Second Circuit Considers Application Of Qualified Reporter’s Privilege

Second Circuit affirms motion to quash subpoena issued to a Wall Street Journal reporter concerning the “accuracy” of published information under New York's Qualified Journalist’s Privilege; under the non-privilege rules of the FRE, it would be difficult to prevent the exposure of privileged information on cross-examination, in Baker v. Goldman Sachs & Co., 669 F.3d 105 (2d Cir. Feb. 15, 2012) (No. 11-1591-cv)

We have previously noted the reporter’s or journalist’s privilege. See, e.g., Error In Applying Journalist’s Privilege In Securities Fraud Case. Congress has also considered this privilege over the past few years. See generally Congress Watch: Reporter Shield Measure (S. 448) Moves To Senate Legislative Calendar; Legislation: Free Flow of Information Act of 2009.

The Second Circuit recently considered the application of the qualified journalist’s privilege which applies to “news that is both unpublished and not obtained under a promise of confidentiality.” The qualified privilege protects reporters from compelled disclosure of “any unpublished news obtained or prepared . . . in the course of gathering or obtaining news . . . , or the source of any such news, where such news was not obtained or received in confidence.” Baker, 669 F.3d at 107-08 (citing N.Y. Civ. Rights Law § 79-h(b)-(c) (NY Journalist Shield Law)). A party may obtain information otherwise protected by the qualified privilege upon demonstrating:

a clear and specific showing that the news: (i) is highly material and relevant; (ii) is critical or necessary to the maintenance of a party's claim, defense or proof of an issue material thereto; and (iii) is not obtainable from any alternative source.
Baker, 669 F.3d at 108 (citing N.Y. Civ. Rights Law § 79-h(c)).

District Court Proceedings

In the case, the plaintiffs brought an action against Goldman Sachs which had provided financial advisor services concerning the sale of the plaintiff’s company in exchange for Lernout & Hauspie stock which ultimately lost its value. As part of the case, the plaintiffs sought to depose former Wall Street Journal reporter Jesse Eisinger who had written articles raising questions about the value of the Lernout & Hauspie stock. The reporter filed a motion to quash the subpoena for a videotaped deposition. In the district court, plaintiffs’ counsel explained the basis of the intended interrogation:

Well, we're going to ask him to confirm what he says was done in the articles which is, among other things, that he received from L&H directly a list of customers which they voluntarily provided to him and that he and his colleagues then proceeded to call those customers and they subsequently published their findings about what those customers told them in the [WSJ].
One point of the intended questioning was to show that a forensic accounting firm which was suggested by Goldman Sachs was not essential to learn of the fraud. The district court granted the motion to quash the subpoena, noting:

(i) Eisinger, as a journalist, could claim the Shield Law’s protection; (ii) the information sought was covered by the Shield Law; and (iii) the Bakers had failed to overcome the privilege by establishing through “clear and convincing evidence” that the testimony “would be critical and relevant” to the maintenance of their claim. It noted the testimony “invariably require[d] disclosure of the unpublished details of the newsgathering process.” The court found that the scope of questions could not be confined to published information, because even the most basic questions -- such as who made the calls and interviewed the Korean companies -- were unpublished details of the newsgathering process. Further, to show that a forensic accounting firm was not required to unearth the information obtained by Eisinger, the Bakers “inevitably would have to ask questions regarding Eisinger's techniques for conducting his investigation, the backgrounds of Eisinger's co-authors and the [WSJ’s] editorial staff, and whether he consulted with any experts or other sources in the course of the investigation” -- all inquiries into the newsgathering process protected by the Shield Law.
Baker, 669 F.3d at 109. The plaintiffs appealed the order granting the motion to quash.

Second Circuit: Shift In Argument: Seeking “Accuracy” Of The Information Reported

The Second Circuit affirmed the district court ruling. The circuit noted that given the apparent application of the Shield Law, counsel for the plaintiffs “took a new tack during oral argument” and clarified that the questions would verify whether the published information was “accurately reported.” When the circuit questioned at argument whether this would open the door to other issues, counsel noted, “because someone else wants to cross-examine in a way that may implicate the shield law, that does not prohibit us from asking legitimate questions that do not implicate the shield law.” Baker, 669 F.3d at 110.

The circuit “reject[ed] this argument.” Initially, “the question counsel proposes to ask cannot be divorced from unpublished material relating to the article.” Baker, 669 F.3d at 110. The answer could not be provided without an adequate foundation under either FRE 701 or FRE 702. As the circuit explained:

Indeed, the opinion sought would not be admissible under Federal Rule of Evidence 701 without foundation evidence showing that the opinion was “rationally based” on Eisinger’s perception and “helpful to . . . determining a fact in issue,” which would require testimony squarely within the shielded area. Even if some component of the opinion was deemed to involve “technical” or “specialized” knowledge regarding journalism –- i.e., an expert opinion -- Federal Rule of Evidence 702's requirement of a showing that such knowledge was “reliably applied . . . to the facts of the case” would enter the protected area.
Baker, 669 F.3d at 110.

Further, if the question were permitted, the cross-examination under FRE 611(b) would likely expose privileged communications. Baker, 669 F.3d at 111 (citing United States v. Treacy, 639 F.3d 32, 44-45 (2d Cir. 2011) (noting in a criminal case involving the journalist’s privilege the right to conduct cross-examination within the scope of direct examination and under the Confrontation Clause)). The circuit also noted that the Rule of Completeness, under FRE 106, may operate to require introduction of a complete writing. The cross-examination could also embrace “issues relating to credibility” under FRE 607 and 608(b).

Finally, the circuit noted the impact the proposed questioning would have in undermining the Shield Law:

If the proposed question was allowed to be asked and answered on the ground that it sought information outside the protected area, the cross-examiner could then easily overcome the privilege by showing a critical need to establish Goldman’s defense to the inferences to be drawn from the answer. The result would turn the statute on its head by allowing an evasion of the privilege through a question deliberately framed to be (supposedly) outside the scope of the privilege to have the effect of compelling testimony on cross-examination within the privilege. We decline to follow a route leading to this result.
Baker v. Goldman Sachs & Co., 669 F.3d at 111-12.

The Baker case highlights the challenges to question a reporter asserting the Reporter’s Privilege. Merely asking the reporter to verify the accuracy of the published information could expose privileged information by use of the FRE on cross-examination.


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