Clinton Makes First Formal Denial of Sex Suit Charges : Courts: President asks immunity from litigation. White House to announce creation of legal defense fund.

President Clinton, in his first formal response to a sexual harassment lawsuit brought by former Arkansas employee Paula Corbin Jones, denied the charges Monday and asserted that he ought to be immune from such litigation while serving in the White House.

In a legal memorandum filed on Clinton’s behalf with U.S. District Court in Little Rock, Ark., Washington attorney Robert S. Bennett pointed to what he said are legal flaws in Jones’ suit, which are likely to be the basis of Clinton’s defense, if the courts reject his assertion of presidential immunity.

In a related development, sources said that the White House will announce today creation of a legal defense fund for the President. The Clintons face potentially huge legal costs in the Jones case and in the investigation of events related to Whitewater Development Corp., an Arkansas real estate venture in which the Clintons were partners. Clinton has authorized the fund to collect donations of as much as $1,000 from individuals.

In the court filing in Little Rock, Bennett said Jones has not established that her alleged 1991 encounter with then-Gov. Clinton in a Little Rock hotel room had any impact on her status as a state employee. In addition, he said, she has failed to show that she was defamed by Clinton’s denial of her story.

“President Clinton vigorously denies the allegations and would further submit that they are insufficient to state a claim of wrongdoing by him,” the memorandum said.

Jones’ lawyer, Gilbert K. Davis, who has 10 days to reply formally to Bennett’s memorandum, said that he will challenge both Clinton’s contention that the President is immune from civil litigation and Bennett’s request that the courts rule first on the issue of presidential immunity before proceeding with other issues.

“The occupant of the White House is not above the rest of us when it comes to acts committed outside of his office,” Davis said.

Jones, in her May 6 suit, alleges that she was denied suitable raises as an employee of the Arkansas Industrial Development Commission. She also maintains that she later was defamed publicly by White House aides because she rejected Clinton’s alleged request for oral sex when, she said, she met with him in a hotel room in May, 1991.

No matter how U.S. District Judge Susan Webber Wright rules on Clinton’s assertion of presidential immunity, the issue is likely to delay any hearing of the case for many months, if not years. Both sides have indicated that they intend to dispute the immunity issue all the way to the U.S. Supreme Court, if necessary.

Bennett’s memorandum was devoted primarily to persuading Wright that she should not hear arguments on any other issues in the case without first resolving the question of whether Clinton is immune from civil litigation during his tenure as President.

If his point of view prevails, the President could avoid answering embarassing questions that are certain to be posed by Jones’ lawyers about his alleged sexual behavior--at least as long as the appeals process drags on. Davis predicted that the appeals process would take four to six years.

Bennett indicated that Clinton’s argument for immunity is based largely on a 1982 Supreme Court decision in a case involving the late President Richard Nixon. In that case, the court ruled that a President is immune from being sued for any official acts.

In light of that case, Bennett argued, Jones should not be permitted to sue Clinton until he has left office.

In Jones’ response, according to Davis, her lawyers will argue that the Supreme Court bestowed immunity on the office of the President, but did not give immunity to the President for personal acts committed outside of his office.

Bennett offered a preview of his other arguments for dismissal of the suit in an extended footnote to his memorandum.

The footnote cited these additional reasons:

* “The plaintiff’s failure to allege facts to show the President caused her to be discriminated against on the basis of her sex.

* “The legal insufficiency of the allegations to make out a claim of quid pro quo or hostile environment sexual harassment.

* “The fact that the plaintiff sat on her rights and did not file her complaint in a timely fashion.

* “The failure of the allegations to satisfy the standard under Arkansas law to make out a claim of intentional infliction of emotional distress.

* “And the fact that her defamation claim rests solely on allegations that President Clinton, through agents, denied the substance of the allegations in this lawsuit.”

Clinton aides anticipate that legal bills from the Jones case and the Whitewater inquiry will exceed $1 million, far beyond the relatively modest means of the Clintons. Sources said that the defense fund will be administered outside the White House and that it would not accept contributions from political action committees, labor unions or interest groups. The names of all donors would be publicly disclosed, aides said.

Jones’ lawyers and conservative groups already have created the Paula Jones Legal Defense Fund to cover Jones’ legal fees.

Times staff writer Robert L. Jackson contributed to this story.