Pando

What shield law? Lawyers for Ebbu co-founder Michael Wendschuh tried to subpoena Pando writer's notes and sources

By Sarah Lacy and Paul Carr , written on May 17, 2017

From The Weed Desk

As regular readers will know, Pando has a longstanding policy of publishing any and all legal threats we receive, no matter how baseless or ridiculous.  

This promise of transparency, which we inherited from our time at TechCrunch, operates as a safeguard to ensure that readers always know if anyone is trying to shut down our reporting or otherwise prevent us from doing the job Pando readers expect us to do.

The policy covers lawsuits, legal demands to take down or alter stories, and any kind of subpoena related to our reporting.

Today's post concerns that third category -- a subpoena -- albeit one that’s different from anything we’ve ever received before. The subpoena wasn’t served on Pando directly, but on one of our freelance contributors, Alex Halperin.

Back in June of last year, we published Alex’s deeply reported and devastating report on troubled Weed startup, Ebbu. As Alex reported, the company's founders -- Michael “Dooma ” Wendschuh and Jon Cooper -- had fallen out in dramatic style, culminating in Wendschuh secretly recording a conversation with Cooper during which Wendschuh said,  “I’ve told people what they need to hear to get their money in and it’s been very difficult… I’ve told some things that were not true.”  The file was uploaded to a company share drive, and then made its way - via a source - to Alex.

If you haven't already read the story, you're in for a treat. We were lucky to get it -- originally Alex pitched it to Rolling Stone who, after careful editing and fact checking, were close to publication. Ultimately, though, they spiked the piece amid legal threats from Wendschuh.

Of course we were delighted to take advantage of Rolling Stone's legal squeamishness. After our own round of edits and fact checks, we satisfied ourselves that the story was accurate and that any legal threats were just the baseless bluster of a company and departed co-founder who didn't want their dirty laundry aired. We were fully aware that a lawsuit might follow, but it would be over a completely accurate story.

The good, but unsurprising, news is that no lawsuit has appeared. At least, not against us.  Again, the story is accurate.

The frustrating news is that (now departed) co-founder Wendschuh decided to take another legal tack: On February 22nd Alex received a subpoena from the law firm of Rovens Lamb acting for Wendschuh, demanding that Alex hand over all of his notes and source materials for the story. The purpose of the subpoena was to help Wendschuh pursue private arbitration in Colorado against Ebbu and Cooper.

The subpoena also demanded Alex attend a deposition in Los Angeles to reveal his confidential sources for the article (including who had arranged leaks to him) and answer other questions about his reporting. 

Seriously. The subpoena is embedded below. 

We can only speculate why Wendschuh tried to target Alex directly in this way. Perhaps he thought that, as a freelance contributor, Alex wouldn’t have the legal resources to push back and would be forced to hand over all his documents and reveal his sources.

If that was Wendschuh’s strategy, it was a miscalculation. If there's one rule of investigative journalism, it's that a reporter protects his sources. If there's a second, it's that editors protect their reporters.

We immediately gave Alex full access to our brilliant attorney, Roger Myers from Bryan Cave. Myers drafted formal Objections to the subpoena’s demand for documents that were not published with the story, reminding Wendschuh and his attorney of California's very clear journalistic shield laws. And that…

Under the shield law, a “freelance journalist” such as Halperin, … , has the right not to disclose any and all information “‘not disseminated to the public by the person from whom disclosure is sought, whether or not related information has been disseminated’” and “whether contained in source material or in memory.”

The full response is also embedded below.

Myers also drafted a petition to quash the subpoena’s demand that Halperin appear for the deposition (to testify about his sources and other unpublished information). 

And guess what?

After we spent thousands of dollars assessing Wendschuh’s subpoena, consulting with his attorneys and finally drafting Objection and petition to quash (supported by a lengthy legal brief), on April 5thWendschuh’s lawyers agreed to take the deposition “off calendar” and accept a declaration from Alex authenticating the material he had published and that he stood by his reporting. In other words, they agreed to respect California law.

Good for them.

But here’s the harsh, expensive reality: The resolution came after hours of consultation between us, Alex and Myers, not to mention time spent drafting responses, and all the other crap that comes with fending off baseless subpoenas.  

Like most publications we have insurance policies to help cover our legal costs in situations like this, but the process of claiming against those is long and difficult. And we still have to pay a big chunk of the legal expense ourselves before any insurance money kicks in.  As of right now, Pando has covered the entire cost of fighting Wendschuh’s subpoena.

That wasn’t easy for us, financially, even though Myers reduced his normal fee for us. But there really was no alternative. This isn’t just about Pando or Ebbu or Alex or us. The entire media is under threat from bullies right now and they simply cannot be allowed to win.

We hope -- of course -- that companies like ours, and TechDirt, and so many others don’t have to follow Gawker out of business to make that point. Eventually the only news outlets left are exactly the ones who will cave when threatened. And if you think truth is under assault now, imagine that reality.

We often say that Pando couldn’t do what we do without the support of our subscribers -- but situations like this really underscore how true that is. Every dime spent fending off Wendschuh’s subpoena came from the monthly or annual subscription fees we receive from readers like you (Wendschuh’s  subpoena almost certainly won’t be the last legal threat we receive this year. If you’re not already a subscriber, this would be a really, really good time to sign up.)

To all those subscribers: Thank you. To our annual Pando Patrons who pay $500 to support fearless independent journalism: Thank you. And to all those subscribers who, back in February (right after Alex had received his subpoena), offered to increase their monthly or annual payment to help us survive situations like this: Thank you, thank you, thank you.

As for Wendschuh, if he thought that costing us money, and Alex stress, would at least scare us away from continuing to report on him and Ebbu, that was another misjudgment. Alex is working on a follow up story which will be published on Pando in the next few weeks.