Somehow I missed it, but over the weekend the New York Post ran a story under the headline "Hedge Fund Witch Hunt" that began, "One of New York's wealthiest hedge-fund gurus is on a witch hunt to track down the person who leaked his fund's latest quarterly investor letter. "
The move "to actually seek a court order to force a media outlet to divulge its sources, is extremely rare," the Post claimed. The article was about the Elliott Associates fund led by Paul Singer, who was a partner of mine in the New York Sun. The Post went on:
First Amendment lawyers scoffed at the notion that Elliott has legal grounds to force AR to uphold the hedge fund's confidentiality agreements."It just seems to me to be colossal gall," said Chuck Tobin, a media lawyer with Holland & Knight in Washington.
The Post's story is objectionable on several counts, beginning with the reference to "one of New York's wealthiest." What does Mr. Singer's wealth have to do with the legal question of whether he can access the information needed to enforce the contract he has with the recipient of the investor letter? Under American law and under the principle of the rule of law, justice is blind — whether you have legal rights has nothing to do with how wealthy you are.
As Mr. Singer's case and some recent others show, however, how wealthy you are does, at least these days, unfortunately have something to do with whether certain elements of the press feel entitled to treat you as a target for abuse.
How about the reference to the "witch hunt"? "Witch hunt," of course, is a reference to the events in Salem where innocent people were tortured to death. Mr. Singer isn't trying to torture anyone or put anyone to death; he just wants to know who, if anyone, violated a contract by giving away a confidential business document. While witches were imaginary, in this case there appears to be at least the possibility of an actual breach of contract.
The Post's claim that seeking a court order forcing a media outlet to divulge its sources is "extremely rare" is nonsense. According to this paper from the Minnesota Law Review, "Avalanche or Undue Alarm? An Empirical Study of Subpoenas Received by the News Media," news organizations reported at least 43 subpoenas in 2006 seeking the names of confidential sources. The American Society of Newspaper Editors cites "a 2006 study" that "estimated that in that year alone, 67 federal subpoenas sought confidential material from reporters, with 41 of those subpoenas seeking the name of a confidential source." And those are just the federal subpoenas, not the state and local ones.
The journalists are so concerned about such subpoenas that, in between writing articles inaccurately describing the subpoenas as "extremely rare," they are busy lobbying Congress for a law that would protect them from having to comply with such requests.
The Post quotes a "media lawyer" who makes his living defending news organizations from such requests, but it doesn't quote any lawyers specializing in contracts. You'd think that the Post, as part of News Corp., would understand the importance in capitalism and in American law of being able to enforce a contract. Suppose an advertiser contracted to purchase advertising in the Post. Suppose the Post kept its end of the bargain by printing the advertising, but the advertiser failed to pay for the ads. Wouldn't the Post want to be able to enforce its contract rights in court the same way that Mr. Singer is trying to enforce the provisions in his contracts that require his investors to keep his communications with them confidential?
The other news organizations that have dealt with the story haven't done much better than the Post.
And Business Insider went so far as to characterize Mr. Singer as "desperate." The Business Insider reporter boasted that, "if it were my source that the judge ruled I had to reveal, I just wouldn't… Four months in jail wouldn't be fun, but I'd do it. One, to keep my source's trust. And two, that'd be a great story!"
Well, one way around this bind is for reporters to tell sources up front when negotiating ground rules that reporters will not disobey a lawful court order. How does it increase any reputable source's trust in a reporter if the reporter is going to go around boasting about how the reporter would disobey the law?
It's a strange time we are in indeed if, when you get to a certain level of wealth or success as an entrepreneur, the press all of a sudden decides that you no longer have the right to enforce your contracts. The Posts writes articles all the time demonizing criminals who receive stolen jewelry, art, or other property that is received unlawfully. It even has conceded that the principle sometimes applies to letters. When Wikileaks published Afghanistan war documents, the Post published an editorial that thundered, "This group needs to be stopped -- and held to account." Yet when the purloined documents aren't war-related but are related to protecting a business, the Post calls holding the leaker to account a "witch hunt" that exhibits "colossal gall."
If there's any colossal gall on display here, it is that of the Post.