The Scoop on Confidential Sources

Protecting confidential news sources is viewed by mainstream journalists as almost a sacred duty. A reporter usually will choose to go to jail rather than betray his or her source, and from time to time a judge does send a reporter to jail for contempt of court for refusing to give up a name. What effect can such a refusal have on a lawsuit against the news organization, say for defamation? Perhaps more importantly, what effect can it have on the organization’s insurance coverage? And what happens when the opposite scenario occurs: a media organization is sued by a source for allegedly breaching an obligation of confidentiality?

When Insured Does Not Disclose a Source

Refusal to disclose a source often takes place in the context of a defamation case. It is generally a matter of state law and those laws vary. One option for a judge is to punish the defendant reporter/news organization for refusing to obey an order to identify a source. The punishment might be an instruction to the jury to treat it as if that source never existed, that the reporter never was told the facts that had been attributed to the source. Such an instruction can have serious consequences, leaving a jury with the ability to conclude that the reporter had an inadequate basis, or no basis at all, for what was reported. Such a conclusion can go a long way toward a finding of liability and can also affect the damages imposed.

What might an insurer do if a case is lost and significant damages are imposed after an insured’s employee refuses a court order to identify a source?

Not all policies address the issue the same way, and some don’t specifically address it at all. For example, some media companies purchase their coverage through a miscellaneous errors and omissions program and may end up with a policy that does not address this issue or others that are important to a media company; an insurer that doesn’t specialize may not even realize the issue exists.

In the absence of a specific provision dealing with confidential sources, an insurer may look to other standard language. For example, many policies require the insured’s cooperation, providing testimony, evidence, etc. An insurer might view a refusal to testify on a key question as a breach of the policy terms, especially when the refusal results in a greater likelihood of liability or a higher damages award.

Most companies offering specialized media coverage address the issue in their base forms, providing assurance to the insured that their coverage won’t be jeopardized if the organization chooses not to reveal a confidential source. In a survey of the base forms of six media liability products, we found just one form (albeit from a large company) that did not have a provision providing the insured with reassurances for refusal to reveal a confidential source in connection with an otherwise covered claim.

When the Insured Does Reveal a Source

Sometimes the opposite scenario arises, and the insured is accused of revealing the identity of a source. The reasons may vary, including: the accusation may be unfounded, the disclosure might have been due to a mistake or the insured might have determined that their news organization had been used by a source that had unscrupulous intentions and that it is in the public’s interest to make a full disclosure. In this scenario, the insured is likely to face a claim for breach of contract as well as other causes of action.

Our survey of six base forms did reveal that the same large company mentioned above also does not address this scenario in their media policy. In addition, that policy contained an exclusion for intentional violation of the law. It’s not clear whether the company would view the exclusion as applying if it looked like the insured deliberately disclosed the source’s identity. And that policy contains an exclusion for breach of contract or agreement, without making an exception to the exclusion for this kind of situation.

A second company that is very active in the media insurance arena also does not address this scenario in their base form. It, too, contains a breach of contract exclusion without an exception for this situation.

The best advice: stick with specialists when possible. But even then, careful due diligence is advised when working in a specialty area.