A new corporate threat

Why bother subpoenaing reporters? Deep pockets and legal responsibilities make media companies vulnerable to court battles.

From the Summer 2007 issue of The News Media & The Law, page 13.

By Elizabeth Soja

In March, U.S. District Judge Reggie Walton issued an order advising Dr. Steven Hatfill that proceeding with his Privacy Act lawsuit against the government was “an endeavor” that Hatfill assumed “at his peril if he decides not to further identify the source or sources of the purported improper disclosures.”

Walton urged Hatfill to “obtain the identity of the alleged source or sources at the Department of Justice and the Federal Bureau of Investigation who allegedly provided information to news reporters” about Hatfill’s status as a “person of interest” in investigation surrounding the anthrax attacks that killed five people in 2001.

Of course, Hatfill’s biggest problem was that the reporters in questions Jim Stewart of CBS, Brian Ross of ABC, Allan Lengel of The Washington Post, Toni Locy of USA Today, and Daniel Klaidman and Michael Isikoff of Newsweek had already refused to break promises of confidentiality they made to their sources.

The reporters had complied with Hatfill’s earlier subpoenas and submitted to general questioning, but they refused to divulge the identities of individual sources at the Justice Department and FBI or talk about any confidential information. Hatfill was going to have to get creative if he wanted to follow Walton’s directive.

What happened in the following weeks demonstrated new and dangerous pitfalls of confidential source reporting. In particular, Hatfill’s case in Washington, D.C., has shown how corporate responsibilities can conflict with a journalist’s ability to disseminate information to the public and the case is not over yet.

Following Walton’s March order (and perhaps taking it further than Walton intended), Hatfill filed motions in April to compel the testimony of the six reporters and subpoenaed several news organizations. He also issued new subpoenas to corporate parties The New York Times Co. and The Baltimore Sun Co., and subpoenaed more journalists, including six Washington Post reporters and Mark Miller of Newsweek.

But why would Hatfill subpoena the news media organizations and parent companies when it was the journalists themselves who knew the identity of the government sources? He was simply following in the footsteps of other plaintiffs and prosecutors who have now realized that corporate news media parties often have more vulnerabilities and more money than individual reporters.

Although Hatfill’s situation is not the first to showcase these problems, it seems to be a culmination of several cases in recent years that have targeted the new corporate vulnerability of the news media.

Faced with the reality that many journalists are ready and willing to go to jail to protect their sources, those who seek journalists’ confidential information have begun to seek alternative ways to compel testimony or obtain confidential information. And if that fails, they can seek large sums of money from the deep pockets of the news media corporations.

In this age of technology and corporate media, the profession of journalism that is, the work of reporters to disseminate truthful information to the public can, in today’s technologically advanced world, conflict with the business of newsgathering.

Lee reaches into deep pockets

The “deep pocket” problem became most apparent in the recent case of scientist Wen Ho Lee a case that is markedly similar to Hatfill’s. In 1999, Lee became the subject of a government investigation when he was accused of stealing United States nuclear technology secrets for China.

Although Lee faced 59 counts of felony espionage, all charges but one against the former nuclear physicist at the Los Alamos National Laboratory in New Mexico were dropped. After the investigation concluded, Lee sued the FBI and U.S. Departments of Energy and Justice under the Privacy Act, alleging that government officials had violated his rights by speaking improperly to members of the news media during the investigation.

In order to prevail in court, Lee said he needed to know the names of the specific officials within the government departments who had spoken with the news media. Articles covering the story, however, attributed the information only to anonymous government sources.

Six journalists were subpoenaed and, just as in the Hatfill case, the journalists agreed to comply with the subpoenas but refused to reveal their sources or discuss confidential information. They were found in contempt of court and fined $500 per day, which was stayed pending appeal.

According to those present in the courtroom, the judge said she would forbid the reporters’ employers from paying the fines a prospect that threatened to financially ruin the reporters and their families.

In 2006, the reporters appealed to the U.S. Supreme Court. But just days before the court was to decide whether to accept the case, Lee entered into a settlement agreement with the government and the reporters’ testimony was no longer necessary.

However, in an unusual twist, the news media organizations involved actually contributed to the government’s settlement with Lee. Even though they were not parties to the lawsuit, ABC News, The Associated Press, the Los Angeles Times, The New York Times and The Washington Posteach agreed to pay Lee $150,000. Faced with the possibility of their reporters being fined $500 a day (roughly $15,000 a month, or $180,000 a year), settling for that amount might have been a bargain.

The companies issued a statement that expressed their reluctance “to contribute anything to this settlement” and their belief that they “sought relief in the courts and found none.” The organizations further explained that they agreed to the settlement “to protect our confidential sources, to protect our journalists from further sanction and possible imprisonment, and to protect out news organizations from potential exposure.”

Although there is no precedent regarding the limits of the fines that can be assessed to news media companies or to reporters personally, the Lee settlement demonstrated the fear of heavy fines spiraling out of control and bankrupting companies and individuals.

‘Most vulnerable’

And it’s not just the fines that can cause problems for companies. Former Time magazine Editor in Chief Norman Pearlstine who was embroiled in the controversy surrounding a subpoena for reporter Matthew Cooper’s notes during the Valerie Plame affair noted that even apart from large fines or settlements, the time and money involved in any corporation’s defense of a reporter can be draining and significant to the corporation and all of its employees.

“Litigation cost is a serious issue,” Pearlstine said. “Even if the corporation is not a party to the case and even if there are no fines, there will still be significant legal bills involved. Litigation cost is a serious issue for everybody, including corporations.”

Pearlstine, who now works as a consultant, added that “not every corporation is multinational” and can afford to pay high legal bills or fines associated with fighting subpoenas.

San Francisco Chronicle reporter Lance Williams, who was subpoenaed with fellow reporter Mark Fainaru-Wada to reveal a confidential source for articles on the Major League Baseball steroids scandal, said that “fining the company has always been part of the toolkit,” but that today, “it is a place where news organizations are most vulnerable” since many newspapers are having financial difficulty in the wake of new technologies and declining circulation.

In Williams’ case, he said that the Chronicle’s parent company, Hearst Corp., “was good enough to go all the way down this road.”

“But when they started talking about the aggregate fines that could have gotten into the tens of millions of dollars, it was scary,” Williams said. “That’s money we’re supposed to use to cover the news. I was worried they would bankrupt the paper.”

Williams also said that he feared for his own financial well-being, as well as his family’s.

“I was less concerned about going to jail than them fining me personally to punish me,” Williams said. “That wasn’t the way our judge handled it, and I don’t know if they legally can do that in a contempt situation, but I was worried.”

A personal privilege no longer

A corporation’s deep pockets may not be the biggest corporate threat to the journalism profession. In today’s technology-based newsrooms, it is not just the reporter who has access to notes, e-mail, and electronic story drafts.

Instead of merely subpoenaing journalists to uncover the identities of their anonymous sources, it is becoming more common to use the corporate structure of a journalist’s employer and the corporate responsibilities that go along with that structure to coercively compel information from both the reporter and the company.

According to Barbara Wall, general counsel for Gannett Co., the news media’s dependence on technology indirectly exacerbates problems that have existed in newsrooms for years.

Unlike the days before e-mail and computers, “it’s not just the reporter’s notebook you need to worry about” when a legal dispute arises, Wall said.

“Every reporter is sending out e-mails and keeping electronic drafts of stories,” she said. “The company has access to more data now.”

Although the dispute over whether the reporter or the newspaper owns a reporter’s notebook is not new, 21st-century technology means that a plaintiff can be reasonably sure that both the reporter and the newspaper have access to the reporter’s computer files.

These conflicts were apparent in 2003 when Special Prosecutor Patrick Fitzgerald sought the identity of Cooper’s source during the Plame affair. Instead of merely subpoenaing Cooper for the information, Fitzgerald also subpoenaed Time Inc. and demanded that the company turn over Cooper’s e-mail and electronic notes.

Both Cooper and Time Inc. fought the subpoenas, but in August 2004, Chief Judge Thomas Hogan of the federal trial court in Washington, D.C., found both the reporter and the company in contempt of court.

After exhausting the appeals process, Time Inc. announced that it would comply with the subpoena. Over Cooper’s objections, the company handed over Cooper’s notes and e-mail to Fitzgerald.

In an official statement defending the company’s decision, Pearlstine said that the courts, in refusing to quash the subpoena, had “limited press freedom in ways that will have a chilling effect on our work.” However, Pearlstine said Time Inc. would turn over the records, reasoning that the “same Constitution that protects the freedom of the press requires obedience to final decisions of the courts and respect for their rulings and judgments.”

Pearlstine reasoned that “while individuals can engage in civil disobedience you can exercise your right to civil dissent and go to jail corporations have a broader responsibly, and it’s not just financial.” Rather, Pearlstine said, it is the corporation’s “responsibility to multiple employees” that can severely complicate matters.

“If Cooper and I were the only ones who knew his source and we believed that the source was entitled to confidentiality, an option would have been that we could have both said no to testifying and we could have both just gone to jail,” Pearlstine said. “But because the information was in e-mail and discoverable, dozens of people might have had access to it. A corporation has a responsibly for the welfare of all of its employees.”

New rules, new complications

Corporate access to a reporter’s information became even more problematic in December when the Federal Rules of Civil Procedure governing discovery and information-gathering in civil lawsuits were updated to address the modern practice of storing data in computer files rather than in filing cabinets. The new rules will also make it easier to for parties to get more information from electronic documents.

When a companies or individuals receive a subpoena for documents, they must now turn over electronically stored information (ESI) in addition to the notes, letters and documents that were traditionally subject to discovery.

By making information discoverable as ESI rather than as printed sheets of paper, litigants can discover vastly more information than a printed page or even a saved e-mail would provide.

ESI often comes with large amounts of “metadata” that acts as a roadmap of the document’s history; examples include editing and drafts, time stamps, use of printers or faxes, e-mail headers and routing information. Thus, under the new rule, litigants can potentially become privy to every change made to a document, every use of a printer, and countless other details that could never be learned from a printed page.

Additionally, news media companies like all corporations are also now required to retain data as soon as the corporation merely anticipates litigation. Courts have said recently that a corporation must preserve any data or documents that are “reasonably likely to be requested during discovery” rather than when a complaint is filed or a subpoena is served.

If a corporation fails to place this hold and documents or data are destroyed, the corporation may be guilty of destruction of evidence, which Wall said can result in sanctions that range from “monetary fines to having the case decided against you.”

Williams noted that fighting a subpoena “takes dedication on the part of the reporter, but the company has to be ready to take the hit as well.”

Williams said he appreciated his employer’s willingness to stand behind him, but wonders how many times it would happen again.

“I imagine news organizations can’t go through this ordeal many times,” he said.