Metropolitan News-Enterprise


Tuesday, January 21, 2014


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Court Says Blogger Receives Same Protection as Formal Press


By MICHAEL J. PEIL, Staff Writer


A blogger is afforded the same First Amendment protections as the institutional press, so liability for private defamation cannot be found unless a blogger acts negligently in making statements on matters of public concern, the Ninth U.S. Circuit Court of Appeals has ruled.

The court, in an opinion by Judge Andrew D. Hurwitz, reversed Friday, and remanded for a new trial, a $2.5 million compensatory damages award, saying First Amendment protections do not turn on whether a defendant is a trained journalist, limiting the distinctions to be made between a formal press and bloggers.

In a written decision before trial, U.S. District Judge Marco A. Hernandez of the District of Oregon ruled that the plaintiffs would not be required to prove negligence or actual damages because Crystal Cox failed to submit evidence proving her status as a journalist.

Bankruptcy Case

Kevin Padrick is a principal and co-founder of Obsidian Finance Group, LLC. In 2008 Summit Accommodators, Inc. retained Obsidian for advice about a contemplated bankruptcy, and after filing for reorganization the bankruptcy court appointed Padrick as chapter 11 trustee. Summit had defrauded clients, so Padrick was to handle the firm’s assets for the benefit of those clients.

Cox wrote blog posts, published on websites she created, accusing Padrick and Obsidian of having engaged in bribery, tax fraud, money laundering and theft in connection with the Summit bankruptcy. She also alleged that Padrick may have “hired a hit man” to kill her.

Padrick and Obsidian sent Cox a cease-and-desist letter, but she continued posting allegations about them. Padrick and Obsidian then filed a defamation suit.

The court held that all but one of Cox’s blog posts were protected because it could not be proven whether the posts were true or false as the language was figurative and hyperbolic.

A post from Dec. 25, 2010 from, it was held, however, made a specific allegation that could be verified where it alleged that Padrick, as trustee, failed to pay $174,000 in taxes owed by Summit. The single defamation claim based on that post therefore was allowed to proceed to a jury trial.

Cox moved for a new trial, arguing that she was protected by the First Amendment and as such the plaintiffs should need to prove that she was negligent in making her statements. The court denied her motion, concluding that fault need not be established and presumed damages could be awarded.

The jury ultimately awarded Padrick $1.5 million and Obsidian $1 million in compensatory damages.

On appeal, Cox did not challenge the jury’s conclusion that her blog statements were false and defamatory. She instead challenged the ruling that liability could be imposed without showing negligence on her behalf.

Gertz Argument Rejected

Padrick and Obsidian argued that, under Gertz v. Robert Welch, Inc. 418 U.S. 323 (1974), the negligence requirement only applies to claims against the institutional press.

Hurwitz, citing Citizens United v. Federal Elections Commission (2010) 558 U.S. 310, disagreed, saying:

“[A] First Amendment distinction between the institutional press and other speakers is unworkable: ‘With the advent of the Internet and the decline of print and broadcast media…the line between the media and others who wish to comment on political and social issues becomes farm more blurred.’...In defamation cases, the public-figure status of a plaintiff and the public importance of the statement at issue—not the identity of the speaker—provide the First Amendment touchstones. We therefore hold that the Gertz negligence requirement for private defamation actions is not limited to cases with institutional media defendants.”

UCLA law professor Eugene Volokh, who argued this case on Cox’s behalf, wrote approvingly of that statement on his blog “The Volokh Conspiracy,“ saying:

“I think that’s right, not just as a matter of First Amendment principle but also as a matter of history and precedent…Note, though, that the court’s reasoning is limited to First Amendment protections; it doesn’t discuss state or federal statutes that provides extra protection to the ‘media’ or to other subsets of speakers.”

Gertz, Padrick and Obsidian also argued, involved a matter of public concern and this case did not, so the negligence requirement of that case should remain inapplicable.

Perhaps, Hurwitz explained, Gertz is limited to matters of public concern, but even with such a limitation Cox’s statements satisfy the requirement:

“Cox’s allegations in this case are similarly a matter of public concern. Padrick was appointed by a United States Bankruptcy Court as the Chapter 11 trustee of a company that had defrauded its investors through a Ponzi scheme. That company retained him and Obsidian to advise it shortly before it filed for bankruptcy. The allegations against Padrick and his company raised questions about whether they were failing to protect the defrauded investors.”

The jury should have been instructed, Hurwitz concluded, that Cox was not liable unless she acted negligently and that an award for presumed damages could not be given unless she acted with actual malice.

Steven M. Wilker, an attorney with Tonkon Torp LLP who argued this case on behalf of Padricka and Obsidian, said in an email:

 “While we are obviously disappointed in the ruling, we do note that the court concluded that there was no dispute that the statements were false and defamatory.  We also note that the Court  describes Ms. Cox as apparently having ‘a history of making similar allegations and seeking payoffs in exchange for retraction.’  Ms. Cox’s false and defamatory statements have caused substantial damage to our clients, and we are evaluating our options with respect to the court’s decision.”

The case is Obsidian Finance Group, LLC v. Cox, No. 12-35238.


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