Will New Hampshire Supreme Court defend the 1st amendment or the mortgage company?

New Hampshire Court Tramples on Constitution, Reporter's Privilege, Section 230, What Have You
April 8th, 2009
by Sam Bayard


A reader recently tipped us off to a troubling ruling from a trial court in New Hampshire:

The Mortgage Specialists, Inc. v. Implode-Explode Heavy Industries, Inc., No. 08-E-0572 (N.H. Super. Ct. Mar. 11, 2009).

In the decision, Justice McHugh of the Superior Court for Rockingham County ordered the publishers of the popular mortgage industry watchdog site, The Mortgage Lender Implode-O-Meter ("ML-Implode"), to turn over the identity of an anonymous source who provided ML-Implode with a copy of a financial document prepared by The Mortgage Specialists, Inc. for submission to the New Hampshire Banking Department. The court also ordered ML-Implode to reveal the identity of an anonymous commenter who allegedly posted defamatory statements about the company and enjoined the website from re-posting the financial document or the allegedly defamatory comments.

Background

ML-Implode, founded by computer scientist and mathematician Aaron Krowne in 2007, tracks the financial health of mortgage lending companies. Krowne and ML-Implode were way ahead of the curve in recognizing the then-impending-now-catastrophic crisis in the housing market and mortgage industry. As Louise Story of the New York Times wrote in an article about the website last summer, these days "[t]he misery in the housing market is registering on the Implode-O-Meter." Without question, the website provides original reporting on one of the most critical issues facing the country today:

With the economy struggling, more financial companies, even well-known ones, are finding themselves on [ML-Implode's] fated list. When parts of Bear Stearns’s residential mortgage unit were sold to private equity investors, for instance, the Implode-O-Meter recorded the sale. And E*Trade Financial could not remove the link on its site to its mortgage division or change the recording on its mortgage division’s 1-800 number without the site chiming in.

The tips usually come anonymously from employees at the troubled mortgage companies. Critics of the site say some of the tips have been more gossip than reality. But the Implode-O-Meter often posts the phone recordings and company e-mail to back up the bad news coming out of places like Merrill Lynch, which in March fired nearly everyone at First Franklin Financial, a business it purchased in 2006. (Source)

The Mortgage Specialists, Inc. ("MSI") is one of the companies on ML-Implode's "Ailing/Watch List." In August 2008, ML-Implode reported that the New Hampshire and Massachusetts Banking Departments had issued temporary cease-and-desist orders against MSI in July. As part of this article, ML-Implode posted a copy of something MSI calls the "2007 Loan Chart," a document showing the number and monetary value of the company's 2007 loan transactions. ML-Implode says that the chart was "sent in by an informant and placed online by the Implode-O-Meter staff."

Additionally, in October 2008 a ML-Implode user going by the handle "Brianbattersby" posted comments on one of the site's forums, allegedly stating that the president of MSI "was caught for FRAUD in 2002 FOR SIGNING BORROWERS NAMES and bought his way out." Days later, "Brianbattersby" posted another negative comment about the company.

Counsel for MSI then contacted ML-Implode requesting that ML-Implode take down the 2007 Loan Chart and forum comments, and that it identify its anonymous source for the Loan Chart and the identity of the commenter. ML-Implode agreed to temporarily remove the Loan Chart and the forum comments, but refused to reveal its source or unmask "Brianbattersby." MSI then filed a petition for injunctive relief in New Hampshire state court, seeking to compel ML-Implode to permanently remove the materials and to disclose the identifying information it previously requested...




Citizen Media Law Project and Cyberlaw Clinic Urge New Hampshire Supreme Court to Defend First Amendment Rights of Mortgage Website
Cambridge, MA
June 23, 2009

The Citizen Media Law Project (CMLP), assisted by Harvard Law School’s Cyberlaw Clinic, urged the New Hampshire Supreme Court to defend the First Amendment rights of a website that covers mortgage industry news.

The CMLP, in conjunction with the Reporters Committee for Freedom of the Press (RCFP) and with the assistance of local counsel Paul Apple of Drummond Woodsum & MacMahon in Portsmouth, NH, submitted an amicus curiae brief in the case of The Mortgage Specialists, Inc. v. Implode-Explode Heavy Industries, Inc. The case involves Implode-Explode Heavy Industries, Inc., which runs a mortgage industry website that posted a New Hampshire Banking Department document...That document described certain business practices of the Mortgage Specialists, Inc., a lending company under investigation in New Hampshire and Massachusetts.

After the mortgage company discovered the disclosure, it sued the website, demanding that the document be removed and that the anonymous source be identified.

The Rockingham County Superior Court granted these requests, and the case is presently on appeal.

In their brief, the amici focused on a series of cases in which courts permitted the publication of confidential or controversial documents – from the U.S. Supreme Court in the famed Pentagon Papers case through recent cases involving recorded cell phone conversations and videos of police searches posted online...

The amici urged the New Hampshire Supreme Court to carefully consider the harm the Superior Court’s ruling would have on freedom of the press, noting in their brief that the publication of this document “is not unlawful in New Hampshire, and, even if it were, would nevertheless be fully protected speech under the First Amendment.”...

The CMLP was represented on the brief by the Cyberlaw Clinic. The CMLP and the Cyberlaw Clinic are both based at Harvard University’s Berkman Center for Internet & Society, an organization dedicated to studying the development of cyberspace...


About the Citizen Media Law Project

The Citizen Media Law Project, which is jointly affiliated with the Berkman Center for Internet & Society at Harvard University and the Center for Citizen Media, provides legal assistance, training, research, and other resources for individuals and organizations involved in online and citizen media. The CMLP endeavors to serve as a catalyst for creative thinking about the intersection of law and journalism on the Internet. Through the project’s website, www.citmedialaw.org, the active engagement of lawyers and scholars, and occasional sponsored conferences, project staff are working to build a community of lawyers, academics, and others who are interested in facilitating citizen participation in online media and protecting the legal rights of those engaged in speech on the Internet.