Matrixx Initiatives v. Mulligan [1]

Matrixx Initiatives filed a lawsuit in Arizona state court against anonymous posters who allegedly defamed the company on the Yahoo! Finance and Silicon Investor message boards. During that case and with the permission of the Arizona court, Matrixx obtained a subpoena in Maryland state court demanding that Timothy Mulligan appear for a deposition and produce documents.

Mulligan publishes an online newsletter on stocks and publicly traded companies called the Eyeshade Report.  In the August 2003 edition of the newsletter, Mulligan discussed allegations of accounting improprieties and other business problems at Matrixx. Originally, the Matrixx subpoena sought information regarding Mulligan's sources for the article and other materials related to Mulligan's newsgathering process.  Mulligan produced over three-hundred pages of documents in response to this subpoena.  Matrixx then obtained a second subpoena demanding that Mulligan appear for a deposition and asking him to disclose the names of every person who received the Eyeshade Report on Matrixx. Matrixx justified its discovery requests by explaining that the allegedly defamatory statements in the Arizona lawsuit were strikingly similar to the issues discussed in Mulligan's report.

Mulligan moved to quash the subpoena, but the court denied the motion.  On appeal, Public Citizen and several other organizations filed an amicus brief urging the appeals court to quash the subpoena. The amici argued that Mulligan qualified for a Maryland news media privilege that protects against forced revelation of sources and newsgathering information, and that enforcement of the subpoena would violate his readers' First Amendment rights to read anonymously.

The appeals court determined that the Eyeshade Report qualified for the news media privilege, but nonetheless affirmed the trial court's ruling that Matrixx could depose Mulligan.  The court indicated that Mulligan could raise his claim of privilege on a question-by-question basis.

Mulligan then appealed to the Maryland Supreme Court, which granted certiorari.  At this point, Matrixx dropeed the case.  Mulligan informs us that Matrixx ultimately never deposed him about his sources.