Posted Jul 01, 2014 09:10 am CDT
A few years ago, Montana real estate agent Crystal Cox got into a public spat with the National Association of Realtors. She had taken an interest in the bankruptcy of an Oregon company that held customers’ cash during property exchanges, according to the New York Times.
A federal grand jury charged the company’s officers with conspiracy to defraud clients. That’s when Cox the real estate agent became Cox the blogger. Having previously targeted top corporate officials, Cox this time took after Oregon lawyer Kevin D. Padrick, who was appointed trustee in the bankruptcy case in 2008. Cox claimed he used inside information to seize the remaining assets for himself. And she let the entire blogged-on world know what she thought. After Padrick and his company, Obsidian Financial Group, sued for defamation, Cox immediately offered her services to remove the online posts for a fee of $2,500 a month.
When the case went to trial, a federal district court found that Cox the blogger is not Cox the journalist. The court found in 2011 that she failed to submit “evidence suggestive of her status as a journalist,” so it rejected Cox’s argument that the plaintiffs had to show evidence of fault, such as knowing the statements were false or acting negligently. The jury awarded Padrick $1.5 million and Obsidian $1 million in compensatory damages.
But in January, the 9th U.S. Circuit Court of Appeals at San Francisco gave Cox back her status as a journalist. In Obsidian Finance Group v. Cox, a case of first impression, Judge Andrew D. Hurwitz spoke for a three-judge panel. He said Cox was entitled to traditional defamation-law protections and, thus, entitled to a new trial where the plaintiffs would have to show fault.
As a result, bloggers receive the same level of protection from defamation suits as traditional journalists.
“The protections of the First Amendment,” the court said, “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 the story.”
“The decision is important because noninstitutional, medialike bloggers help to spread so much information,” says Washington, D.C.-based expert Thomas C. Goldstein, who filed an amicus brief on behalf of SCOTUSblog, his website covering the Supreme Court.
“For all the reasons the institutional press need the confidence that they can speak without being sued too easily, so do bloggers,” Goldstein says. “At the same time, the public knows that it has a remedy against reckless false claims on the Internet.”
The decision relied on a 1974 U.S. Supreme Court case, Gertz v. Robert Welch Inc. The high court ruled in that case that a private person suing for defamation did not have to show evidence of actual malice, but—if the statements address a matter of public concern—the private person must still show negligence or fault on the part of the defendant. The Gertz court emphasized that a fault standard was important to shield “the press and broadcast media from the rigors of strict liability for defamation.”
“The Gertz court did not expressly limit its holding to the defamation of institutional media defendants,” the appeals court panel wrote. The judges quoted the Supreme Court’s 2010 campaign finance decision, Citizens United v. Federal Election Commission: “We have consistently rejected the proposition that the institutional press has any constitutional privilege beyond that of other speakers.”
UCLA law professor Eugene Volokh, who represented Cox on appeal, agrees that a primary significance of the decision is treating institutional and noninstitutional media similarly.
“I think the view that the First Amendment applies equally to all who speak to the public has been generally accepted since the framing and has been important since,” Volokh explains.”But it’s more true now that more people than ever before would be made into second-class citizens if the contrary view were adopted. And it’s harder than ever before to tell who is ‘institutional media’ and who is not.”
The appeals panel mentioned that the important “First Amendment touchstones” in defamation cases are whether the plaintiff is a public official or private person and whether the statements at issue address questions of public importance.
The 9th Circuit ruled in favor of Oregon lawyer Padrick on the public official question, saying that a bankruptcy trustee qualifies more as a private person than as a public official. The distinction between a public or private figure is crucial in defamation cases. That’s because a public official or public figure must show that the defamation defendant acted with actual malice, which means knowing falsity or reckless disregard. In New York Times Co. v. Sullivan, the Supreme Court ruled in 1964 that a public official suing for defamation had to show that the allegedly defamatory statements were made with actual malice, defined as knowing falsity or reckless disregard of the truth.
On the other hand, a private person suing for defamation often must show only negligence. The 9th Circuit reasoned that a bankruptcy trustee was not “tantamount to a public official.”
However, the 9th Circuit said that Cox’s blog post addressed matters of public concern because the statement raised the question of whether the plaintiffs had failed to protect defrauded investors. Because the post addressed a matter of public importance, the lower court should have instructed the jury that it could not find Cox liable for defamation unless it found that she acted negligently. Furthermore, the panel found that the lower court should have instructed the jury that it could award presumed damages unless Cox met the standard of actual malice.
Padrick and Obsidian had also appealed the lower court’s ruling with regard to the other blog posts Cox had made. Padrick and Obsidian alleged that many of these other posts also were defamatory. The 9th Circuit affirmed the lower court with respect to those statements, saying that Cox consistently used extreme, hyperbolic language that did not assert objective facts.
Attorneys for Obsidian and Padrick, contacted for this story, say they have filed a petition for rehearing en banc. They contend that the lower court erred in finding that most of Cox’s blog posts were not capable of being considered false, defamatory statements of fact. “Here, it is readily apparent that Cox does not mean her accusations in any loose, figurative or hyperbolic style,” the petition reads. “She is literally and seriously accusing plaintiffs of committing crimes, which is susceptible of being proved true or false, as any government prosecutor will attest.”
The petition also questions whether the 9th Circuit panel erred when it found that Cox had not waived her challenge to the jury instructions, writing: “The panel decision conflicts with the express language of a federal rule of civil procedure and prior decisions of this court regarding the preservation requirements for jury instruction errors.”
As of press time, it was not known whether the 9th Circuit would grant en banc review or the plaintiffs would try to take the matter up to the Supreme Court.
“I’d be surprised if the Supreme Court stepped into the case,” says Goldstein, a seasoned oral advocate before the high court.
“The court of appeals’ decision seems plainly right, and there isn’t a conflict in the court of appeals.”
This article originally appeared in the July 2014 issue of the ABA Journal with this headline: “Blogger Gets Press Pass: In defamation case, online writer is now a journalist.”