Constitutional Law: The Impact of the Freedom of the Press on Contractual Obligations (Cohen v. Cowles Media Co., 445 N.W.2d 248 (1989))

University of Florida Journal of Law & Public Policy University of Florida Journal of Law & Public Policy

Article 11

Constitutional Law: The Impact of the Freedom of the Press on Constitutional Law: The Impact of the Freedom of the Press on

Contractual Obligations (Cohen v. Cowles Media Co., 445 N.W.2d Contractual Obligations (Cohen v. Cowles Media Co., 445 N.W.2d

248 (1989 248 (1989 Dale Parker

Part of the Law and Society Commons, and the Public Law and Legal Theory Commons

CONSTITUTIONAL LAW: THE IMPACT OF FREEDOM OF THE PRESS ON CONTRACTUAL OBLIGATIONS

Cohen v. Cowles Media Co., 445 N.W.2d 248 (1989)

Plaintiff filed suit against two newspapers, seeking compensatory and punitive damages for breach of contract and misrepresentation.' During the 1983 Minnesota elections, reporters from three newspapers and one television station exchanged promises of anonymity in return for the plaintiffs news tip concerning a gubernatorial candidate.2 Subsequently, two of the newspapers publicly identified the plaintiff as the anonymous source,3 thereby causing the plaintiff to lose his job.4 The trial court held that the first amendment did not bar the plaintiffs claims5 and found for the plaintiff on both counts and awarded compensatory and punitive damages.6 The media defendants appealed. The Minnesota court of appeals affirmed in part and reversed in part7 and HELD, the first amendment to the United States Constitution does not bar a contract claim against media defendants.8

Historically, the first amendment barred governmental infringement upon the freedom of the press.9 However, actions of private individuals fell beyond the scope of first amendment protection.'° Con-

1. 445 N.W.2d 248 (Minn. Ct. App. 1989), rev'd, 457 N.W.2d 199 (Minn., Jul. 20, 1990). 2. 3. 4. 5. 6. 7.

Id. at 252-54. Id. at 253. Id. at 253-54. Id. at 254. Id. Id. at 251-52, 262. The court of appeals affirmed the trial court's holding for the appellee on the contract claim and the accompanying compensatory damages. The court of appeals reversed the trial court's withholding of a judgment non obstante veredicto on the issue of misrepresentation. The dismissal of the misrepresentation claim removed the issue of punitive damages from the instant case.

8. 9.

Id. at 254-55. "Congress shall make no law.., abridging the freedom ... of the press." U.S. CONST.

amend. I. "Nor shall any state deprive any person of life, liberty, or property without due process of law .... " U.S. CONST. amend. XIV, § 1. Under the Incorporation Doctrine, the word "liberty" incorporates fundamental rights into the due process clause of the fourteenth amendment thereby protecting those fundamental rights from state infringement. J. NOWAK, R. ROTUNDA & J. YOUNG, CONSTITUTIONAL LAW § 11.6 (1986); see also Near v. Minn., 283 U.S. 697 (1931) (applying the ban on laws abridging the freedom of the press to the states).

10. See Flagg Brothers, Inc. v. Brooks, 436 U.S. 149 (1978) (holding that suit for breach of a fundamental right is only justiciable when a state or a person acting for the state encroaches on the fundamental right); The Civil Rights Cases, 109 U.S. 3 (1883) (holding that private invasion of personal rights is not the subject of the fourteenth amendment).

stitutional scrutiny only arose upon proof of state action impairing the media's freedom to publish.", Therefore, absent a demonstration of state action, no right to relief from private infringement of first amendment rights existed.'2

Facially neutral statutes that incidentally impair fundamental rights do not always fulfill the state action requirement. The United States Supreme Court examined a facially neutral statute that impinged upon due process in Flagg Brothers, Inc. v. Brooks.3 The Flagg Brothers Court found no state action when a warehouseman, utilizing state law, obtained a lien on the plaintiffs goods without judicial review.'4 The plaintiff alleged state action based upon the state's authorization of the defendant's lien. 5 Since the plaintiff failed to name a state official as a party,'6 the Court analyzed the connections between the defendant and the state.7 The Court held for the defendant, finding state acquiescence in private action inadequate to convert the warehouseman's action into an action of the state.'s

Even in the presence of state action, the Constitution permits media regulation.19 In assessing the constitutionality of state laws imposing content-neutral media regulation, courts examine a variety of

11. The Supreme Court stated:

While the principle that private action is immune from the restrictions of the Fourteenth Amendment is well established and easily stated, the question whether particular conduct is "private," on the one hand, or "state action" on the other, ..[The] inquiry must be whether there frequently admits of no easy answer .. is a sufficiently close nexus between the State and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of

the State itself.

Jackson v. Metropolitan Edison Co., 419 U.S. 345 (1974). Generally, the Court required a state law depriving the plaintiff of a constitutional right, see Lugar v. Edmondson Oil Co., 457 U.S. 922 (1982) (use of law allowing pre-judgment attachment on debtor's property constituted state action) and the existence of traditional indicia of a private individual-state government nexus, see Lugar, 457 U.S. 922 (joint action test); Jackson, 419 U.S. 345 (nexus test); Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970) (state compulsion test); Marsh v. Alabama, 326 U.S. 501 (1946) (public function doctrine). 12. See supra note 10. 13. 436 U.S. 149 (1978). 14. 15. 16.

Id. at 166. Id. at 164-66. Id. at 149-50. Naming a state official as a party would have added support to the plaintiffs claim of state action. See Sniadach v. Family Finance Corp., 395 U.S. 337 (1969) (finding state action when the government enforced a private claim to the property of a debtor by a creditor).

Id. at 157-66; see supra note 11.

17. 18. 436 U.S. at 164. 19. Minneapolis Star & Tribune Co. v. Minnesota Comm'r of Revenue, 460 U.S. 575 (1983).

factors, including state power, statute breadth, and burden on the plaintiff.20 Courts use a balancing test to weigh the state's interest in enforcing the regulation against the burden imposed upon the media plaintiff.21 Significant state interest coupled with slight media burden leads to a designation of constitutionality.2

Minneapolis Star & Tribune Co. v. Minnesota Commissioner of Revenue,- illustrates an application of this balancing test. In Minneapolis Star, the United States Supreme Court examined the imposition of a state use tax on Minnesota publishers.24 The law taxed paper and ink products, but exempted the first $100,000 worth of materials consumed in a calendar year.- The Court determined that the law singled out the press for special treatment.26 Although the Court recognized the applicability of general business laws to the media,27 the majority held that Minnesota could have achieved its goal of increased revenues through more generalized means.28 Utilizing the balancing test, the Court determined that the media plaintiffs burden outweighed Minnesota's interest in raising revenue by means of the use tax.- Therefore, the Court overturned the tax.-

Even when the state imposes a heavy media burden countered only by a weak state interest, the media plaintiffs claim may fail due to a waiver of constitutional rights. The Third Circuit Court of Appeals established the modern framework for waiver analysis in Erie Telecommunications, Inc. v. Erie.31 In Erie Telecommunications, a cable company attempted to rescind2 a franchise contract with the city government based, in part, upon an infringement of first amendment rights. 3

20. United States v. O'Brien, 391 U.S. 367 (1968). The Court examines whether the regulation was within the constitutional power of the government, whether the law furthered a significant state interest, whether the burden on the plaintiff was incidental to the purpose of the law, and whether the burden is not greater than necessary to achieve the state goal. Id.

21. This mode of constitutional analysis is similar to the mere rationality test. See Minnesota

v. Clover Leaf Creamery Co., 449 U.S. 456 (1981).

22. 23. 24. 25. 26. 27. 28.

449 U.S. at 456. (1983). Id. Id. at 578. Id. at 582. Id. at 583. Id. at 587-88. The court stated that Minnesota could have achieved its goal of increased

revenue through application of its general sales tax.

Id. at 593.

29. 30. Id. 31. 32. A rescission amounts to the unmaking of a contract and not merely a termination.

853 F.2d 1084 (3d Cir. 1988)

BLACK'S LAW DICTIONARY 679 (5th abr. ed. 1983).

33. 853 F.2d at 1087-88.

The court held that the media plaintiff waived its first amendment rights in a previously signed release.34 The court recognized that constitutional rights can be waived when parties act of their own volition, with full understanding of the consequences.8 Yet, the court also applied a nonwaiver presumption.36 Within this framework, the court overcame the presumption by finding compelling evidence of the media plaintiff's waiver.37 Accordingly, the court enforced the contract.38

In the instant case, the media appellants combined the theories presented in Flagg Brothers, Minneapolis Star, and Erie Telecommunications to support their claim to first amendment protection. First, the media appellants argued that state action existed through judicial enforcement of the private contract.39 Second, the media appellants argued that constitutional analysis of the state action required a balancing test.40 Finally, the media appellants contended that no waiver of first amendment rights occurred.41 To uphold the trial court's imposition of contractual liability, the Minnesota court of appeals utilized a three-tiered analysis based upon the appellants' three claims.42

The instant court considered whether state action existed by reviewing the history of first amendment protection afforded the press.43 While the dissent claimed that the instant case threatened the viability of first amendment protection, the majority recognized that neutral application of state law does not necessarily constitute state action.44 The court noted that court action may constitute state action where

34.

Id. at 1101. The release stated that the media plaintiff agreed to

release ...the City of Erie from any and all claims, demands, actions, or causes ..of whatever nature, in any way relating to, directly or indirectly, of action . the Franchise together with any and all litigation arising from, or in connection with, said Agreement including, but not limited to, the pending action from the beginning of the world to the date of these presents.

Id. at 1094-96. Id. at 1091. Id. at 1101. Id. at 1103.

35. 36. 37. 38. 39. 445 N.W.2d 248 (1989). The appellants argued that state enforcement of the contract constituted state action under the rule in Shelly v. Kraemer. See Shelly v. Kraemer, 334 U.S. 1, 22, 23 (1948) (court action may constitute state action if the court's conduct constitutes "active

intervention").

40. 445 N.W.2d at 256-57. 41. 42.

Id. at 258. Id. at 254-62. The court's analysis consisted of a determination of state action, a balancing

of state interests against media burdens, and waiver of first amendment defenses.

43. 44.

Id. at 256-58. 445 N.W.2d at 255.

the court engages in active intervention at the request of third parties.45 The instant court found no active intervention by the trial court since the parties contractually defined the content of published information.46 The majority reasoned that since the parties delineated the press' freedom to publish, no state action attached.47

Further, the court distinguished the instant case from suits involving application of state defamation law to the media.4 8 The majority stated that defamation laws by their nature regulate speech .4 In contrast, the majority held contract laws do not regulate speech.5 0 Under contract law, the parties freely choose the terms and consequences of the contract. Therefore, the court reasoned, an award of contract damages does not constitute a state sanction on the press.51 Finding no state action in the instant case, the court of appeals could have dismissed the media appellants' constitutional claim.52 However, the court continued as if state action existed and advanced to its second tier of analysis.

In its second tier of analysis, the court of appeals weighed the competing interests of the state and the media. Utilizing the Minneapolis Star balancing testas the court examined the state's interest in enforcing its general contract laws.- The dissent disputed the existence of a compelling state interest in enforcement of Minnesota contract law.55 The majority, however, recognized an important state interest in enforcing state contract law.- The majority noted the similarity between a contract to provide information to the media and a contract to provide services to the media.57 Thus, the majority

45.

Id. at 255-56. See Shelley, 334 U.S. 1 (finding state action when third party used court

to enforce racially restrictive covenant).

46. 47. 48.

Id. at 255. Id. at 255-56. Id. See N.Y. Times, Inc. v. Sullivan, 376 U.S. 254 (1964) (finding state action when

private party sued on state defamation law).

445 N.W.2d at 255. Id. at 256. Id.

49. 50. 51. 52. Most protections of individual and political liberties guaranteed in the Constitution apply only to the state and federal governments. Accordingly, state action serves as a basic component of a prima facie case for unconstitutional action. Without a showing of state action, the constitutional provisions do not apply, and the court will not hear the case. See J. NOWAK, R. ROTUNDA & J. YOUNG, supra note 9, § 12.1. 445 N.W.2d at 256. Id. at 256-58. Id. at 264-66. Id. at 256-57. Id. at 257.

53. 54. 55. 56. 57.

reasoned that since a contract to provide services binds the media, a contract to provide information should be equally binding.- The court also recognized the applicability of general business law to the media.59 Accordingly, the instant court found a significant state interest in the enforcement of Minnesota's contract law.60

To complete the balancing test, the instant court considered the burden created by enforcement of the contract. The dissent predicted a heavy media burden.61 The majority disagreed. Based on the Supreme Court holding in Minneapolis Star, the majority found no absolute right of publication.62 The court also rejected the media appellants' claim that the newsworthiness of the appellee's name demonstrated an undue burden on the press.6 The instant court stated that enforcement of a promise of confidentiality would not prohibit publication of information lawfully obtained without a promise of confidentiality.- Overall, the court found that contract liability would not intrude upon the editorial process and that the state maintained a significant interest in enforcing the contract. Accordingly, the instant court held that Minnesota's contract law satisfied the Minneapolis Star balancing test for constitutional enforcement against the media.65

In its third tier of analysis, the instant court examined the waiver doctrine. Although the dissent argued that the reporters failed to clearly waive their first amendment rights,6 the majority found a waiver. Based upon the reporters' prior experience with promises of confidentiality, the majority concluded that the reporters fully understood the consequences of their actions when they guaranteed the appellee's anonymity.67 Therefore, the court held that under the Erie Telecommunications test, the appellants, through their agents, clearly waived their first amendment defense.6

In the instant case, the Minnesota court of appeals followed the modern trend of recognizing permissible infringements on the freedom of the press. Previous rulings allowed regulation in areas of traditional

58. 59. 60. 61. 62. 63. 64.

65. 66. 67. 68.

Id. Id. at 256-58. Id. at 256-57. Id. at 263-64. Id. at 256. Id. at 257. Id. at 257-58.

Id. Id. at 266-68. Id. at 258. Id.

governmental control,69 including cases dealing with competing constitutional rights.70 Under established precedent, cases involving media regulation require a weighing of the competing interests of the state and the media.71 Courts, however, remain free to consider legislative intent,72 scope of state law,7 3 framers' intent,74 the regulation's ability to achieve the state's goal,75 and other relevant factors to assess the comparative weight of the state and media interests.

The instant decision endorses two broad policy objectives. First, it protects justified expectations.76 By requiring the media appellants to pay damages, the court encourages fulfillment of future contractual obligations and promotes certainty of contract.77 Second, the instant holding serves to acknowledge the modern importance of contract law, which forms one of the cornerstones of a capitalistic society. By equating a contractual duty with a fundamental right,7M the court revitalizes modern contract law and promotes application of contract doctrine in resolving economic disputes.

An alternative analysis not explicitly undertaken by the Minnesota court of appeals involves the application by analogy of the contracts clause of the United States Constitution.79 The contracts clause classifies state legislation impairing contractual obligations as unconstitutional.80 The contracts clause prohibits state laws from altering preexisting contractual obligations. By analogy, state court holdings which redefine contractual duties, although not unconstitutional, should be discouraged.

69. See Minnesota Star, (recognizing applicability of general taxes to the press); Associated Press v. United States, 326 U.S. 1 (holding antitrust laws applicable to the press), reh'g denied, 326 U.S. 1802 (1945); Associated Press v. NLRB, 301 U.S. 103 (1937) (acknowledging applicability of National Labor Relations Act to the press).

70. See Zurcher v. The Stanford Daily, 436 U.S. 547 (1978) (recognizing the binding nature of the fourth amendment over the press); Branzberg v. Hayes, 408 U.S. 665 (1972) (acknowledging supremacy of investigative authority of a grand jury over the press).

Id. at 592.

71. Minneapolis Star, . 72. 73. Florida Star v. B.J.F., 109 S. Ct. 2603, 2612 (1989). 74. Minneapolis Star, 460 U.S. at 585. 75. 76. 445 N.W.2d at 257. 77. Id. at 257-58. 78.

Id. at 588.

Id. at 254-58. The instant court implicitly recognized the parity of contract law and the

freedom of the press in the absence of state action.

79.

"No state shall [pass] any [Law] impairing the obligation of contracts." U.S. CONST.

art. I, § 10, cl. 1. Id.

80.

Moreover, the United States Supreme Court allows impairment of contractual obligations only when the state, acting under its police power,81 seeks to advance a compelling state interest.- Even then, contractual responsibilities cannot be permanently dismissed, but only In the instant case, the media appellants temporarily suspended. sought a permanent discharge from their contractual duty to preserve the appellee's anonymity.84 Application of the contracts clause invalidates this action as an improper goal for state legislation. A similar action in a state court, while not strictly forbidden, would likely be disfavored.

The instant case establishes a precedent which combines immediate impact with long range repercussions. The ruling creates another exception to the first amendment guarantee of freedom of the press. By binding media appellants to their contractual obligations, the instant court advocates the modern viability of economic regulation of the media in matters not involving state action.

Furthermore, the instant holding adds to current judicial analysis of the proper role of the media in today's society.6 Recognizing exceptions to the press' first amendment protection, the Supreme Court

81. See infra note 82. The Blaisdell Court recognized the inherent power of the states to

act in emergencies and to protect the security of their citizens.

82. See Home Building & Loan Ass'n v. Blaisdell, 290 U.S. 398 (1934) (allowing a two year moratorium on mortgage foreclosures and establishing lowered mortgage payments during the same period based upon a state of emergency during the Great Depression).

83. Id. at 439, 447. 84. 445 N.W.2d at 252-54. 85. For other examples, see Minneapolis Star, (recognizing applicability of general taxes to the press); Associated Press v. United States, 326 U.S. 1 (1945) (holding that first amendment does not exempt press from antitrust laws); Chaplinsky v. New Hampshire, 315 U.S. 568 (1942) (excluding fighting words from first amendment protection); Associated

Press v. NLRB, 301 U.S. 103 (1937) (holding National Labor Relations Act applicable to the press).

86. The Supreme Court has stated:

In the First Amendment the Founding Fathers gave the free press the protection

it must have to fulfill its essential role in our democracy .... The Government's power to censor the press was abolished so that the press would remain forever free to censure the Government. The press was protected so that it could bare the secrets of government and inform the people.

New York Times Co. v. United States, 403 U.S. 713, 717 (1971) (Black, J. concurring); see also Dun & Bradstreet v. Greenmoss Builders, 472 U.S. 749 (1985) (Powell's plurality decision debating the nature of speech protected by the first amendment); Konigsberg v. State Bar of

California, 366 U.S. 36, 56-81 (1961) (Black's dissent espousing the absolute nature of the freedom of the press), reh'g denied, 368 U.S. 869 (1961). But see Konigsberg, 366 U.S. at 49-56 (Harlan, writing for the majority, espousing a balancing test for freedom of the press cases).

has identified several interests outweighing the freedom of the press. Applying public policy arguments, the Court carved out niches for defamation7 and invasion of privacy.88 By finding liability in these cases, the Court promotes the public interest and intensifies the debate over the media's role in American societys9

Finally, long range analysis discloses the instant case's impact upon cases involving the reporter's privilege.9° By overriding the offensive use of the reporter's privilege, the instant court may have opened the door for infringement on defensive use of the privilege.91 Although courts refuse to recognize an absolute privilege,-2 many states possess media shield laws.93 Future courts may rely upon the instant holding as a basis for circumventing state shield laws and denying access to the reporter's privilege.'

The instant court's application of contract doctrine to the media achieves a legally, equitably, and jurisprudentially significant result. Relying upon established precedent, the court reaches an equitable

87. New York Times v. Sullivan, 376 U.S. 254 (1964). 88. Florida Star v. B.J.F., 109 S. Ct. 2603, 2612 (1989). 89. See supra note 86. 90. Courts recognize a limited reporter's privilege allowing maintenance of the confidentiality of sources in certain limited areas. Branzburg v. Hayes, (1972) (finding some protection of news sources necessary to the information gathering process). See also Comment, The Dimensions of a Journalist's Shield, 6 U. PUGET SOUND L. REV. 285 (1983).

91. Traditionally, this privilege has been used as a defense to requests for the reporter's source of information. (1972). In the instant case, however, the media defendants attempted to utilize the reporters' privilege in an offensive manner: i.e. to prevent suit by the reporter's source.

92. Branzburg v. Hayes, (1972) (holding that reporters can be required to

testify before grand juries).

.93.

See, e.g., MINN. STAT. ANN. §§ 595.022-.025 (West 1988) (creating a statutory privilege allowing reporters to maintain the confidentiality of their sources, but also establishing a judicial bypass if the value of the information outweighs the press's interest in preserving its privilege). But see In re Farber, 78 N.J. 259, 394 A.2d 330 (1978) (holding that New Jersey's shield law must give way to sixth amendment rights and state constitutional provisions), cert. denied, 493 U.S. 997.

t On appeal, the Supreme Court of Minnesota reversed the court of appeals and held for the media defendants. 457 N.W.2d 199 (Minn., 1990). The court reasoned that the parties did not believe that they were creating a legally enforceable contract when the promise of anonymity was made and were not thinking in terms of offer and acceptance. Id. at 203. Since the parties did not intend to create a contract, the court refused to find a contract and therefore held for the media defendant on the breach of contract claim. Id. The Minnesota Supreme Court did not address the constitutional matters discussed in this case comment. Accordingly, the reasoning set out in this case comment remains unreversed. The United States Supreme Court granted certiorari. Cohen v. Cowles Media Co., d/b/a Minneapolis Star & Tribune Co., 1990 WL 162952 (U.S.) (U.S., Dec. 10, 1990) (No. 90-634).

result without forced reliance upon a quantum leap of legal logic. Although the first amendment recognizes a special constitutional role for the press, it does not immunize the media from civic and legal obligations. The media should not be able to use the first amendment as a shield to ward off legal burdens borne by the rest of society. A reporter, like any other citizen, is and should remain subject to general laws and regulations. Changes in technology and social mores in the last four decades have allowed the media to expand beyond its original constitutional role. Consequently, through an offensive use of the first amendment, today's media assumes privileges unavailable to the ordinary citizen. By applying traditional laws to the media, the instant case helps to preserve the delicate balance of personal and political liberties contained in the United States Constitution.

Dale Parker