1. Path was fined, not for anything involving address books, but for allowing 12 year olds to sign up for the service.
2. Yes... it is proof that Path uploads your phone book. Of course, they ask you. The OS won't even give you access to the phone book without prompting the user. So somewhere along the way, the user knowingly gave Path access to their contacts.
It would be rather trivial for a real reporter to do some research here. Does Path actually say "We're going to invite all your friends via SMS", even in fine print? It might be sleazy, but it would certainly change a lot. But instead, we're just going to sit here and speculate about things and irrationally talk about a fine that didn't have anything to do with this.