| SAN FRANCISCO
SAN FRANCISCO Jan 17 A blogger is entitled to
the same free speech protections as a traditional journalist and
cannot be liable for defamation unless she acted negligently, a
federal appeals court ruled on Friday.
Crystal Cox lost a defamation trial in 2011 over a blog post
she wrote accusing a bankruptcy trustee and Obsidian Finance
Group of tax fraud. A lower court judge had found that Obsidian
did not have to prove that Cox acted negligently because Cox
failed to submit evidence of her status as a journalist.
But in the ruling, the 9th U.S. Circuit Court of Appeals in
San Francisco said Cox deserved a new trial, regardless of the
fact that she is not a traditional reporter.
"As the Supreme Court has accurately warned, a First
Amendment distinction between the institutional press and other
speakers is unworkable," 9th Circuit Judge Andrew Hurwitz wrote
for a unanimous three judge panel.
Attorneys for Obsidian and the trustee could not immediately
be reached for comment. Eugene Volokh, a UCLA School of Law
professor who represented Cox, said the ruling is particularly
important in the era of online content.
"In this day and age, with so much important stuff produced
by people who are not professionals, it's harder than ever to
decide who is a member of the institutional press," Volokh said.
Cox's blogging activities have attracted their share of
controversy. According to the court's opinion, Cox has a history
of making allegations of fraud and other illegal activities "and
seeking payoffs in exchange for retraction."
In 2008, Summit Accommodators retained Obsidian, a firm that
advises distressed businesses. When Summit filed for bankruptcy,
the court appointed an Obsidian principal, Kevin Padrick, as
Cox wrote a series of blog posts, including one that accused
Padrick of tax fraud in failing to pay $174,000 in taxes owed by
Summit. U.S. District Judge Marco Hernandez in Oregon rejected
Cox's First Amendment defenses, and a jury awarded Padrick and
Obsidian a combined $2.5 million.
However, the 9th Circuit found that the tax fraud
allegations were a matter of public concern, which means
Obsidian had to show evidence of Cox's negligent behavior.
"The allegations against Padrick and his company raised
questions about whether they were failing to protect the
defrauded investors because they were in league with their
original clients," Judge Hurwitz wrote.
Volokh said that on retrial, Obsidian will have to show that
Cox had actual knowledge that her post was false when she
The case in the 9th Circuit is Obsidian Finance Group LLC
and Kevin Padrick vs. Crystal Cox, 12-35238.
(Reporting by Dan Levine; Editing by Richard Chang)