” these events were portrayed in the following paragraph on pages 396-397:

"After news of the Boesky agreement, Cogut had agreed to be represented by New York criminal lawyer Michael Armstrong, Lowell’s lawyer. But like Maultasch and Dahl,[] Cogut had become uneasy about his attorney’s possible conflict of interest [the differing needs of his attorney’s several clients], Lowell’s interests were too close to Mike Milken’s. Cogut’s concern had increased when, earlier in 1988, Armstrong came to him with an affidavit he had prepared for Cogut to sign. Its intent had been to exonerate Lowell, based on assertions of fact by Cogut. Cogut read it over and had only one problem: the facts weren’t true. He angrily refused to sign, and began looking for new lawyers, eventually hiring Los Angeles lawyers Tom Pollack and Ted Miller. [In September 1988 Cogut submitted an affidavit.]”

This paragraph is the focus of the present litigation.

Prior to the publication of "Den of Thieves,” Armstrong obtained a copy of the manuscript and wrote to Simon & Schuster that the book contained false statements about his client Lowell and himself. Attorneys for Simon & Schuster met with Armstrong, who primarily pressed the references to Lowell Milken that he claimed were false but also discussed the passage at issue and later presented them with a written list of 21 claimed inaccuracies in the book (19 of them relating to Lowell or Milken activities).

With regard to the paragraph at issue, Armstrong wrote: "The affidavit referred to in this paragraph was completely truthful and was signed and sworn to by Cogut, not angrily rejected.” Armstrong further explained that Cogut’s retainer letter disclosed the conflict of interest, and he clarified that Cogut had consulted both with the attorney referred by Armstrong and with separate counsel. Armstrong suggested that, because the book had already been printed, the publisher include an errata sheet. The book was released without changes and without an errata sheet.

Armstrong now charges that the quoted paragraph is materially false and defamatory in that it depicts him as "attempting unsuccessfully to procure the perjured oath of his client, Craig M. Cogut, by preparing for Cogut’s signature a false affidavit exonerating another client, Lowell Milken, which affidavit Cogut 'angrily refused to sign’ because 'the facts weren’t true.’ ” Plaintiff asserts that these statements were published with gross irresponsibility or actual malice and demands $10,000,000 in compensatory damages and $25,000,000 in punitive damages.

Prior to answering, defendants moved to dismiss the complaint arguing that all facts contained in the paragraph were true or substantially true, that the plaintiff could not sustain a cause of action based upon false implications, and that defendants were protected by the defenses of "opinion” and the "single instance” rule. The trial court denied defendants’ motion, concluding that the cited passage was susceptible of a defamatory meaning and that the statements at issue were not protected by either of the claimed defenses. The Appellate Division affirmed, as do we.

We begin our analysis by underscoring the procedural posture of this case. All that is before us is plaintiffs verified amended complaint and defendants’ motion to dismiss on the law. We recognize that summary judgment has particular value, where appropriate, in libel cases, so as not to protract litigation through discovery and trial and thereby chill the exercise of constitutionally protected freedoms (see, e.g., Immuno AG. v Moor-Jankowski, 77 NY2d 235, 256; Karaduman v Newsday, Inc., 51 NY2d 531, 543). But we recognize as well a plaintiff’s right to seek redress, and not have the courthouse doors closed at the very inception of an action, where the pleading meets a minimal standard necessary to resist dismissal of a complaint. Whether plaintiff meets this threshold standard is the focal issue on this appeal.

Where a plaintiff alleges that statements are false and defamatory, the legal question for the court on a motion to dismiss is whether the contested statements are reasonably susceptible of a defamatory connotation (Weiner v Doubleday & Co., 74 NY2d 586, 592). In making this determination, the court must give the disputed language a fair reading in the context of the publication as a whole (James v Gannett Co., 40 NY2d 415, 419-420).

Armstrong claims that the paragraph in issue falls into the category of literally false and defamatory statements. By contrast, defendants insist that the verified amended complaint — which incorporates the substantial additional information contained in the 10 appended exhibits — itself establishes that the paragraph is at least substantially true, which is all the law requires. It is, for example, unquestionably true from the face of the pleading, defendants point out, that Armstrong had a possible conflict of interest when, as Lowell Milken’s attorney, he undertook representation of Cogut; that he prepared an affidavit for client Cogut that was intended to exculpate Lowell Milken; and that after reading the affidavit Cogut indeed retained his own counsel.

At least one significant statement, however, does not at this juncture fit defendants’ characterization. Plaintiff insists that he never prepared a false affidavit for Cogut’s signature and that the sentence, "Cogut read [the affidavit] over and had only one problem: the facts weren’t true,” is false. Armstrong specifically pleaded in the verified amended complaint that the final affidavit that Cogut signed "set forth the same essential facts in exoneration of Lowell Milken as were set forth in every prior draft affidavit that had been presented to Cogut by Armstrong for Cogut’s comments and revisions.” Viewing the statements at issue most favorably to plaintiff, as we must on a dismissal motion, we conclude that this sentence, in the context in which it appears, is susceptible of a defamatory meaning: that Armstrong deliberately presented a false affidavit for one client (Cogut) to sign in order to exculpate another client (Lowell), resulting in Cogut’s angry discharge of Armstrong and the retention of new counsel. Thus, the complaint must go forward.

While this in one sense determines the question before us, it leaves open a major point of contention: whether plaintiff’s claim is one of "defamation by implication” and if so, what standard should apply on a motion to dismiss such a cause of action.

"Defamation by implication” is premised not on direct statements but on false suggestions, impressions and implications arising from otherwise truthful statements. Memphis Publ. Co. v Nichols (569 SW2d 412, 420 [Tenn]) is illustrative. There, the court found an article implicitly defamatory where it truthfully reported that a woman, upon finding her husband at plaintiffs home, shot the plaintiff, but the article neglected to state that at the time they all were at a social gathering with several other people, including plaintiffs husband.

The concern that substantially truthful speech be adequately protected has led courts to embrace different standards for measuring the sufficiency of claims of defamation by implication (see, e.g., Strada v Connecticut Newspapers, 193 Conn 313, 477 A2d 1005 [defamatory implication must arise from a material omission]; Chapin v Knight-Ridder, Inc., 993 F2d 1087, 1092 [implication must be a reasonable one, and author must intend to convey it]; see also, Kortz v Midwest Communications, 20 Media L Rep 1890 [Minn] [rejecting theory of libel by implication as contrary to free speech values]). Defendants and amici urge us to adopt, as this State’s standard, that the defamatory implication must be clear and inescapable which, they say, would result in dismissal of the present action.

The difficulty with defendants’ argument is that this is not, as they argue, a case of "a modern Rosetta stone” where the passage in issue must be "stretched and extrapolated” by subjective interpretations in order to find any possible falsity. Rather, this is, as plaintiff insists, a case of allegedly false statements of verifiable fact, with inferences flowing from those facts, and he bears the burden of proving the alleged falsity as well as the other elements of his claim. Those standards are well established in our law (see, Gross v New York Times Co., 82 NY2d 146, 156). The choice of an appropriate test for claims of defamation by implication must therefore await another day. The same is true as to defendants’ contention that November v Time, Inc. (13 NY2d 175, 179)— relied on by the Appellate Division — is today an incorrect standard for claims of defamation by implication.

Accordingly, the order of the Appellate Division should be affirmed, with costs, and the certified question answered in the affirmative.

Judges Simons, Titone, Bellacosa, Smith, Levine and Ciparick concur.

Order affirmed, etc.

      . The complaint annexes and incorporates the following exhibits: an excerpt from both the hardback and the paperback editions of "Den of Thieves” containing the paragraph at issue; affidavit of Craig M. Cogut, dated September 28, 1988; Cogut’s September 29, 1988 cover letter to Armstrong transmitting his affidavit; Armstrong’s submission to the U.S. Attorney dated October 18, 1988; Armstrong’s letter to Simon & Schuster dated September 13, 1991, regarding alleged inaccuracies; a letter from Mark C. Morril (Simon & Schuster senior vice-president and general counsel) to Armstrong dated September 17, 1991; Armstrong’s letter to Morril, dated September 18,1991; Armstrong’s cover letter to Morril, dated September 27, 1991, appending a list of 21 claimed inaccurate passages in the book; Morril’s letter to Armstrong, dated October 8, 1991, requesting support for the claimed inaccuracies.

      . The signed, but not the original, affidavit is appended as an exhibit to the amended verified complaint.

      . The bracketed material did not appear in the hardcover edition of the book, but did appear in the later paperback version.

      . Cary Maultasch was a trader and Jim Dahl was a salesman with Drexel Burnham Lambert.

      . We agree with the trial court and the Appellate Division that neither the "single instance” rule nor "opinion” protection is determinative here. The "single instance” rule applies where a publication charges a professional person with a single error in judgment, which the law presumes not to injure reputation (Smolla, Defamation § 4.06 [3] [1991]). Plaintiff’s claim that he stands accused of suborning perjury and other unethical conduct transcends this narrow doctrine. Similarly, it is clear that the complaint is based not on "opinion” but on alleged factual misstatements and the inferences arising from them.