Jeffrey Masson remembers the exact moment he discovered he had been betrayed, as he sees it, by New Yorker writer Janet Malcolm.

Just the day before, he says, Malcolm had called from New York to say the first installment of her two-part series on Masson's feud with the psychoanalytic establishment was finally running and that she would send a copy of the magazine to Masson in Berkeley, Calif., by Federal Express.

"You will love it, Jeff," he recalls Malcolm assuring him.

So there he was, doing research for his latest book in the medical library at Stanford, when he was interrupted by an emergency call from his girlfriend, who had just seen the New Yorker.

"She said, 'I'm trembling, I'm shaking, I have to read you some of this,' " Masson remembers. And she did, about half an hour's worth, until, Masson says, "I realized I had been totally betrayed and these were not my quotations."

On Monday, the Supreme Court is to hear oral argument in Masson v. The New Yorker Magazine, the libel suit that ensued from "In the Freud Archives," Malcolm's December 1983 New Yorker series and book about Masson's controversial research on Freud.

For the purposes of the case, the justices will assume something Malcolm vehemently disputes: that she fabricated the quotations Masson complains about -- his reference to himself as an "intellectual gigolo"; his vow to turn Anna Freud's house into a place of "sex, women, fun"; his statement that he would be viewed as, after Freud, "the greatest analyst who ever lived"; and several others.

The question before them will be whether manufactured or deliberately altered quotations alone are proof of libel -- demonstrating the knowing or reckless disregard for the truth that public figures like Masson must prove to prevail in a libel suit.

The federal appeals court in San Francisco said that was not enough, and said a lower court was right to dismiss Masson's suit before trial. Even assuming that Malcolm invented the quotations, the court said, they were close enough in substance to "the many provocative, bombastic statements" that Masson had made in some 40 hours of taped conversations -- quoted at length in the 160-page book -- to defeat his claim that he had been libeled.

In an impassioned dissent, Judge Alex Kozinski said the majority's approach gave journalists "the right to lie in print." Its impact, he said, was "if you make statements that could reasonably be construed as boastful or arrogant (or callous or stupid or reflecting any other trait of character or intellect) the reporter may attribute to you any other statement reflecting that same trait."

No reputable news organization defends that practice, nor does Malcolm or the New Yorker.

But press lawyers warn that a reversal of the appeals court could force nearly every swearing contest between source and reporter to the expense of a trial and transform libel law from a vehicle for salvaging injured reputations into a mechanism for correcting misquotations.

For Malcolm's lawyers, quotation marks are legally irrelevant. A "misquotation without a genuine change in meaning," they argue, cannot result in the harm to reputation that is required for a libel suit.

Unethical as it may be to fool with a quote, said media lawyer Floyd Abrams, "If someone has plainly said something which amounts to the same thing as the alleged quotation, his remedy shouldn't be a libel suit." Ruling otherwise, he said, would "virtually require a trial in every case" of claimed misquotation.

Those on the other side say the appeals court ruling tilts the balance in the opposite direction and ignores the persuasive force of direct quotation.

"If she had said in her piece that Masson seems to think of himself as a kind of intellectual gigolo, she would have been fully protected, because people would have said that's her view and taken it with a grain of salt -- as we all do when we read other people's interpretation," said Stewart Baker, who wrote a brief in the case for journalists and academics who side with Masson. Malcolm "didn't do that," he said.

"She told the world that this was Masson's own expression about himself, and if you read some of the reviews of her book you'll see that many of the reviewers said about Masson, 'Here's a man who stands condemned by his own words.' That reflects the power of direct quotes, and it's precisely because of that difference that reporters ought to be expected not to make up quotations."

The dispute has drawn additional notice because it concerns actions by a writer who challenged her profession in a now famous 1989 New Yorker piece about "Fatal Vision" author Joe McGinniss's relationship with Green Beret murderer Jeffrey MacDonald.

"Every journalist who is not too stupid or too full of himself to notice what is going on knows that what he does is morally indefensible," Malcolm proclaimed in her opening salvo, going on to compare journalists to confidence men who seduce their sources only to betray them in print.

Masson contends that is precisely what Malcolm did to him. A former Sanskrit scholar whose controversial views on Freud's seduction theory resulted in his being fired from his position as projects director of the Freud Archives, Masson now runs an "upscale Italian" sandwich shop in Berkeley.

He says his inability to obtain a teaching position is due in part to Malcolm's devastating portrait of him, speaking with the fervor of a source scorned. "This was much more than a reporter-subject relationship," says Masson, now 49. "She was definitely a friend."

Malcolm, he emphasized, "did not make just small minor stylistic or syntactical changes which I never would have objected to." Instead, he claims, "She knew exactly what I said in every case and just deliberately altered them . . . because she got a more titillating story."

Two of Masson's examples are comments that Malcolm quotes him as making during a lunch at Chez Panisse in Berkeley, between bites of baked goat cheese appetizer and striped bass with fennel.

At one point, Masson describes an affair with a graduate student who told him he was nice to sleep with but a social embarrassment outside his own room.

Anna Freud and Kurt Eissler, the head of the Freud archives, he goes on to say in the Malcolm account, had the same reaction. "They liked me well enough 'in my own room'. . . . I was like an intellectual gigolo -- you get your pleasure from him, but you don't take him out in public."

But the intellectual gigolo quote does not appear on the tape of the actual luncheon. Instead, Masson says on tape, Freud and Eissler "felt, in a sense, I was a private asset but a public liability. . . . They liked me when I was alone in their living room."

Masson is also quoted as describing, during the same meal, his plans for Freud's Maresfield Gardens house in London, which he was to occupy after Anna Freud's death. On the tape transcript, he says: "Boy, I was going to renovate it and open it up, and the sun would come in and there would be people. . . . "

But on the typed manuscript, a sentence similar to this is crossed out, and handwritten above it is another line Masson now says he never uttered: "Maresfield Gardens would have been a center of scholarship, but it would also have been a place of sex, women, fun."

Malcolm admits that Masson did not make either the "intellectual gigolo" or the "sex, women, fun" remarks during the Chez Panisse lunch, but insists he did so at another time, during a breakfast six months later at her home in New York, when her tape recorder was broken.

In a deposition taken in the case, she defended what she described as a journalistic "convention" that it was acceptable to combine statements from various interviews and recount them as if they had occurred in a single conversation.

"What do they call this convention?" Masson's lawyer asked. "We call that writing," Malcolm responded.

She has since lost her handwritten notes of the breakfast conversation, in which Masson made three of the challenged quotes, she says. But she has the typed version of those notes and turned them over to her lawyers 19 months before Masson denied the intellectual gigolo line. She says the other challenged quotations are things she recalls Masson saying.

Malcolm said in her deposition that she had many untaped conversations with Masson, explaining, "It was because I did not know about the technology of tape recorders to put batteries in and, therefore, I was limited to where there was a plug."

Malcolm's lawyers say Masson said things at least as outrageous, and substantially similar to, what he now denies. On the "sex, women, fun" quote, for example, he told Malcolm he had slept with more than 1,000 women. And he said of a London psychoanalyst: "We were going to pass women on to each other, and we were going to have a great time together when I lived in the Freud house. We'd have great parties there."

Malcolm, 56, who said she is not giving interviews, told the New York Times last year that the case is especially "bizarre" because she is "a compulsively careful writer." The daughter of a psychiatrist, she wrote an earlier piece on psychoanalysis, "The Impossible Profession."

"I invented nothing," she said in a court filing. "I never harbored the slightest ill will toward Mr. Masson." In fact, she notes that on rereading the tape transcript, "I am not only more than satisfied that my portrait of Mr. Massion is accurate, but I am struck anew with how restrained it is."

For his part, Masson says Malcolm "has the right to think I'm a fool and an idiot and a careless scholar and anything she wants. But she doesn't have the right to put those opinions into quotation marks and call them my words."