Subpoenas of 2 news organizations correctly rebuffed

Monday, April 18, 2011

When a reporter receives a subpoena, it’s usually because he or she has cited a confidential source, obtained information that has eluded prosecutors or stirred up a controversy that results in civil litigation. Rare are the cases in which a reporter is subpoenaed simply because he or she did a good job.

Baker v. Goldman Sachs & Co. and McBride v. CBS Radio, however, are two such cases. In Baker, litigants subpoenaed a reporter in an attempt to show how easily the reporter had obtained information. In McBride, a party subpoenaed a producer in an attempt to show how responsibly the producer had handled an anonymous tip. As laudable as the reporting in these cases might be, the judges in them correctly rebuffed the efforts to compel these journalists’ testimony.

The subpoenaing litigants in Baker hired Goldman Sachs in 2000 to advise them regarding a merger of their company, Dragon Systems, with Lernout & Haupsie (“L&H”). According to the owners, Goldman Sachs failed to investigate adequately L&H’s finances and client base. As a result, the owners claim, they lost their entire $300 million investment when L&H filed for bankruptcy within months of the merger.

After filing suit, the owners subpoenaed Jesse Eisinger, who in 2000 was part of a team of reporters that wrote a series of articles about L&H for The Wall Street Journal. In these articles, the Journal reported that L&H had drastically overstated the extent of its client base. The owners sought to depose Eisinger as “the individual who did exactly what Goldman should have done” and to show how easily Goldman Sachs could have obtained information about L&H’s client base.

In Baker, the plaintiff claims a CBS radio station in Philadelphia failed to verify the accuracy of an anonymous tip and, as a result, falsely identified him as a target of an FBI investigation. Richard Williams, a producer for an ABC radio station in Philadelphia, received the same tip but did not broadcast the plaintiff’s name because the station was unable to verify the tip’s accuracy. The plaintiff subpoenaed Williams to establish how the ABC station had handled the tip and, by implication, how the CBS station should have handled it.

In both cases, the judges — in decisions coincidentally issued on April 12 — quashed the subpoenas. In Baker, Judge Barbara Jones of the U.S. District Court for the Southern District of New York held that the owners could not overcome the qualified privilege in New York’s shield law that protects newsgathering.

“Plaintiffs have not demonstrated how testimony about a journalist’s investigative techniques and process of reporting are a relevant comparison to Goldman Sachs’ duty of care in this situation,” Jones wrote. “The fact that the Wall Street Journal conducted an investigation into L&H sheds no light on the scope of Goldman’s obligations to Dragon and the Plaintiffs.”

In McBride, Judge Juan Sanchez of the U.S. District Court for the Eastern District of Pennsylvania held that Williams’ editorial decisions similarly were protected. Citing a qualified reporter’s privilege under the First Amendment, Sanchez held that “These editorial decisions and newsgathering activities are at the core of what the reporter’s privilege protects.”

Moreover, Sanchez noted, the plaintiff could “prove CBS was negligent in numerous ways without producing evidence of the investigations and editorial decisions of other news organizations.”

The decisions in Baker and McBride tell journalists that their good work can’t be used to prove someone else’s work was bad. If that message reaches litigants, subpoenas like those in Baker and McBride will be even rarer.