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Financial newsletter entitled to news media privilege

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  1. Protecting Sources and Materials
NEWS MEDIA UPDATE   ·   MARYLAND   ·   Confidentiality/Privilege   ·   Sep. 21, 2006

NEWS MEDIA UPDATE   ·   MARYLAND   ·   Confidentiality/Privilege   ·   Sep. 21, 2006

Financial newsletter entitled to news media privilege

  • A Maryland court rules that a newsletter president does not have to answer deposition questions covered by the state reporter’s privilege law.

Sep. 21, 2006  ·   The publisher of a financial newsletter qualifies for protection under the state’s news media privilege act, according to a panel of Maryland appellate judges who nonetheless ordered a deposition of a newsletter publisher to move forward on Tuesday.

Tim Mulligan had appealed the January 2005 decision of a Maryland circuit court judge who refused Mulligan’s request to quash a subpoena for his deposition.

Mulligan, who publishes The Eyeshade Report, a newsletter that reports on publicly traded companies, was subpoenaed in 2003 by Matrixx Initiatives Inc., the company that manufactures Zicam nasal products.

Matrixx alleged that an article written in The Eyeshade Report contained false statements about their products and demanded the subscriber lists of the newsletter to identify possible sources of the article, according to Mulligan.

“I wrote an article that was very critical of Matrixx, ” Mulligan said today. “I derived most of the information from Matrixx’s Securities and Exchange Commission report, but there were some private sources.”

Mulligan said that compelling disclosure of subscriber lists creates special problems for industry-specific reporters because their subscribers and news sources may be the same people.

Mulligan had feared the lower court’s motion was denied because the judge did not think newsletter reporters qualified for the state reporter’s privilege or thought the privilege did not protect subscriber lists.

In declaring Mulligan a member of the news media, the appeals court relied on Deltec v. Dun & Bradstreet, an Ohio case from 1960, to suggest that a financial newsletter would be covered by the reporter’s privilege in Maryland.

Still, the appeals court in Annapolis upheld the subpoena, stating that Mulligan’s deposition would “go forward because it is clear that the subpoena issued to appellants [Mulligan] seeks much more information than is subject to protection under the act,” wrote Chief Judge Joseph Murphy, referring to the state shield law.

The appeals court, agreeing with the lower court, noted that if certain information is privileged, Mulligan would not have to answer questions during his deposition that revealed that information. Mulligan still would be required to answer questions not covered under the privilege.

Mulligan said he was “pleased that the court acknowledged the privilege.”

But the court’s ruling did not address the issue of whether Mulligan will be required to divulge his subscribers.

If asked by Matrixx, Mulligan said that he will not hand over his subscriber lists or sources. He cited a 2003 case in which the state appeals court denied the Maryland Securities Divison’s request to obtain a subscriber list from a newsletter publisher under the state’s reporter’s privilege.

In Mulligan’s case, Matrixx subpoenaed not only the subscriber lists but 25 separate categories of documents. Mulligan said that he believes Matrixx demanded the voluminous amount of material in part as a scare tactic.

“This is not a bad way to go after a critic,” Mulligan said.

(Forensic Advisors, Inc. et al. v. Matrixx Initiatives, Inc., Media Counsel: Tim Mulligan, Annapolis, M.D.)HS

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