There was an important decision last week in the United States Court of Appeals for the Ninth Circuit in which a panel ruled that bloggers are entitled to the same protections as journalists. The decision is in sharp contrast to the view of Senator Dianne Feinstein and Obama Administration officials who have fought against such protections for bloggers in a new federal shield law. The opinion was handed down on January 17, 2014 in Obsidian Finance Group v. Cox.

The decision came in a defamation lawsuit where the panel ordered a new trial in the case of Crystal L. Cox, a blogger from Eureka, Montana. Cox was sued for defamation by attorney Kevin Padrick and his company, Obsidian Finance Group LLC, after she wrote about what she viewed as fraud, corruption, money-laundering and other illegal activities. Patrick and Obsidian were hired by Summit Accommodators, which had defrauded investors. Padrick and Obsidian advised Summit before a filing for bankruptcy and the U.S. Bankruptcy Court later appointed Padrick trustee in the Chapter 11 case.

Some of Cox’s allegations were indeed quite raw and over-the-top, as noted by the court. She accused “Padrick and Obsidian of engaging in “illegal activity,” including “corruption,” “fraud,” “deceit on the government,” “money laundering,” “defamation,” “harassment,” “tax crimes,” and “fraud against the government.” Cox also claimed that Obsidian paid off “media” and “politicians” and may have hired a hit man to kill her.” There is one site entitled simply “Obsidiansucks.” The site shows Cox’s picture above with the pledge “I promise to expose Kevin Padrick.”

Notably, the district court held that “all but one of Cox’s blog posts were constitutionally protected opinions because they employed figurative and hyperbolic language and could not be proved true or false.” Obsidian Fin. Grp., LLC v. Cox, 812 F. Supp. 2d 1220, 1232-34 (D. Or. 2011). However, one posting on December 25, 2010 on bankruptcycorruption.com was found to have made “fairly specific allegations [that] a reasonable reader could understand . . . to imply a provable fact assertion”—i.e., that Padrick, in his capacity as bankruptcy trustee, failed to pay $174,000 in taxes owed by Summit.” The one posting was allowed to go to trial and the jury found in favor of Padrick and Obsidian, awarding the former $1.5 million and the latter $1 million in compensatory damages.

District Judge Marco A. Hernandez ruled that Padrick and Obsidian were not required to prove either negligence or actual damages because Cox had failed to submit “evidence suggestive of her status as a journalist.” Obsidian Fin. Grp., LLC v. Cox, No. 3:11-cv-00057-HZ, 2011 U.S. Dist. LEXIS 137548, 2011 WL 5999334, at *5 (D. Or. Nov. 30, 2011). Hernandez further ruled that neither Padrick nor Obsidian was an all-purpose public figure or a limited public figure based upon Padrick’s role as a bankruptcy trustee because “they had not injected themselves into a public controversy, but rather that Cox had “created the controversy . . . .” 2011 U.S. Dist. LEXIS 137548, [WL] at *4.

The case raises in New York Times Co. v. Sullivan which held that, when a public official seeks damages for defamation, the official must show “actual malice”—that the defendant published the defamatory statement “with knowledge that it was false or with reckless disregard of whether it was false or not.” Id. at 280. Later, in Gertz v. Robert Welch, Inc., the Court held that the First Amendment required only a “negligence standard for private defamation actions.” 418 U.S. 323, 350, 94 S. Ct. 2997, 41 L. Ed. 2d 789 (1974). The question is what a blog is: more like a journalist or a private communication. The court noted that

“[t]he Gertz court did not expressly limit its holding to the defamation of institutional media defendants. And,

although the Supreme Court has never directly held that the Gertz rule applies beyond the institutional press, it has repeatedly refused in non-defamation contexts to accord greater First Amendment protection to the institutional media than to other speakers.”

The court relied on Citizens United for support this broader view of free speech. Consistent with a couple of other circuits, the panel ruled:

The protections of the First Amendment do not turn on whether the defendant was a trained journalist, formally affiliated with traditional news entities, engaged in conflict-of-interest disclosure, went beyond just assembling others’ writings, or tried to get both sides of a story. As the Supreme Court has accurately warned, 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 far more blurred.” Citizens United, 558 U.S. at 352. 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. But this does not completely resolve the Gertz dispute.

The court then goes on to rule that this was a matter of public concern.

Unlike the speech at issue in Dun & Bradstreet that the Court found to be a matter only of private concern, Cox’s December 25 blog post was not “solely in the individual interest of the speaker and its specific business audience.” 472 U.S. at 762 (plurality opinion). The post was published to the public at large, not simply made “available to only five subscribers, who, under the terms of the subscription agreement, could not disseminate it further . . . .” Id. And, Cox’s speech was not “like advertising” and thus “hardy and unlikely to be deterred by incidental state regulation.” Id.

Because Cox’s blog post addressed a matter of public concern, even assuming that Gertz is limited to such speech, the district court should have instructed the jury that it could not find Cox liable for defamation unless it found that she acted negligently. See Gertz, 418 U.S. at 350. The court also should have instructed the jury that it could not award presumed damages unless it found that Cox acted with actual malice. Id. at 349.

The panel goes on to rule against Cox in saying that the lawyer and the group are not public figures. However, that still requires a new trial with the added protections afforded to the blog.

The panel also clarified the standards applied in the cross appeal on what constitutes opinion while (ironically) Cox’s heated language worked to her advantage:

In Milkovich v. Lorain Journal Co., the Supreme Court refused to create a blanket defamation exemption for “anything that might be labeled ‘opinion.'” 497 U.S. 1, 18, 110 S. Ct. 2695, 111 L. Ed. 2d 1 (1990). This court has held that “while ‘pure’ opinions are protected by the First Amendment, a statement that ‘may . . . imply a false assertion of fact’ is actionable.” Partington v. Bugliosi, 56 F.3d 1147, 1153 (9th Cir. 1995) (quoting Milkovich, 497 U.S. at 19). We have developed a three-part test to determine whether a statement contains an assertion of objective fact. Unelko Corp. v. Rooney, 912 F.2d 1049, 1053 (9th Cir. 1990). The test considers “(1) whether the general tenor of the entire work negates the impression that the defendant was asserting an objective fact, (2) whether the defendant used figurative or hyperbolic language that negates that impression, and (3) whether the statement in question is susceptible of being proved true or false.” Partington, 56 F.3d at 1153.

As to the first factor, the general tenor of Cox’s blog posts negates the impression that she was asserting objective facts. The statements were posted on obsidianfinancesucks.com, a website name that leads “the reader of the statements [to be] predisposed to view them with a certain amount of skepticism and with an understanding that they will likely present one-sided viewpoints rather than assertions of provable facts.” Obsidian Fin. Grp., 812 F. Supp. 2d at 1232. The district judge correctly concluded that the “occasional and somewhat run-on[,] almost ‘stream of consciousness’-like sentences read more like a journal or diary entry revealing [Cox’s] feelings rather than assertions of fact.” Id. at 1233.

As to the second factor, Cox’s consistent use of extreme language negates the impression that the blog posts assert objective facts. Cox regularly employed hyperbolic language in the posts, including terms such as “immoral,” “really bad,” “thugs,” and “evil doers.” Id. (quoting blog posts). Cox’s assertions that “Padrick hired a ‘hit man’ to kill her” or “that the entire bankruptcy court system is corrupt” similarly dispel any reasonable expectation that the statements assert facts. Id.

And, as to the third factor, the district court correctly found that, in the context of a non-professional website containing consistently hyperbolic language, Cox’s blog posts are “not sufficiently factual to be proved true or false.” Id. at 1234. We find no error in the court’s application of the Unelko test and reject the cross-appeal.

It is a major decision and one that further challenges the effort of Feinstein and others to strip bloggers of protections under media shield laws. The “new media” obviously concerns many politicians like Feinstein, who show the same hostility to bloggers as her predecessors once showed to the media before New York Times v. Sullivan. While the issues are not identical between the torts doctrines and media shield laws, the ruling undermines the argument that there is a clear line between bloggers and conventional reporters in dealing with public disputes and allegations. We have still not resolved how to draw the line (if such a line is possible) between conventional and new media. What is significant is that this court is refusing to expose bloggers to the type of pre-Sullivan liability that would dramatically chill Internet speech.

Cox posted what appears to be a running discussion on the case and the appeal including her confusion of distinction drawn over re-posting on the various site on which her views appeared:

Source: ABC