Gag order raises censorship debate

Published Sept. 27, 1995|Updated Oct. 4, 2005

Until recently, the legal wrangling between Bankers Trust Co. and Procter & Gamble Co. was probably not a candidate for Court TV. Without sex, drugs, homemade bombs or bloody gloves, this civil lawsuit seemed destined to be little more than a blip on the public record.

Then, a federal judge in Cincinnati declared that the record wasn't public. And he ordered Business Week magazine not to publish an investigative story about the case.

Since then, the dispute has drawn the attention of media lawyers, First Amendment experts and news organizations around the country.

While the corporations involved are talking about their right to keep company secrets, many others see a clear case of government censorship.

There is nothing abnormal about sealing documents, said Jane Kirtley, the executive director of the Reporters Committee for Freedom of the Press in Washington, D.C. "But gagging a reporter from publishing them is highly unusual," she said. "I can't think of a case like this."

The dispute has become the focus of an increasingly tense debate over what should be off-limits to the public in a lawsuit involving corporations.

Corporate attorneys argue that they must protect their company's "trade secrets," especially during the early stages of what could be a frivolous lawsuit. But media experts and First Amendment lawyers are wondering whether some of the nation's bigger businesses have found a way to use the public court system for private ends.

"What we are seeing is the promiscuous use of protective orders," said Rodney Smolla, law professor and First Amendment expert at William & Mary Law School in Virginia.

The story of the missing story, according to Business Week editor-in-chief Stephen Shepard, began a few hours before he planned to go to press on Sept.13 with an article about the case.

As the lawyer for the magazine checked the story around 6 that evening, his fax machine began whining nearby. Its message was from U.S. District Court Judge John Feikens in Cincinnati: The documents being used for Business Week's story were "under seal," and he ordered editors to kill their story.

After getting the fax, the reaction among Business Week editors was that they had not received the documents from the court, and did not know when they obtained them that they were under seal.

But the magazine's attorney said that the judge held him personally responsible if the publication disobeyed the court's order. After failing to find Feikens (who said later that he was available that evening) and being rebuffed by an appeals judge, Business Week spiked its story.

"This was the first time in our 66-year history that we have ever been forced by the government to pull a story," the magazine editors wrote. "The basic issue is prior restraint _ a lawyer's way of saying government censorship."

Procter & Gamble had accused Bankers Trust of not properly informing the company about the risks of derivative offerings. Procter & Gamble charged that it lost $102-million from derivatives bought from the New York-based bank, and asked the court for $195-million in damages.

"There are some legitimate reasons for secrecy," said Richard J. Ovelmen, an expert on media law in Miami. "But in my experience, the more a party wants to keep something secret, usually the more reason there is for the public to have access to it."

Business Week has not skimped in its efforts to publish its story. Lawyers for McGraw-Hill, which owns the magazine, quickly turned to a federal appeals court for help in releasing their story.

When they lost at that level, the New York-based company took its case to the U.S. Supreme Court, where its arguments were rebuffed again.

Supreme Court Justice John Paul Stevens last week decided "the wiser course" was to bounce the matter back to Feikens, who has extended his temporary restraining order on the Business Week article until Oct. 3.

A spokesman for Bankers Trust said the company would have no comment on the case.