Latest First Amendment Contest Erupts Between Judge, McGraw-Hill

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Dealing yet another blow to the already embattled Fourth Estate, a federal judge in Washington ordered a business publisher yesterday to turn over a trove of data about energy pricing to federal regulators investigating alleged manipulation of the natural gas market.


Judge Royce Lamberth ordered McGraw-Hill Companies and its division that sells energy-related data and reports, Platts, to produce a wide array of pricing information as well as internal e-mails, procedures, and other records. The subpoenaed records are to be turned over to the Commodity Futures Trading Commission as part of an ongoing probe of allegations that some energy firms and traders deliberately released doctored numbers in order to affect gas prices.


Judge Lamberth said Platts qualified for a legal privilege that protects journalists from having to testify or produce records in many cases. However, the judge found that the regulators’ need for the information outweighed the privilege in this instance.


“While the record reflects that Platts may not be involved in what is most commonly considered traditional news gathering, the privilege applies to a broad range of news gatherers,” Judge Lamberth wrote. He said the commodity board’s claim to the Platts information was not as strong as that of a federal grand jury, but still important because inaccurate reports could have moved the markets. “To the extent that Platts’ publications were erroneous, the public interest in truthful news reporting – the very interest safeguarded by the privilege – is threatened,” the judge wrote.


A spokesman for McGraw-Hill, James Keener, said the company was still reviewing yesterday’s ruling. “We’re pleased the court recognized the applicability of the reporter’s privilege,” Mr. Keener said.


In advancing its claim for the journalistic privilege, McGraw-Hill wrapped itself in the First Amendment. However, in a related case in Texas, the company took a step highly unusual for a news organization, asking a federal judge to close a criminal trial to the press and public.


In Houston, McGraw-Hill recently sought to block the disclosure of records the company provided to a grand jury investigating alleged market manipulation. The publishing company said releasing the data during the trial of an energy trader, James Phillips, could harm the firm competitively and disclose its trade secrets.


McGraw-Hill asked the court to close any proceedings in which the firm’s work was to be discussed. Last month, Judge David Hittner rejected the request, saying that it could require closing the courtroom for the entire trial. “The interests to be served by a fair, expeditious and unparsed public trial outweigh the monetary loss likely to be suffered by McGraw Hill,” the judge wrote.


An attorney for Mr. Phillips, David Adler, described McGraw-Hill’s stance in the Texas case as “weird.”


“It’s a little ironic that the media company’s seeking to close the courtroom,” he said. “If this was Coca-Cola and they were trying to protect the formula for Coke, I’d have a little more sympathy for them.”


McGraw-Hill argued that displaying the data in court would disclose the way it modifies the information before publishing it. Asked about the Texas case, Mr. Keener said, “McGraw-Hill has consistently responded to requests for data in a manner consistent with our journalistic principles.”


A professor of media ethics and law at the University of Minnesota, Jane Kirtley, applauded Judge Lamberth for finding that Platts qualified as a news outlet, but she was critical of the firm’s legal approach. “You really cannot avoid the charge of being a hypocrite if you argue for openness all the time, except when you’re involved in a case,” she said. “It is a problem. How can you expect a court to take you seriously if you are opportunistic in the assertion of that privilege?”


Ms. Kirtley said it was troubling that the regulators had turned to the press to advance an investigation. “The fact they have to use a news organization to do their homework for them bothers me,” she said.


The decision issued yesterday involved data submitted to Platts by a specific energy marketing company that is under investigation by commodities regulators. At the firm’s request, the company is not identified in public court records.


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