The following fact pattern raises numerous legal issues in both defamation and invasion of privacy. Using the four-part defamation framework (elements, status of the plaintiff, liability standard and damages), analyze the plaintiffs' defamation case. If any defenses apply, you should also discuss them. Also, be sure to address any potential invasion of privacy torts that might apply. Remember, discussonly concepts that are applicable to this hypothetical. This is not a general essay on defamation and privacy law. You will lose points for discussing concepts that are not directly related to the fact pattern.

Sheeza Goode Righter was just dozing off when her cell phone's ringing rendition of Fleur de Lys startled her back to reality. It reminded her once again how much she hated that phone. She fumbled across the dark room guided only by the rhythmic blinking of the tower light atop the distant mountain out her bedroom window. On most nights she cursed those pulsating flashes whose primary purpose was to keep amateur aviators from careening into the wooded peak. Tonight she realized they would serve another function, namely saving her from the misery of physical therapy that undoubtedly would be necessary if she tripped over the stacks of magazines littered about her bedroom floor.

She grabbed the phone just before the fatal ring that would bounce the caller into satellite-assisted voicemail and require more illumination to retrieve the message than Sheeza wanted to provide her environs at this hour.

The voice sounded distressed, obviously nervous, but with a sense of purpose. He had a story to tell, and for the moment, Sheeza was his captive audience. She had found herself in that position many times. As the most senior reporter on the staff of the Centre Daily Bugle, Sheeza Goode Righter was a fixture in Centre County. People knew her byline, and they felt free to call her.

First, he established the ground rules. He would not be identified. What he was about to tell her would rock the corporate world or, as he described it, "shake 'em to the core." She could use all he was about to relate, but not his name. Sheeza began her usual lecture about journalistic attribution, but cut it short when she sensed it was only agitating her late-night suitor -- and that he might take his business elsewhere. Instinctively, she knew this was not an ordinary call -- or an ordinary caller. And if she was going to be rousted out of bed, she wanted to hear what he had to say.

He told her he worked for Spendron, one of the nation's leading financial centers and the bedrock of Centre County's economy. He has done so for nine years. He generally liked his job and the company, but what he discovered last Tuesday night had shaken his faith in his employer.

An internal memorandum left in a copy machine in the executive offices spelled out details of a money-skimming scheme involving two high-level employees. The caller identified both execs and offered to fax Sheeza a copy of the memo. He also told her that the district attorney had been in the executive offices earlier that day, and arrest warrants would be issued later in the week.

Just before he hung up, he told Sheeza that he thought one of the two execs, Willy Liftdacash, had been fired from the Inotech corporation in Silicon Valley. He heard that Liftdacash might have been fired for alcohol-related troubles or "mental problems."

By the time the fax machine began whirring, Sheeza already had turned on most of the lights in her house. The memorandum certainly looked official - the familiar Sprendron logo, with the $ instead of the "S." And it said exactly what the caller had described.

The next morning Sheeza called Sprendron's corporate communications department and spoke with the company's director of media relations, Ima Clod. Clod said she had no knowledge of any such investigation and that Sheeza's source clearly was mistaken. Smelling a cover-up, Sheeza began working on her story - surely a page-one exclusive for the Bugle.

Sprendron Execs Face Criminal Charges

By Sheeza Goode Righter

Bugle Staff Writer

Two top Sprendron executives will be arrested later this week for intentionally misdirecting more than $200,000 in company revenues into their personal bank accounts, according to a source within the corporation who has asked not to be identified.

A confidential internal memorandum obtained by the Centre Daily Bugle alleges that Hope T.O. Padmawallet, vice president for corporate finance, and Willy Liftdacash, corporate financial officer, developed an operating system to deposit into their personal bank accounts the fractions of a cent that typically are rounded off during the thousands of transactions Sprendron conducts each day. Company officials noticed the accounting glitch during a routine audit, according to the source.

Neither Padmawallet nor Liftdacash was available for comment.

Spendron spokesperson Ima Clod said she was unaware of any such investigation.

According to the company's Web site, Padmawallet, who holds an M.B.A. from Harvard Business School, was "instrumental in establishing the company's premier accounting system." Liftdacash joined the company in 1998, shortly after leaving the Inotech corporation in Silicon Valley.

Inotech vice president Bill Lundberg said Liftdacash was laid off from that company during a "corporate restructuring, yeah." Lundberg refused to confirm reports that Liftdacash had a gambling problem, fueled by alcoholism and earlier bouts with mental illness.

Bill Shreader, associate professor of accounting at Penn State and author of "Trolling for Dollars: The Rise of Corporate Bottom Feeders," said business crime continues to increase throughout the country.

"Financial skimming sadly is becoming a way of life in corporate America," he said. "These Spendron criminals should be locked away in a federal, [expletive] prison."

The company is said to be cooperating with the Centre County District Attorney's office. Arrest warrants could be issued as early as Thursday. The pair will be charged with theft and embezzlement and, if convicted, could face up to 12 years in prison. As soon as the newspaper hit the street, the phones started ringing in the Bugle's newsroom. Spendron denied the existence of any such scheme or memorandum. When Sheeza faxed a copy to them, they insisted it was a fraud. For the first time, Sheeza got that sinking feeling that perhaps she had been burned by the source. Maybe he had fabricated the entire episode, including the memorandum. Meanwhile, her editor, along with Spendron's lawyers and the District Attorney, were demanding to know her source's name, now that the paper surely was going to be sued.