Second Circuit case could weaken reporter's rights

The U.S. Court of Appeals in New York (2nd Cir.) heard oral arguments Tuesday in a case that could affect whether reporters can refuse to testify about their sources.

In the appeal of a fraud conviction against former Monster Worldwide Inc. executive James Treacy, the defense argued in its brief that Treacy was deprived of his Sixth Amendment right to confront witnesses against him when a lower court limited the testimony and cross-examination of a reporter who invoked his privilege not to testify.

According to the brief, Wall Street Journal reporter Charles Forelle was called to testify for the government regarding statements Forelle attributed to Treacy in a 2006 Journal exposé on corporate backdating of stock options. Treacy was accused of engaging in illegal backdating of employee options and was convicted of conspiracy and securities fraud in the lower court, according to Bloomberg.

When Forelle was called by the government to testify, he invoked his First Amendment-based privilege not to disclose information, arguing that his testimony was not essential to the case, according to the Bloomberg report. The government disagreed, insisting that comments Treacy made during the interview for the Journal could prove he lied to the government by denying involvement in backdating of employee options. The court then reached a compromise in which Forelle was forced to testify, but attorneys were only allowed to question him about statements attributed to Treacy in the Journal story.

In their brief, defense lawyers pointed out that "Treacy spoke only about his own option grants" in the Journal interview and was not in fact denying involvement in the process of issuing options to all company employees, as the government was trying to prove. The defense argued that because they were limited to questioning Forelle about only the statements made in the Journal story and, thus, were prevented from discussing outside communication between Forelle and Treacy that purportedly could prove their case, they were obstructed from proving Treacy's statements referred only to his own options.

"The court’s 'tight limit' on the scope of the reporter’s testimony . . . resulted in only one side of the conversation being admitted: the government got to admit the reported statements, and argue to the jury they were lies, while the defense was prevented from questioning the reporter about the context or details of the interview, which bore critically on whether the statements were true or false," the defense brief says.

Treacy's lawyers also argued they were "further prevented from testing the credibility of the reporter's answers," and that this was a gross violation of the defendant's right to confrontation.

"The journalist’s privilege . . . does not trump a criminal defendant’s right to confront and cross-examine a government witness," the defense wrote.

In response, government prosecutors argued that the trial court was completely justified in balancing rights under the First Amendment against Treacy's right to confrontation, and that this did not amount to a violation of the defendant's Sixth Amendment rights. Prosecutors also pointed out that the appellate court has a long history of defending the reporter's privilege.

Dow Jones & Company Inc., publisher of the Wall Street Journal, filed a friend-of-the-court brief, defending their reporter's First Amendments rights and arguing that the court "should have simply quashed the Subpoena."

Dow Jones also urged the court to define the exact circumstances under which a reporter may be called to testify in federal court, arguing that such a standard should follow precedent from U.S. v. Burke, which requires that a reporter's testimony be "highly material and relevant" in order for the court to override the reporter's privilege.

"Accepting the Government's own arguments," the brief argues, "the Subpoena was nothing more than an attempt at unnecessary bolstering of a fact that had already been established. Forelle's testimony, therefore, cannot be considered highly material and relevant, as the Burke standard requires."

The core issue for the press in this case is a direct conflict between reporters’ rights under the First Amendment and a defendant’s rights under the Sixth Amendment. A ruling in favor of the defense could give criminal defense lawyers the power to fully question reporters during cross-examination and could affect reporters' ability to compromise and settle subpoena battles by agreeing to provide partial testimony, as Forelle did in this case.

During oral arguments Tuesday, the court was more concerned with the inadequacy of the cross-examination than with the rights of the press, said Bloomberg reporter David Glovin. One judge inquired whether Forelle was “on some sort of pedestal,” while another argued that the cross-examination “was so limiting.”

Although the court did not comment directly on the future of the reporter's privilege, Glovin said, one judge hinted that an upcoming ruling in another Second Circuit case could have an impact on the rights of the press.

In a dispute between oil giant Chevron and documentary filmmaker Joe Berlinger, the Second Circuit ruled earlier this year that Berlinger must release 600 hours of footage gathered for his film “Crude,” which depicts a legal battle between Chevron and residents of the Amazon region who claim the company is responsible for massive pollution in the area.

On July 15, the court entered an interim order demanding that the documentary maker release most of the footage, but has yet to issue a more detailed written opinion.

During oral arguments in Treacy’s appeal, the judge indicated that the Chevron ruling may affect the reporter’s privilege "at least around the edges," Glovin said.