Corporations must have power to police leaks internally so newspapers will remain free to publish leaks
By Peter Scheer
California Attorney General Bill Lockyer wasted no time in filing criminal charges against former Hewlett-Packard Chairwoman Patricia Dunn, H-P’s senior legal counsel and three outside security consultants for alleged crimes committed in the course of an over-zealous effort to plug leaks in the H-P boardroom. Lockyer’s haste has nothing to do with the urgency of the case and everything to do with his running for state Treasurer in next month’s elections.
Is a criminal prosecution of H-P’s top officers overkill?
In assessing HP’s investigative techniques, I start from the proposition that public corporations are allowed to have secrets and to take measures to protect them. A corporate board needn’t function as openly as a city council. Indeed, depending on the circumstances, the disclosure of corporate secrets can be a violation of federal securities laws.
While corporations have a right to keep secrets, the press has a right to try to uncover them. There is a symmetry here that is, I believe, of constitutional dimension. The press, under the First Amendment, is generally free to publish stories containing corporate secrets (as long reporters break no laws in obtaining the information). On the other hand, corporations, because they have no recourse against the press, must have considerable latitude to prevent disaffected employees or board members from leaking.
The media’s relative freedom to publish leaks, whether from corporations or the Defense Department, is a function of corporations’ and government’s relative freedom to identify and punish leakers in their own ranks. If they were constrained in their ability to deter leaks internally, their claim to stop the press from publishing leaks would be much stronger, perhaps irresistible.
Hence the San Francisco Chronicle’s argument in the BALCO case that the Justice Department should be forced—before it can demand the outing of reporters’ confidential sources—to intensify the pressure on suspected leakers to confess to leaking grand jury transcripts.
Hence also the position of bloggers who resisted subpoenas from Apple Computer demanding the name of a company insider who leaked corporate documents containing alleged trade secrets. Lawyers for the bloggers argued, correctly in my view, that Apple should first be required to force its employees to submit to polygraph tests—and only after those fail to ID the leaker could Apple subpoena the bloggers.
Corporations like H-P must have broad authority to police themselves to stop leaks, and this authority is actually a necessary byproduct of the First Amendment’s protection of the press. Viewed in this context, H-P’s investigative techniques were plainly indefensible in their targeting of reporters. However, there is nothing wrong in principle with HP’s use of corporate resources to plug leaks or the use of aggressive investigative techniques directed at H-P staff and board members.
Whether H-P ran afoul of arcane state anti-fraud laws will be decided by the courts. The main provision relied on in Lockyer’s indictment, Penal Code section 530.5, is ambiguous at best. (It’s unclear, for example, how prosecutors can show that H-P obtained phone records and other information for an “unlawful purpose,” as required by section 530.5, since the purpose of plugging corporate leaks is not unlawful.)
But H-P could have, without violating any laws, used other highly aggressive and intrusive techniques in its internal investigations. These include: polygraphing board members; cross-examining suspected leakers; reviewing employees’ email and phone records (from H-P-owned accounts); and questioning of suspects’ colleagues at work. It doesn’t make much sense to prosecute H-P for actions that, while perhaps technically illegal, are arguably less intrusive than actions that are perfectly legal.
There’s one other reason to go slow in condemning H-P. At the heart of Lockyer’s case is the essentially undisputed accusation that H-P’s gumshoes engaged in what has come to be known as “pretexting”–pretending to be someone you’re not in order to obtain the records of the other person. While pretexting has all the hallmarks of fraudulent misrepresentation, let’s remember that some types of investigative reporting also involve misrepresentation.
A few examples: posing as a home-buyer to test whether real estate brokers and mortgage lenders disfavor racial minorities; pretending to be a prospective law client to test whether lawyers coach clients to fabricate claims; or engaging in a “sting operation” to identify corrupt cops, doctors who prescribe unnecessary treatment, or auto repair shops that “fix” cars that aren’t broken.
Stories like these can’t be written without the use of misrepresentations that are similar to those involved in pretexting. In Lockyer’s unseemly rush to put H-P’s Dunn behind bars (where she apparently will receive chemotherapy for a recurrence of ovarian cancer), let’s make sure he doesn’t also outlaw an essential tool of legitimate journalism.
Peter Scheer, a lawyer and journalist, is executive director of the California First Amendment Coalition