More on "Journalists Might Be Felons for Publishing Leaked Governmental 'Predecisional Information'"

Interesting developments before the Supreme Court, which is scheduled to consider the case Friday.

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I wrote about this case last year, shortly after the Second Circuit panel decision (which was titled U.S. v. Blaszczak) concluding 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.

There have been procedural developments since then (there usually are). Several months after the panel decision, the Supreme Court adopted a narrower reading of "property" in Kelly v. U.S.—the Bridgegate case—than some lower courts had done. The defendants in Blaszcak then petitioned the Court for certiorari. (The lead case is now styled Olan v. U.S.). And the government didn't file a substantive argument about the certworthiness of the case, but instead asked the Court to send the case back down to the Second Circuit:

Petitioners contend that their convictions … are infirm because a federal agency's predecisional, confidential information about a regulation does not constitute "property" under the federal fraud statutes or a "thing of value" under the federal conversion statute. After the court of appeals issued its decision in this case and denied rehearing, this Court decided Kelly v. U.S., which held that "a scheme to alter … a regulatory choice is not one to appropriate the government's property." …

A remand … would allow the court of appeals to consider the issue …. Accordingly, the appropriate course is to grant the petitions for writs of certiorari, vacate the decision below, and remand the case for further consideration in light of Kelly.

I'm pleased to see that the Second Circuit decision will at least likely be reconsidered, though it seems to me to make sense for the Court to be the one doing the reconsidering. The issue strikes me as being of huge First Amendment significance, and likely of even greater securities law significance (though as to the latter I'm not an expert).

Here, by the way, is a passage from the National Association of Criminal Defense Lawyers amicus brief in the Second Circuit phase of the case that puts the substantive issue 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. Speaking of which, I’m surprised that none of the Conspirators took official notice of the UK magistrates court holding that Julian Assange can’t be extradited to the US because in a US supermax prison he would kill himself. If I was American I’d consider that a pretty serious conclusion for a foreign court to reach.

    1. Are you suggesting that… Jeffrey Epstein didn’t kill himself?

      At least, that’s one recent prominent case where a US federal prison failed to prevent an inmate’s death when they were recently identified as a suicide risk. If Epstein killed himself, why is it outlandish to think that Assange would be unable to?

      Separately, courts both inside and outside the US often make mistakes or issue politicized judgments. What evidence did the court hear before reaching that conclusion?

      1. On the contrary, the judge referred to the Epstein case as an example of someone killing themselves in Supermax. (Judgment, par. 361.) That’s also where you can read what evidence the district judge considered.

        But the judgment is extremely critical of the US prison regime, listing all sorts of things that could and should be better with respect to prisoners’ mental health. It’s a pretty high profile example of foreigners talking about the US as if it’s a third world country.

        1. Well, the BoP has its problems…

    2. Doesn’t the UK have a “No Execution” policy — that they won’t extradite if the person faces a possible death sentence?

    3. Seems to me it says a lot more about Assange than US prisons. It’s pretty hard to keep a determined inmate from killing themselves, absent 24 isolation which of course could make him even more unhinged.

      Usually I’m skeptical about claims of mental illness to escape punishment, but remembering this story from almost 2 years ago makes the claim a little more credible:
      Julian Assange evicted after smearing faeces on embassy walls

    4. In the year that Epstein killed himself, there were 27 suicides in US federal prisons, out of about 175,000 total prisoners.
      England/Wales that year had 83 prisoner suicides, out of about 85,000 total prisoners.

      27/175,000 = 0.015%
      83 / 85,000 = 0.097%

      So, the US system is so terrible that it has 1/6th the suicide rate of the English prison system, and that’s a reason for Americans to be ashamed that an English judge won’t allow Assange to be sent to the US for trial.

      Right.
      Like many conclusions of foreign courts about the US, it has little to do with reality.

  2. The NACDL brief relies a lot on a situation that federal processes already have provisions to prevent: namely, that a federal agency makes a poorly considered decision final. Significant rules require notices of propoosed rulemaking and comment periods, minor rules can be reversed as easily as they are passed, and so forth. Admittedly, judiciary deference does hamstring court review, but we should not have to rely on a well-intentioned leaker to prevent a government agency from making serious mistakes.

  3. This seems to be going down a bad road which would lead to journalists/media simply regurgitating official govt press releases and therefore the destruction of freedom of the press.

    And there are extremely fine lines between the leak scenario above, an off-the-record interview where the source remains anonymous, and a whistleblower.

    I get (and fully support), holding govt employees to non-disclosure agreements – and they should be punished when they break those VOLUNTARY agreements; but that’s where it should end.

    The press should not be held liable for any information that comes into their possession – although they may be held liable if the government demands that the press reveal the identity of their source and they refuse. “While many states have ‘shield laws’ that prevent the government from forcing journalists to reveal their sources, there is no equivalent federal law. Vice President Mike Pence, as a Congressman, authored and co-sponsored a proposed federal shield law several times, but it remains stalled in Congress.” (Freedom Forum Institute).

    1. apedad, I am sympathetic to what you write. I guess the problem here is that there is no bright line.

      If every government employee was required to sign a non-disclosure agreement containing a clause that it is forbidden to share (leak) predecisional information to anyone (not just the press) as a condition of employment, I would be Ok with that. There is no ambiguity there. I think you’d be Ok with that also.

      As I understand it, there are defined administrative and legal procedures for whistleblowing, and absolutely none of them include leaking information to the press.

      1. If you’re going to make an NDA compulsory like that, you might as well spare yourself the paperwork and write it in legislation. That’s what I used to have when I was a civil servant: a statutory NDA theoretically enforced by criminal sanctions.

        1. Whether by legislation or administrative rule-making, a signed NDA should be the standard for government employees. I would feel differently if there was no defined legal or administrative procedures for whistle-blowing.

    2. ‘The press should not be held liable for any information that comes into their possession.’ If the press publishes classified material and there is loss of life or injury that can be traced to the publication? Ideologues tend to view things in black and white, the world is grey. I am very much in favor of press freedoms, I am not, however, an absolutist.

    3. What if the press proactively tries to induce the official into improperly providing the confidential information?

    4. I’m against having special carve outs for journalists, if it’s against the law for you and me, then the law should apply to journalists too.

  4. I suppose that treatment of information as property will remain forever asymmetrical. Government can own it, but not citizens.

    When will compulsion to give information be considered a taking?

  5. Seems a little deck chairs on the Titanic. So glad SCOTUS takes up these issues yet dodges anything regarding the complete violation of civil rights by Governor EO’s.

    Oh wait the oh so brave court ruled barely 5-4 that the EOs can’t perpetually violate the very first amendment by preventing folks form practicing their religion.

    So brave while they figure out some administrative reason to dodge and not take cases.

    1. What are some of the cases you think the court should have taken?

  6. Considering the number of people who think that just being of the wrong political party is treason (see, for example, the comments on any story about the election in the WAPO), this doesn’t seem excessive.

  7. So….if you leak confidential government information to someone, and that person uses it to their fiscal advantage in the stock market,
    that’s illegal.

    Unless that person publishes the data to shift government policy, and if the shifted government policy improves their existing stock market portfolio, that’s completely legal.

  8. I’m sorry. Government doesn’t get to define speech as property, so it can control it, any more than it can define speech as behavior, so it can control it. There is no lying going on here, so even the argument about snake oil frauds doesn’t apply.

    1. The property right isn’t in the speech, it’s in using the information itself. It’s fairly clear that in a general scenario the publication of secret information by a party without rights to it is violating the rights of the information-holder. The question really only seems to be media publishing confidential government information.

      1. The bigger question is why should the government’s information be confidential in the first place?

        If Congress debates a law it does so in public — if it delegates that authority to some other entity, it ought to have to debate it in public as well.

  9. Question: A private sector employee whistleblows something of vital public importance — e.g. the company’s internal research shows that MBTE will contaminate ground water (and the wells used for human drinking water) even though the EPA’s don’t.

    An intrepid journalist receives a copy of the confidential company research report in the mail. Can he/she/it print it?

    Now if you know what MBTE did to the wells throughout New England, you see why I am saying “whistleblower” — and, in reality, the oil companies were quite open about their research and told the EPA not to mandate it for this very reason but were ignored.

  10. If I steal your car, and the cops catch me, I don’t think it’s a valid defense that I thought I would make better use of your car than you would. The NYT or WaPo or National Review or Breitbart would certainly claim that it would make better use of government secrets than the government would. Is that claim enough to excuse the crime?

    It’s true, is it not, that the govt employee most likely only stole the secrets because he/she knew that the NYT or WaPo or National Review or Breitbart would publish them and interfere with a program or policy with which the employee disagreed. If I’m a Republican, another commenter might claim that I oppose leaks of confidential information only during the Trump, Bush 2, Bush 1, Reagan, etc. Administrations, but not during the Carter, Clinton, Obama, and (soon to be) Biden Administrations.

    But in fact I say ALL governments ought to be able to keep their PROPER secrets. And where we ought to focus our attention is not on protecting leakers and leakees, but on limiting unnecessary government secrecy by any administration.

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