PPM America, Inc. v. Marriott Corp.

152 F.R.D. 32, 22 Media L. Rep. (BNA) 1501, 1993 U.S. Dist. LEXIS 17255, 1993 WL 513552
CourtDistrict Court, S.D. New York
DecidedDecember 8, 1993
DocketMisc. No. 8-85 (RWS); Civ. A. No. 92-3068
StatusPublished
Cited by11 cases

This text of 152 F.R.D. 32 (PPM America, Inc. v. Marriott Corp.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
PPM America, Inc. v. Marriott Corp., 152 F.R.D. 32, 22 Media L. Rep. (BNA) 1501, 1993 U.S. Dist. LEXIS 17255, 1993 WL 513552 (S.D.N.Y. 1993).

Opinion

OPINION

SWEET, District Judge.

The Marriott Corporation (“Marriott”), the counterelaimant in this action, has moved by way of Order to Show Cause for an order, pursuant to Rules 37(a) and 45 of the Fed.R.Civ.P. to compel Daily Insights, Inc. (“Daily Insights”), a non-party witness, to answer questions posed to it during a deposition taken by Marriott through counsel on November 16, 1993, and for sanctions. Daily Insights has cross-moved to quash Marriott’s subpoena, for a protective order, and for costs. For the reasons set forth below, Marriott’s motion to compel is granted and its motion for sanctions is denied. Daily Insights’ motions are denied.

Facts and Prior Proceedings

In October 1992, Marriott announced a stock transaction which would result in two companies, each of which would conduct a portion of Marriott’s core businesses. Certain holders of Marriott’s debt securities, including PPM America, Inc. (“PPM”), the plaintiffs in this action, brought suit in the District Court of Maryland alleging various federal and state causes of action. The District Court of Maryland set December 13, 1993, as the discovery cutoff date in this litigation.

[34]*34Marriott has filed a counterclaim for tortious interference with contract against the PPM plaintiffs, alleging that these individuals acted as a group to interfere with its contractual arrangements with its financial advisors. Marriott claims that the Counterclaim Defendants discussed a conspiracy to interfere with Marriott’s contractual relations in a telephone conference call on October 9, 1992 (the “Conference Call”). These allegations are based on a partial transcript (the “Transcript”) of the Conference Call created by Daily Insights from a tape recording. Daily Insights claims that the tape recording of the Conference Call was lost after the creation of the Transcript.

Based on information contained in the Transcript, Marriott deposed many of the participants in the Conference Call seeking information concerning any tape recording of it. This discovery has failed to reveal the identity of the party who taped the Call.

Marriott subpoenaed Daily Insights in an attempt to authenticate the transcript and to learn who supplied the tape recording of the Conference Call to Daily Insights. Daily Insights was deposed on November 16, and asserted a journalists’ privilege as a basis for not answering questions about the operation of its business or regarding the identity of the party who provided the tape recording of the October 9 call.

Since 1990, Daily Insights has produced a daily newsletter (the “Newsletter”), which contains matters of financial interest that have been collected by Daily Insights employees designated as “analysts.” Daily Insights claims to have a paid subscriber circulation, and to be a member of a publishers group. See Angelowitz Aff. at 2. However, both in the deposition and in the papers submitted here Daily Insights has not provided any facts with respect to its circulation or its methods of distribution or publication.

Argument was heard on the present motions on December 7, 1993, and the motions were considered fully submitted as of that date.

Discussion

Federal Law Governs the Scope of any Privileges Claimed in this Case

Before considering the issue of privilege, the governing law must be determined. The information regarding the underlying action in Maryland is incomplete, but it appears that the Maryland action involves various federal and state claims, while the defendants’ counterclaim is for common law tortious interference with contract. See Marriott Mem. at 4-7.

Fed.R.Ev. 501 provides, in relevant part, that “in civil actions and proceedings, with respect to an element of a claim or defense as to which State law supplies the rule of decision, the privilege of a witness ... shall be determined in accordance with State law.” The “rationale underlying [this] proviso is that federal law should not supersede that of the States in substantive areas such as privilege absent a compelling reason.” Notes of Comm, on the Judiciary, H.R. No. 93-650.

This counterclaim is one for tortious interference with contract, a state law claim. However, Section 79-h of the New York Civil Rights Law, which applies to “persons employed by, or connected with, news media,” does not create a privilege for journalists. Rather, it forbids the use of the contempt power against individual journalists who refuse to divulge information. Since it does not create a state privilege, it has a limited effect under Rule 501. See Apicella v. McNeil Labs. Inc., 66 F.R.D. 78, 84 (E.D.N.Y.1975). In addition, although this counterclaim is predicated on state law, the plaintiffs’ claims are predicated on both federal and state law claims. When cases involve both federal and state claims, asserted privileges are governed by the principles of federal law. See, e.g., von Bulow by Auersperg v. von Bulow, 811 F.2d 136, 141 (2d Cir.1987) (applying federal law to journalist privilege in case involving state and federal claims); Lipinski v. Skinner, 781 F.Supp. 131, 134 (N.D.N.Y.1991) (in case involving state and federal claims, “state privileges are relevant but do not control”). Finally, the result in the present case is identical whether state or federal law on privileges is applied.

Federal Law Regarding a Journalist Privilege

Even if the producers of the Newsletter were found to be journalists, federal law [35]*35would require granting Marriott’s motion to compel. Federal courts agree that a protection exists which shelters journalists from disclosing confidential sources, but they do not invoke it unless, after balancing competing interests, the scale tips in favor of nondisclosure. On a case-by-case basis, federal courts weigh a reporter’s claim to First Amendment protection from forced disclosure against the opposing party’s claim to probative evidence. A party can overcome the privilege of a journalist if it shows that the information is material and relevant to the party’s claim; is necessary or critical to the maintenance of the claim; and is not obtainable from other available sources. See United States v. Burke, 700 F.2d 70, 76-77 (2d Cir.), cert. denied, 464 U.S. 816, 104 S.Ct. 72, 78 L.Ed.2d 85 (1983); In re Petroleum Prods. Antitrust Litig., 680 F.2d 5, 7 (2d Cir.), cert. denied, 459 U.S. 909, 103 S.Ct. 215, 74 L.Ed.2d 171 (1982).

The facts relating to the Conference Call are both relevant and critical to the maintenance of Marriott’s counterclaim for tortious interference with contract. Only a partial transcript of this conference call is presently available to Marriott, and obtaining further information regarding the call may be the only way that Marriott could maintain its claim. In addition, in order to authenticate the partial transcript for use at trial, it may be necessary for Marriott to depose the person who made the tape recording from which the transcript was made. Finally, it appears that Marriott has exhausted all other avenues for obtaining information regarding the tape of the call.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

The New York Times Co. v. Gonzales
382 F. Supp. 2d 457 (S.D. New York, 2005)
Tripp v. Department of Defense
284 F. Supp. 2d 50 (District of Columbia, 2003)
Gonzales v. Pierce
175 F.R.D. 57 (S.D. New York, 1997)
Bauer v. Gannett Co., Inc.(KARE 11)
557 N.W.2d 608 (Court of Appeals of Minnesota, 1997)
Troupin v. Metropolitan Life Insurance
169 F.R.D. 546 (S.D. New York, 1996)
Damiano v. Sony Music Entertainment, Inc.
168 F.R.D. 485 (D. New Jersey, 1996)
J.J.C. v. Fridell
165 F.R.D. 513 (D. Minnesota, 1995)
Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A.
160 F.R.D. 437 (S.D. New York, 1995)

Cite This Page — Counsel Stack

Bluebook (online)
152 F.R.D. 32, 22 Media L. Rep. (BNA) 1501, 1993 U.S. Dist. LEXIS 17255, 1993 WL 513552, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ppm-america-inc-v-marriott-corp-nysd-1993.