Bloggers Win Media First Amendment Protections

A federal appeals court held for the first time bloggers get the same first amendment protection as institutional media, for the purpose of libel law.

The 9th U.S. Circuit Court of Appeals Friday overturned a $2.5 million libel verdict against a Montana blogger who accused a bankruptcy trustee of fraud.

The panel held that plaintiffs suing for libel over statements that are matters of public concern must prove that the defendant was negligent.

“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,” wrote Judge Andrew Hurwitz, a recent appointee of President Obama.

Crystal Cox, the blogger, is entitled to a new trial in Oregon, where the first trial was held, according to the court.

Cox created several websites critical of Kevin Padrick, the head of Obsidian Finance Group, which advises financially distressed businesses.  One company Obsidian advised was Summit Accommodators, which later filed for bankruptcy.  The bankruptcy court appointed Padrick as trustee to recover assets from Summit, according to the court.

Cox set up several blogs and posted multiple times accusing Padrick and Obsidian of fraud, corruption, money laundering and other illegal activity, according to the court.

The trial court rejected all but one of the postings as hyperbolic opinion.  One statement that could be construed as claiming to be fact, was allowed to go to trial as libelous.  It accused Padrick of tax fraud while administering assets of a company in bankruptcy.

“Cox apparently has a history of making similar allegations and seeking payoffs in exchange for retraction,” Hurwitz wrote.

But in defamation cases it is whether the smeared plaintiff is a public figure and the public importance of the allegedly libelous statement that are the issue – not the identity of the speaker, he said.

Defamation History

Decades ago, the U.S. Supreme court found that when a public official seeks damages for defamation they must prove a very high standard of “actual malice” on the part of the journalist, that is, the statement was published with knowledge that it was false or reckless disregard for the truth. (NY Times v. Sullivan).

A decade later, the high court held that the First Amendment required only a “negligence” for private defamation actions. [Gertz v. Robert Welch]

Hurwitz says the case of the blogger sits between Sullivan and Gertz, which is an area “not yet fully explored by this circuit” in the context of the internet.

Padrick and Obsidian argued that the Gertz negligence requirement applies only to lawsuits by the institutional press, i.e. traditional newspapers, TV and radio.

The 9th Circuit panel rejected the argument and pointed out that although the U.S. Supreme Court has not directly answered the question, it has given hints.

“The court held that the press gets no special immunity from laws that apply to others, including those – such as copyright law – that target communications,” Hurwitz said.

He even cited the controversial political donations case, Citizens United v. Federal Election Commission, which allowed corporations to make unlimited campaign contributions.  In that case the court wrote, “We have consistently rejected the proposition that the institutional press has any constitutional privilege beyond that of other speakers,” the 2010 opinion states.

In addition, the high court stated in that case that a first amendment distinction between the institutional press and other speakers is unworkable in the age of the rise of the internet and decline of print and broadcast media.

As for the Gertz negligence requirement, Hurwitz said, “We therefore hold that the Gertz negligence requirement for private defamation actions is not limited to cases with institutional media defendants.”

The trial judge should have instructed the jury that it could not find Cox liable for defamation unless it found that she acted negligently and it could not award damages unless it found Cox acted with actual malice, Hurwitz said.

Joining Hurwitz in the decision were Judges Arthur Alarcon and Milan Smith.

Case: Obsidian Finance Group v. Cox, No. 12-35238




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