Free Speech

Journalists Might Be Felons for Publishing Leaked Governmental "Predecisional Information"

That's the logical implication of a recent Second Circuit panel decision (though one involving a non-journalist).

|The Volokh Conspiracy |

In U.S. v. Blaszczak, decided four weeks ago, a Second Circuit panel concluded (by a 2-1 vote) that a federal agency "has a 'property right in keeping confidential and making exclusive use' of its nonpublic predecisional information." Because of this, the panel held that a federal employee's leak of the information—and the receipt of that information by someone cooperating with the employee—could be felony wire fraud and conversion of government property.

In Blaszczak, the people dealing with the employee were using this information to trade stocks, and some of the securities charges on which they were convicted were focused on that. But the wire fraud and conversion charges did not require a showing of such illegal trading—the parties were convicted for the "theft" of government information quite apart from how the information is used.

Say then that investigative journalists have a relationship with a federal government employee, and cooperate with the employee to get a leak of confidential government "predecisional information" about the government's planned policy changes. Under the panel's theory, they too would be guilty of felony conversion of federal property and wire fraud.

Indeed, even if they just get the leak out of the blue, they would likely still be guilty of felony conversion, so long as they knew the leak was of confidential information. In such a situation, they would have "knowingly convert[ed] to [their] use … any … thing of value of the United States," or "receive[d] … or retain[ed] [such a thing of value] with intent to convert it to [their] use or gain, knowing it to have been embezzled, stolen, purloined or converted." Participation in the leak itself isn't required; knowing use of the leaked information suffices. (If the "property" could somehow be valued at under $1000, such behavior would be just a misdemeanor, but I assume that under the federal-predecisional-information-as-property theory that the panel majority adopted, most leaked information would be valued at more than that.)

Nor would journalists have an obvious First Amendment defense that others don't possess. As I've canvassed in my Freedom of the Press as an Industry, or for the Press as a Technology? From the Framing to Today article, the First Amendment generally doesn't give institutional media more protection than other speakers.

Even if a court could distinguish use of government property for public speech purposes (whether by the media or other speakers) from such use for private purposes, the statutes on which the panel relies draw no such distinction. And the panel's reasoning as to property draws no such distinction, either: If the predecisional information is federal government property, and using that information for one purpose (selling stocks) is conversion of that property, then using that information for another purpose (selling newspapers) would be as well. Certainly journalists (or independent bloggers or other commentators) have no assurance that they would escape criminal liability under the panel's theory.

The National Association of Criminal Defense Lawyers amicus brief in the case puts the matter well:

Consider a government employee, believing the government is about to enact a misguided policy, who makes an interstate telephone call to a journalist and relays "confidential" information about the planned policy. Assume the employee does so in the hope that the journalist's newspaper will publish the article, that the publication will lead to public pressure, and that the pressure will lead the government to reverse its misguided decision. Further, assume the information will help the newspaper increase its circulation. On the prosecution's theory in this case, the employee, the journalist, and the newspaper would be well advised to consult with counsel before proceeding, for this conduct would satisfy each element of the fraud and theft offenses for which the defendants were convicted.

It would violate Section 641, as charged in this case, because on the prosecution's theory all "confidential" information is the government's property, the information was disclosed without permission, the disclosure was intended to deny the government the "use and benefit" of the property in precisely the manner identified by the prosecution here—undermining the government's ability to implement a chosen policy—and the information was worth more than $1,000 to the ultimate recipient, the newspaper.

On the prosecution's theory, this conduct would also violate the fraud statutes, for similar reasons: It would constitute a scheme to deprive the government of what the prosecution contends is government "property"—that is, the information about regulatory plans—and to convert that property to one's own use (that is, to run a profitable newspaper story).

The prosecution may protest that it would never bring such a case. But the vibrant public discourse guaranteed by the First Amendment requires greater protection than a prosecutor's indulgence. See McDonnell, 136 S. Ct. at 2372-2373 ("[W]e cannot construe a criminal statute on the assumption that the Government will 'use it responsibly.'" (quoting United States v. Stevens, 559 U.S. 460, 480 (2010))). When, as here, "the most sweeping reading of [a] statute would fundamentally upset" constitutional constraints on federal prosecution, it "gives … serious reason to doubt the Government's expansive reading … and calls for [courts] to interpret the statute more narrowly." Bond v. United States, 572 U.S. 844, 866 (2014).

Of course, information is sometimes treated as property, and indeed business confidential information has been so treated in related areas (as in Carpenter v. U.S. (1987)); that too raises potential First Amendment problems for business journalists whose articles are often based on leaks from within a company.

But the First Amendment concerns become even greater when the information has to do with the inner workings of the government, and not just of a private business. And the case for treating the information as property becomes weaker; to quote again the NACDL brief,

To be sure, the Supreme Court in Carpenter, on which the government relied heavily below, affirmed a fraud conviction based on a scheme to steal and trade on "confidential business information." But it was critical in Carpenter that the scheme involved a very particular business—the Wall Street Journal—and a very particular kind of information—the planned content of future columns. The Journal obviously held much more than a "regulatory" interest in its forthcoming columns. These columns were, in the Carpenter Court's words, the Journal's "stock in trade." It requires no great leap of logic to find that a newspaper has a property interest in the only thing it sells—the particular stories it plans to print—and that misappropriating such valuable, confidential information is a form of fraud.

Here, by contrast, the information about future regulatory actions is not something the government ever sells, much less its entire stock in trade. And the government can identify only hypothetical regulatory injury from disclosure of the information, unlike the obvious commercial loss at issue in Carpenter....

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  1. Not seeing a problem.

    1. Because you enjoy the image of people you don’t like being incarcerated?

  2. Is felony conversion applicable to non-rival goods? They’re not actually “converted” as such, after all.

    1. That was my initial thought, but it seems “conversion” in this context has a bit different flavor than in the typical tort context.

      We disagree with Defendants’ view of how the “serious interference” standard applies when, as here, the property at issue is confidential information. By focusing on the fact that their misappropriation of confidential CMS information did not ultimately affect the rules that CMS subsequently announced, Defendants disregard the Supreme Court’s teaching in Morissette v. United States that conversion under Section 641 extends broadly to the “misuse or abuse of [government] property.” 342 U.S. 246, 272 (1952). Moreover, Defendants’ argument overlooks the fact that the unauthorized disclosure of CMS’s confidential nonpublic information by definition interferes with the agency’s right to exclude the public from accessing such information. See Carpenter, 484 U.S. at 26 (rejecting the defendants’ argument that they “did not interfere with the Journal’s use of the [pre-publication] information” as “miss[ing] the point,” because it sufficed that the defendants interfered with the Journal’s “right to decide how to use [the information] prior to disclosing it to the public”). Thus, we agree with the government that the relevant “interference” with CMS’s ownership of confidential information was complete upon the unauthorized disclosure.

  3. If this ends up being applied to journalists, which I highly doubt, it will be their own fault. The culture of uncritically relying on anonymous government leaks (which have a low accuracy rate when we view such stories years down the line) has destroyed the notion that such arrangements are necessary for a free press and informed public.

  4. Treating information as property has one major flaw, it does not deprive the “owner” of the information of anything, except the sole possession of that information.

    If I steal a car, I have deprived the Owner of that car the use of his or her property. If I steal a copy of a document the Owner still has a copy of that document and can still use it. If I steal a copyrighted document I have deprived the Owner of the royalties the Owner might have received, however the Government cannot have a copyright in work produced by government employees.

    1. In trade secret law, stealing (or misappropriating) a trade secret deprives the owner of the value of having information that no one else has. The fact that the owner still has the information is not a valid argument, because you have deprived it of that value.

      That said, I am dubious that a government agency can own a trade secret.

      1. The classic example of a government “owning” a trade secret is the development of nuclear weapons or other weapons of mass destruction. Where the government works through various means to restrict the knowledge of the development, typically to just the government.

        1. Also trade treaty negotiations, and deciding whether or not to attack a foreign country (or just kill top-ranking members of its governments)

        2. Governments certainly have an interest in keeping certain information secret or at least confidential.
          But that is not a property interest. The government is not running a business, it is running a government. So I am dubious that rises to a “trade secret” or a proprietary right.
          (Here is one difference. Can the govt. sell its confidential information? No, it cannot. A trade secret, OTOH, can be sold, and it often has been when a business or part of a business is transferred.)

          1. ” The government is not running a business, it is running a government.”

            But the R’s want to run government like a business.

    2. There are significant exceptions. The copyright issue is generally true. But not always.

  5. “Blue Star . . . they’re about to get a favorable ruling on a big court case.”

    — Charlie Sheen to Michael Douglas, Wall Street, 1988

  6. Hmm. The release of the Pentagon Papers certainly sold a ton of newspapers, tv-ad slots and who knows what else. Would that happen under this ruling?

  7. This is a necessary push back to the assumed value of government leaks.
    There is no right to leak free of prosecution and no right to publish that which is stolen, even if it is information.
    Information is indisputably valuable, in almost all cases. Of course, the claimed lack of value would be a defense.

    1. Of what value to the government is this information?

      They can’t sell it, and its publication doesn’t damage any government property or financial prospects.

      IOW, it’s not like a business trade secret.

      1. Its value is to the People of the United States as a whole, and in keeping a fair and even standard, as well as increasing the efficacy of government.

        In this particular case, it was used for fiscal advantage by a private party. For an fair market system, if one individual party has an unfair knowledge advantage, it skews the system, introducing corruption. But there are several other situations where the release of confidential information would be detrimental.

        Take a court case. The Federal Prosecutors develop a strategy to prosecute someone. Someone in the prosecutor’s office disagrees with the case, and leaks the strategy to the defense. The defense uses the knowledge to assist in their defense. Should the leaker be prosecuted? What about the defense lawyers?

        Take an FBI terrorist investigation. Information is leaked and released, either privately or to the Press. The result is that the terrorist “gets away”. Should the leaker or press be prosecuted?

    2. “There is no right to leak free of prosecution and no right to publish that which is stolen, even if it is information.”

      The first part of this statement is obviously true and uncontroversial.
      The second part is obviously incorrect.

      The harder case is what you do with the third party who encourages someone to leak.

    3. “There is no right to leak free of prosecution […]”

      Why not? Surely you aren’t suggesting that Congress passed a law abridging freedom of speech, or of the press…

  8. I’m rather quite wonkish and see this more as not following a process as opposed to the information itself.

    Could the info have been obtained via legal means (FOIA)?

    1. Could the info have been obtained via legal means (FOIA)?

      Don’t you mean other means?

  9. How is wire fraud implicate if the journalist is cooperating with a government employee (or receives a leak without prompting)? Where is the misrepresentation?

  10. This is off-topic, but . . .
    Given the new info over the weekend; I do hope someone will post about why (or why not) the leak of Bolton’s book does not defeat any effort by Trump to claim Executive Privilege in re Bolton’s testimony. Or, at least, defeating an Ex. Priv claim about anything Bolton wrote that has been leaked already. My understanding was that, once it’s out in the public, most claims of privilege fail, since . . . well, it’s already out there.
    Is this correct? Or am I grossly oversimplifying the issue and therefore overlooking critical variables? Or am I just wrong about the law? All certainly possible (I’m relying on decades-old info from my law school memories), so I would not be shocked if my assumption turns out to be incorrect.

    1. In short,

      A. It probably doesn’t defeat executive privilege, for a few different reasons. Especially the broader privilege outside what was explicitly revealed.

      B. It doesn’t really matter anyway, because any such claims will be subject to lawsuit and appeals, and you’re back where you started with the original subpoenas*. An extended time to get the info you want.

      C. *It’s worth noting, Bolton was never actually subpoenaed by Congress. He was invited to testify before the House, and declined. But he wasn’t actually subpoenaed.

      D. It’s also worth noting that executive privilege extends beyond just disclosures to Congress, but also to the public as a whole. IE, if Bolton was writing a book, and there was confidential material in it that would reasonably be covered by executive privilege, then it would be…ahem…improper for Bolton to release that information to the public via publication. That would be release of confidential information. Now, if Bolton was subpoenaed by Congress, and that subpoena was upheld by the court, and it was released then…Nothing Bolton could do, he’s got to follow the law. And then the information is in the public domain, and a book could be published.

      But just publication of confidential information WITHOUT being forced to reveal it in public? That’s quite a different story.

      1. Agree that it would be (would have been?) improper to release info that was privileged. Although Bolton, by giving an advance copy to the White House for clearance, presumably did not “release” anything by this…the White House could order him to self-censor things that it claimed were protected by Ex Priv or some other privilege.
        My question was more general. Assuming that, say, 10 conversations were covered by some privilege; once those conversations have been leaked or otherwise released to the public, can a president still rely on a privilege claim. Or, like one’s virginity, is it: “Once it’s lost, it’s lost.”?

        1. There’s an open question about what “precisely” was leaked (and if its entirely accurate, but that’s a different conversation). But I would say the rest is still covered.

          To use a separate example, with the Fast and the Furious case (holding aside the much much later resolution to the lawsuit), we know Obama released many documents to Congress, but kept others under executive privilege. Simply because he released the first set doesn’t mean that all the rest couldn’t be covered (as Obama asserted Exec. Privilege at the time).

          Likewise, I think that questions that aren’t a “is what you wrote here true or not?” to Bolton would still be covered under executive privilege. And even questions like that “might” be out of bounds.

      2. There’s also the fact that approximately 53% of the Senate doesn’t want to be bothered by facts, and approximately 46% of the Senate already thinks they know anything Mr. Bolton would have to say.

  11. Pentagon Papers, much?

  12. The act of publishing is separate from merely possessing or reading. Whether the government, can consistent with the First Amendment, criminalize publishing (I would assume a “knowing” component would be required) classified material is a close call. Leaking it is far from any kind of call though. Of course there is no right to leak classified information.

    1. “Of course there is no right to leak classified information.”

      Because of course Congress can pass a law that abridges freedom of speech!

      1. Are you seriously suggesting the First Amendment protects people leaking classified governmental information?

        1. Let’s see. Congress shall make no law… yep. Checks out.

          1. The issue is almost never what a law is. The issue is typically what “the freedom of speech” includes.

            1. Yes, I’m sure they can find a way that the first amendment doesn’t say what it says.

  13. And yet should such a case involving a journalist arise, the same people crying “slippery slope…the end is nigh” will put forward arguments for why the rationale of this case isn’t applicable in the journalist context.

  14. Crazy how all the conservative libertarian commenters on this blog don’t much care for First Amendment protections for journalists against the government.

    1. I see tons of defense of the journalist, and nuanced discussion as to whether he encouraged the leaker too much, presumably as with whether the Wikileaks guy merely said he’d publish, you’re a good man, or actually paid or helped plan it somehow.

      1. Tons.

        Except for Bob, Allutz, JtD, GoPH…

        Also strange how this blog which is so often full of libertarian bumper-stickers is suddenly into nuances about how journalists could be on the hook via what is admittedly a technicality.

        1. I am in no way attacking free speech, just stating that journalists need to hold themselves to higher standards otherwise it becomes an unteneble Popperian scenario where the institution lives in service of foreign spies and disaffected domestic liars.

          1. 1. Good on you for clarifying. I stand corrected, and am glad you aren’t acting merely out of spite like many on here seem to be.

            2. I also don’t much like for the current trend of court gossip as reporting, but I don’t think the costs of such require the broad, novel, and collateral attack on publication that the OP describes.

            1. My point merely is that the 1st Amendment (and a lot of our rights) have a lot in common with classic “commons” in economics. They can only exist with civilized participants and responsible stewards. We’ve already had reporters have their phone records taken in the Stephen Jin-Woo Kim case, and that case is incredibly tame compared to the leak culture we have now.

              1. I think I push back on that. Utilitarian or consequentialist arguments about rights regimes cannot be the entire picture, or else all rights would be constrained to the point of effective annihilation in the name of ‘necessity.’

                It’s pretty sinister to say ‘the only way these rights can exist is if no one exercises them to their full extent.’

                Plus, the journalist isn’t the one doing the wrong, it’s the leaker. The journalist is just the more convenient target.

              2. “or else all rights would be constrained to the point of effective annihilation in the name of ‘necessity.’ ”

                Correct. See, e.g., internment of American citizens during WWII.

  15. Please note: when the so-called Climategate emails were released, showing climate scientists across the English-speaking world as scoundrels, the NY Times referred to the emails as ‘stolen.’ So much for the MSM as seekers for truth.

    1. Ah, words matter.

    2. Not quite the same as jailing anyone, Jon.

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