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March 31, 2009 By Email and U.S. Mail Mark W. Williams, Esq. Sherman & Howard L.L.C. 633 Seventeenth Street, Ste. 3000 Denver, CO 80202 Re: Dear Mark: As you know, we represent Burson-Marsteller (“Burson”) with respect to the claim raised by your clients Stan Lee, Arthur Lieberman, and POW! Entertainment Inc (“POW!”) in your February 16, 2009 letter that a press release issued by Burson on behalf of its client, SL Claims LLC (“SLC”) on January 27, 2009 (the “Press Release”) is defamatory. This letter addresses the lack of merit of that claim. To establish such a claim, your clients will have to prove that Burson made false and defamatory statements of fact in the Press Release. This they will not be able to do. The Press Release contained truthful statements of facts, or pure opinion – i.e., statements which cannot be reasonably interpreted as stating or implying assertions of fact (which are not actionable). See Unelko Corp. v. Rooney, 912 F.2d 1049, 1053 (9th Cir. 1990); Moyer v. Amador Valley Joint Union High School District, 225 Cal. App. 3d 720 (1990); Immuno AG v. Moor-Jankowski, 77 N.Y.2d 235 (1991). Judge Wilson did, in fact, rule that the transfer of certain intellectual property rights from the chapter 11 bankruptcy estate of Stan Lee Media, Inc. to QED Productions, LLC [(“QED”)] was “done in violation of the automatic stay, and was therefore void as a matter of law.” QED is a subsidiary of POW!, and Stan Lee and Arthur Lieberman were principals of POW! at the time of the transfer. These facts were either in the court order or in the record before the court when it made its ruling. Furthermore, POW!’s own website identifies Mr. Lee and Mr. Lieberman as founders and principals of POW! and POW! issued its own press release in 2005 regarding POW!’s acquisition of these assets. The Press Release was thus a fair and substantially accurate report of the court order because it was based on facts that, even if not included in the court order, were part of the record before the court, and was based on facts that were true. Other statements in the Press Release were the opinion of SLC, and readers would interpret them as such in the context of a press release issued by a party to a litigation. See e.g., Partington v. Bugliosi, 56 F.3d 1147 (9th Cir. 1995) (statements concerning opposing counsel by an attorney not actionable because they offered the personal viewpoint of the author concerning a trial and readers would recognize the statements as Claims by Stan Lee et al. against Burson-Marsteller
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highly subjective opinions of the author); Mattel, Inc. v. MCA Records, Inc., 28 F. Supp. 2d 1120, 1159-62 (C.D. Cal. 1998) (statements regarding a lawsuit found to be non-actionable hyperbole where the public knew that each side believed strongly in its position). Moreover, your clients are clearly public figures, and the issue – a judicial ruling regarding the transfer of assets of a bankruptcy estate – is a matter of public concern, including to the creditors of the estate, investors and shareholders of POW!, a public company, and its business associates. Moreover, POW! and its principals voluntarily attempted to influence the public by, among other things, issuing the 2005 press release mentioned above. Mattel, 28 F. Supp. 2d at 1162-1164. Therefore, your clients would have to prove, by clear and convincing evidence, that any allegedly defamatory statements were made with actual malice on the part of Burson. Id. at 1163. Actual malice requires that your clients establish Burson’s subjective intent and show that the statements were made with knowledge that they were false or reckless disregard; i.e., a high probability of awareness that they were false. Id. Failure to investigate does not constitute actual malice. See Masson v. New Yorker Magazine, 960 F.2d 896, 901 (9th Cir. 1992) (finding that a publisher with no obvious reason to doubt the accuracy of a story is under no duty to conduct an investigation); Mattel, 28 F. Supp. 2d at 1164 (finding no actual malice when defendant made statements without full knowledge and failed to retract them and stating that failure to investigate, even when a reasonably prudent person would have done so, is not sufficient to establish reckless disregard); Freeman v. Johnston, 84 N.Y.2d 52 (1994) (failure to investigate alone will not support finding of actual malice). Your clients cannot meet this burden. Assuming arguendo that there were any false statements in the Press Release, Burson had no knowledge or high probability of awareness that any such statements were false. Burson reviewed the Court Order, and relied on SLC and SLC’s counsel in approving the accuracy of the Press Release. As you know, SLC’s counsel, Marty Garbus, is an experienced attorney, including in the field of defamation and first amendment law. It was thus certainly reasonable for Burson to rely upon SLC and Mr. Garbus to approve the Press Release for accuracy. See Bindrim v. Mitchell, 92 Cal. App. 3d 61, 73 (1979) (finding no actual malice on the part of the publisher where it received author’s assurances regarding the characters in a manuscript and an editor knowledgeable about libel read the manuscript). Indeed, we find it telling that your clients have not asserted any claims against SLC, on whose behalf Burson issued the Press Release. Although Burson believes your clients’ claim has no merit, in order to avoid litigation, as you know, Burson did agree to issue an amended statement, which we proposed to you on March 5th, 2009. We do not believe the retraction your clients requested was accurate or appropriate. As I explained to you, your retraction could expose Burson to liability from SLC, and thus was unreasonable. In addition, in light of the fact that your clients have issued their own press release – which, as public figures, they have the means of doing – negates the need for a retraction from Burson.
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Nevertheless, we are still willing to discuss this matter further in order to reach an amicable resolution and are still willing to issue the amended statement we provided to you. It does, however, seem more practicable for you to negotiate a statement directly with SLC since that is the party that the Press Release was issued for and the party who approved the Press Release. This letter is written for settlement purposes only and without waiver of any our client’s rights, claims and/or defenses. Very truly yours,
Marc J. Rachman cc: Jack Cairl, Esq.