• by Wendy Davis  @wendyndavis, January 20, 2014

Bloggers who are accused of libel are entitled to the same rights as members of the mainstream media, an appeals court has 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,” the 9th Circuit Court of Appeals said in a ruling issued late last week.

The decision, viewed as a sweeping victory for bloggers, reversed a $2.5 million libel verdict against Crystal Cox. A three-judge appellate panel returned the case to the U.S. District Court in Portland, Ore. for a new trial.

The ruling stems from a series of posts by Montana resident Crystal Cox on ObsidianFinanceSucks.com (and other sites that she operates), criticizing both Obsidian Finance Group, which consults with businesses in financial trouble, and its co-founder, Kevin Padrick, whom she called “a thug and a thief.”

Padrick and Obsidian demanded that Cox remove the posts. She refused to do so. Cox also “apparently has a history of making similar allegations and seeking payoffs in exchange for retraction,” according to the court's opinion.

In January 2011, Padrick and Obsidian filed a defamation lawsuit against Cox, who unsuccessfully represented herself. The trial dealt with one specific post -- a Dec. 25, 2010 item on “bankruptcycorruption.com," which accuses Padrick of failing to pay around $174,000 in taxes that were owed by a company for which he served as bankruptcy trustee.

Before trial, Cox argued that she should be considered a member of the media -- which would have influenced the instructions that were given to the jury. Critically, if Cox had been considered “media,” the jury would have been told that it had to consider Cox's state of mind, including whether she acted with negligence, before awarding damages. Without that type of instruction, the jury could find that Cox defamed Obsidian simply by publishing a false statement, even if she believed the statement to be true.

U.S. District Court Judge Marco Hernandez rejected Cox's request. “Defendant cites no cases indicating that a self-proclaimed 'investigative blogger' is considered 'media' for the purposes of applying a negligence standard in a defamation claim,” he wrote.

The judge then drew up a checklist of journalistic qualities, which he said would indicate that a blogger is entitled to protections in defamation cases. They included “education in journalism,” “proof of adherence to journalistic standards such as editing, fact-checking, or disclosures of conflicts of interest,” “creation of an independent product rather than assembling writings and postings of others,” and “contacting 'the other side' to get both sides of a story.”

The appellate court rejected that reasoning. “A First Amendment distinction between the institutional press and other speakers is unworkable,” the 9th Circuit wrote.

Cox also unsuccessfully argued before trial that the Dec. 25 post dealt with a matter of public concern, as opposed to a private issue. It's harder for people who sue for libel to receive damage awards when the item is about a matter of public concern.

The appellate court agreed with her on that point, as well. “The December 25 post alleged that Padrick, a court-appointed trustee, committed tax fraud while administering the assets of a company in a Chapter 11 reorganization,” the judges wrote. “Public allegations that someone is involved in crime generally are speech on a matter of public concern.”

The court added that the trial judge should have told the jury that it couldn't award “presumed damages” without first finding that Cox acted with actual malice -- which would require proof that she either knew the statement was false, or had a reckless disregard for whether or not the statement was true.

"Blogger in pajamas" photo from Shutterstock.