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Reason
Reason
Eugene Volokh

Fifth Circuit Stays Broad Discovery Regarding Media Matters Donors in X v. Media Matters

From an opinion issued Sunday by Fifth Circuit Judges Jerry Smith, Graves, and Engelhardt in X Corp. v. Media Matters for America:

In November 2023, X Corp. sued Media Matters, Inc., Eric Hananoki, and Angelo Carusone (collectively, "Media Matters") for (1) interfering with X Corp.'s contract, (2) disparaging X Corp's business, and (3) interfering with X Corp.'s prospective economic advantage. X Corp. alleges that Media Matters "knowingly and maliciously" manipulated images to "portray X Corp. as a social media platform dominated by neo-Nazism and anti-Semitism," which "alienate[d] major advertisers, publishers, and users from X."

In discovery, X Corp. requested that Media Matters produce the identity of donors, their addresses, and its communications with them. Relevant to this appeal are X Corp.'s Requests for Production 17, 18, 21, and 35:

Request for Production 17. Documents sufficient to show the identity of all Your donors or any others who provide financial support of any kind, their residence, the time and place of their donation or provision of financial support, and the amount of their donations or other financial support.

Request for Production 18. Any document or communication reflecting Your attempts to solicit donations or financial support of any kind, including but not limited to any discussions with any donors or any others who provided, considered providing, or were asked to provide financial support of any kind.

Request for Production 21. All documents and communications regarding Your sources of funding for research, investigation, reporting, publication, or any other work related to X, the Platform, Elon Musk, or Linda Yaccarino.

Request for Production 35. All materials regarding or communications with any donor or potential donor to Media Matters mentioning or regarding in any way this Matter, Elon Musk, Linda Yaccarino, X, Twitter, or the Platform, including misinformation, brand safety, or ad pairing on the Platform.

The panel granted a stay of the district court's order enforcing the subpoenas:

The district court agreed that Media Matters raises legitimate First Amendment concerns [in objecting to the required disclosures]. So when X Corp. first moved to compel in May 2024, the court didn't order Media Matters immediately to disclose its purportedly privileged information but, instead, ordered it to log its claims of privilege by June 14. This order implicitly required Media Matters to look for documents responsive to X Corp.'s discovery requests.

In the intervening four months, however, Media Matters refused to search for these documents or to log its claims to privilege over them. It says that it had several more months to comply under the district court's updated discovery timeline. But that's not how it explained its refusal; instead, it told X Corp. that it was "not separately searching for donor-related documents" under Requests 17 and 18 and that X Corp. would find out about those documents only if they fell within other discovery requests. It similarly maintains here that those requests "substantially overlap" with other requests.

The district court granted X Corp.'s second motion to compel. It reasonably concluded that Media Matters never intended to log responsive documents. It thus found that by defying the order, Media Matters had waived any applicable First Amendment privilege. In addition, it found that Media Matters had abandoned its First Amendment privilege by not properly raising it in its updated discovery responses.

It is puzzling why Media Matters defied the district court. As that court explained, Media Matters "could have complied with the Order by, at a minimum, independently searching for the documents and creating a privilege log." In other words, it didn't yet have to turn over the purportedly privileged documents. Does Media Matters think that the First Amendment excuses it from explaining why withheld discovery is privileged? …

Nonetheless, waiver or not, we don't decide these "novel and farreaching" First Amendment issues in this ruling on the motion to stay, lest we "issu[e] unnecessary and potentially overbroad or misleading rulings." This stay application is an imperfect vehicle to resolve those questions. "[T]ime is woefully short for thorough consideration." And the parties have presented their arguments across only a few pages that they filed in the haste of an emergency appeal. {Importantly, this decision is made by an administrative panel (sometimes called a motions panel). The merits of the interlocutory appeal will be decided by a merits panel after full briefing and, if that panel chooses, oral argument. "A panel hearing the merits of an appeal may review a motions panel ruling, and overturn it where necessary."}

Instead, we look to the discovery limits set out in Federal Rule of Civil Procedure 26. A party may only "obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case." We consider, among other things, "the importance of the discovery in resolving the issues and whether the burden or expense of the proposed discovery outweighs its likely benefit."

Starting with Request for Production 17, the broadest request, X Corp. demanded

Documents sufficient to show the identity of all Your donors or any others who provide financial support of any kind, their residence, the time and place of their donation or provision of financial support, and the amount of their donations or other financial support.

Request 17 is not "proportional to the needs of the case." X Corp. says that it needs this information to determine (1) how Media Matters has "availed [itself] of Texas," (2) how it "funded [its] tortious conduct," and (3) whether it is "profiting or seeking to improve [its] financial condition from its disparagement." In its order compelling production, the district court said that this information would help X Corp. prove "willful and intentional … interference with [X Corp.'s] contract" and whether "false and disparaging information was published with malice."

We doubt that X Corp. needs the identity of Media Matters's every donor, big or small, to advance its theories. Nor does it need the full residential addresses for any of those stated purposes. Conversely, Media Matters and its donors would bear a heavy burden if Media Matters had to release this information. It could enable others to harass or intimidate Media Matters or its donors. Indeed, X Corp.'s owner, Elon Musk, has said that X Corp. would "pursue not just [Media Matters] but anyone funding that organization. I want to be clear about that anyone funding that organization, will be, we will pursue them."

The district court might have alleviated some of these burdens by issuing the protective order to which the parties had stipulated. It declined to do so, reasoning that parties could always "agree to any confidentiality or discovery-related contract" without using judicial resources.

Unlike a private agreement, however, court orders are backed by courts' coercive power. True, the district court required X Corp. to "ask the Court before using an information beyond the Attorney's Eyes Only designation." But that was far from a blanket ban on sharing confidential information. We conclude that Media Matters was reasonably concerned, not because we doubt the "character of [X Corp.'s] lawyers" or the judgment of the district court, but because of the sensitive nature of the requested data.

The other requests for production are not as broad but still encompass irrelevant information. Request 18 asks for communications "reflecting … attempts to solicit donations or financial support, including … discussions with donors" or potential donors. Request 21 asks for "sources of funding for research, investigation, reporting, publication, or any other work related to X, the Platform, Elon Musk, or Linda Yaccarino." Request 35 asks for communications with donors or potential donors regarding "this Matter, Elon Musk, Linda Yaccarino, X, Twitter, or the Platform, including misinformation, brand safety, or ad pairing on the Platform." There is no apparent reason why these documents need to identify all donors or potential donors, but we agree with the district court that the communications could otherwise be relevant to X Corp.'s theories. Indeed, Media Matters seems to agree that Requests 21 and 35 are appropriate.

Because X Corp.'s discovery requests are disproportional to the needs of the case, Media Matters is likely to succeed on the merits of its appeal….

Aria Branch, Christopher D. Dodge, Jacob D. Shelly, Abha Khanna, Elias Law Group, and  Andrew Patrick LeGrand of Gibson, Dunn & Crutcher represent Media Matters.

The post Fifth Circuit Stays Broad Discovery Regarding Media Matters Donors in <i>X v. Media Matters</i> appeared first on Reason.com.

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