The Appellate Division, First Department, at 27 Madison Ave.
The Appellate Division, First Department, at 27 Madison Ave. (NYLJ/Rick Kopstein)

The Appellate Division, First Department, on Thursday ruled that a company that provides information about distressed businesses to high-end institutional subscribers is exempt from having to disclose the names of its sources, overturning the trial court’s decision.

The appellant, Murray Energy Corporations, has vowed to continue litigating the suit.

Bloomberg LP, Reuters, Dow Jones & Co., The Financial Times, Politico and several other large media companies had joined as amici curiae for the newsletter publisher.

Justices John Sweeny, Angela Mazzarelli, Troy Webber, Marcy Kahn, and Cynthia Kern unanimously ruled that New York City-based Reorg Research Inc. is covered by New York’s Shield Law, reversing a Manhattan Supreme Court decision in February that the subscription-only company wasn’t covered under the state law meant to protect journalists.

“We find that [the] respondent is exempt from having to disclose the names of its confidential sources by New York’s Shield Law because it is a ‘professional medium or agency which has as one of its main functions the dissemination of news to the public’” the panel wrote in Matter of Murray Energy Corp. v. Reorg Research, Inc., 157797/16.

The case against Reorg began when the company sent out two news alerts to its subscriber’s about one of the county’s largest coal mine operators, Murray Energy Corporation. The alerts, which were based on information provided by anonymous sources, claimed that Murray Energy had reached a collective bargaining agreement with its employees. Another alert described the details of internal negotiations between the company and its debt holders.

Murray Energy argued that the anonymous sources violated its confidentiality agreement with Reorg. In the decision, the appellate court said that the information released by Reorg has public benefit.

“More importantly, given the substantial investment required to unearth this information and the limited number of interested readers, the alternative is not broader coverage but no coverage at all,” the court wrote.

Jude Gorman, the general counsel at Reorg, said that the company was “delighted” at the decision, noting that “the court made it clear that there are strong protections” in place for this kind of reporting.

Laura Handman, co-chair of appellate practice at Davis Wright Tremaine who represented Reorg, said, “The decision provides the certainty needed for reporters to do their jobs.”

But Gary Broadbent, the senior corporate counsel and director of investor and media relations at Murray, said that the company was “deeply disappointed” in the ruling.

“Reorg Research has repeatedly obtained and profited from the distribution of Murray Energy Corporation’s confidential financial information, in breach of Murray Energy’s legally enforceable confidentiality agreements,” he said in an email. “We will continue to vigorously litigate this case and to ensure that all of Murray Energy’s financial information remains strictly confidential. We are progressing in our identification of the party that violated our confidentiality agreement by disseminating this confidential financial information to the public. We will hold this party responsible for their actions,” Broadbent added.

Jeffrey J. Chapman at McGuire Woods was of counsel for respondent. Michael Berry, of counsel at Levine Sullivan Koch & Schultz, New York represented the amici.