A reader points us to this Citizen Media Law Project report on an unlikely new front in the battle for press freedom and an unlikely freedom fighter.

A court in New Hampshire’s Rockingham County recently ordered the website Mortgage Lender Implode-O-Meter and its owner and editor Aaron Krowne to disclose the source of a chart it published showing a company called The Mortgage Specialists’s 2007 loan volume.

This was in the process of the Implode-O-Meter reporting on a nasty couple of settlements The Mortgage Specialists’ agreed to after the states of New Hampshire and Massachusetts said the company committed fraud. The Implode-O-Meter quoted the Union Leader’s report:

State regulators and investigators claim an inspection showed that The Mortgage Specialists:

* Represented photocopied customer signatures as originals;

* Removed a signature from a loan file;

* Altered broker fee agreements after the consumer signed the documents;

* Failed to keep customer application files under lock as required by the Gramm-Leach-Bliley Act;

* Fraudulently issued a 40-year adjustable rate mortgage with a balloon payment at the end of 30 years to a customer who had applied for a fixed-rate, 30-year mortgage.

Neighboring Massachusetts also was on the firm’s case, issuing a cease and desist order. The two states settled with The Mortgage Specialists a month later, with stiff penalties of $300,000 each against the company. New Hampshire got the company and its officers for an additional $125,000.

So Mortgage Implode-O-Meter wrote a roundup of the case and posted an internal Mortgage Specialists document (since temporarily removed) sent to it by an anonymous tipster. It seems pretty clear to me that this blog is a news site and the chart was part of its newsgathering.

Mortgage Specialists asked the Implode-O-Meter to take down the chart, which it did, as well as a
comment a reader posted that it says was false and defamatory, which Implode-O-Meter also took down. But Mortgage Specialists wanted to know who leaked it to them and who was responsible for the posted comment. The Implode-O-Meter refused to disclose these people, and Mortgage Specialists sued. Something tells me it wouldn’t have sued the Union Leader for doing journalism.

The county judge, one Kenneth R. McHugh, ordered the Implode-O-Meter (whose incorporated name is awesome: Implode-Explode Heavy Industries Inc.) to hand over its source, to out its commenter, and to refrain from republishing the chart or the comment.

The Citizen Media Law Project (based at Harvard Law) says that’s prior restraint:

In fact, Justice McHugh’s order is a prior restraint because it enjoins ML-Implode and its agents, servants, employees, and representatives from “displaying, posting, publishing, distributing, linking to and/or otherwise providing any information for the access or other dissemination of copies and/or images of [the] 2007 Loan Chart and any information or data contained therein.” This is a classic prior restraint because it “actually forbid[s] speech activities.” Alexander v. United States, 509 U.S. 544, 550 (1993).

It does a nice job of running down another several reasons why this argument is terrible. But tell that to the judge, who ruled:

One would have hoped that when a legitimate publisher of information was notified of the fact that certain unauthorized information was given to it which was then published, presumably in good faith, the publisher would, in order to maintain the integrity of its publication, willingly provide the wronged party with the information requested.

Um, no, dude.

Further, Judge McHugh wrote:

The maintenance of a free press does not give a publisher the right to protect the identity of someone who has provided it with unauthorized or defamatory information.

Methinks McHugh needs to go read up on his First Amendment.

Citizen Media Law Project writes that it expects this case to be overturned by the state’s Supreme Court:

For now, the decision stands as an excellent example of why we need strong procedural safeguards for courts to follow when deciding whether or not to compel the identification of anonymous speakers, why shield laws that constrain judicial discretion are important, and why constitutional doctrine should limit judicial power to grant prior restraints to such a vanishingly small category of cases.

Indeed.

But this is a good illustration of the blurring of the line between traditional and new media and how the old guard still doesn’t get it.

We need more people reporting on the shady doings of the mortgage industry, not less. That’s what the Mortgage Implode-O-Meter was doing here with its First Amendment rights.

This ruling, if allowed to stand, will have a chilling effect on journalism. It makes you wonder how much stuff company’s or individuals are able to force down off blogs because the threatened folks don’t have the resources or know-how to fight it.

Good for Krowne and the Implode-O-Meter for fighting this. If you’re aware of other cases like this that haven’t gotten picked up the press, drop me a line.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.