PORTLAND, Ore. (CN) - Attorneys argued fine points of defamation law in a 9th Circuit hearing involving a self-styled investigative blogger whom an Oregon financial company successfully sued for a blog post.
Crystal Cox, who calls herself an "investigative blogger," operated a website that accused Oregon-based Obsidian Finance Group of illegal activities, corruption, tax fraud and money laundering.
Obsidian and its co-founder Kevin Padrick sued Cox for defamation in January 2011. Before the case went to trial, the court found that only one blog post on "bankruptcycorruption.com" was capable of defamatory meaning.
The one-day trial centered on that single post. In it, Cox called Padrick "a criminal" and accused him of "corruption and back alley handshakes," among other things.
In November 2011 a jury found Cox was liable for $2.5 million in damages . Cox sought a new trial, challenging U.S. District Judge Marco Hernandez's order.
Hernandez denied Cox's motion for a new trial, and elaborated on issues that were not addressed during the one-day trial, in a March 2012 order.
Hernandez rejected Cox's arguments that Padrick and Obsidian were public figures, and that the blog post was a matter of "public concern because exposing criminal fraud is always in the public interest."
"Defendant's argument requires characterizing any statement regarding a private individual's or a private corporation's alleged willful failure to properly report its taxable income as a statement related to a matter of public concern suitable for enhanced First Amendment protection in the context of a defamation claim," Hernandez wrote.
"While every taxpayer could certainly be affected by another's failure to pay taxes, I do not read the 'matter of public concern' cases to encompass such essentially private company."
Hernandez also clarified his position on the media status of bloggers: an issue that made this case a cause célèbre among some free-speech advocates .
"In my discussion, I did not state that a person who 'blogs' could never be considered 'media.' I also did not state that to be considered 'media,' one had to possess all or most of the characteristics I recited," Hernandez wrote.
Cox appealed to the 9th Circuit, and a three-judge panel heard arguments from both sides in Portland last week.
Much of the argument centered on the U.S. Supreme Court ruling in Gertz v. Robert Welch Inc., in which the court held that states can establish their own liability standards for defamation.
In this case, attorneys disputed whether Cox represented a media institution, and whether her blog post was an attack on Padrick as a private individual.
Representing Cox, attorney Eugene Volokh argued that as a bankruptcy trustee, Padrick should be considered a "limited public official."
The panel seemed skeptical.
"A bankruptcy trustee is appointed," 9th Circuit Judge Milan Smith said. "They don't have a lot of discretion. They certainly don't have the ability to go out and talk to the media whenever they want or they'll lose their job. They're not elected."
Volokh argued that the subject of the blog post was "a matter of public concern."
"If there's a pre-existing controversy about the plaintiff, he's already going to be a public figure on this limited purpose public figure theory," Volokh said.
Judge Smith didn't buy it.
"I'm very troubled by your argument on this point," Smith said. "It's a bottomless pit.
"If we agree with your concept that this man is not protected, then where does it stop? Is there anybody who couldn't be made into a public figure under your concept?"
Volokh reiterated that because a trustee such as Padrick is appointed by a judge, he should be considered a public official.
Representing Obsidian and Padrick, attorney Steven Wilker said Cox was essentially "standing on the corner yelling bad things about my client" and questioned the constitutional value of such speech.
"Define the institutional media for me," 9th Circuit Judge Michael Hurwitz asked.
"There has to be some semblance that this is in fact news," Wilker replied, "as opposed to a personal rant."
"Aren't you forgetting the history of our wonderful republic?" Judge Smith asked. "Virtually every newspaper in those days was a professional political rant."
Wilker claimed that Cox's blog post "was not a political rant and not political speech."
"Whatever the institution may be, we know the news media doesn't offer to stop publishing if you just pay a small fee," Wilker said. "That's not media; that's extortion."
The panel continued to press Wilker on how to define the "institutional media," which he contended should be the only media protected by Gertz.
Judge Smith pointed out that only 11 percent of the public reads newspapers, and a significant portion gets its news from the internet, which does not have the same vetting process for publishing.
"Does all of that go out the window because something's not published by The New York Times or the L.A. Times?" Smith asked.
Wilker acknowledged that because of the differing views of the Supreme Court justices in Gertz, "we don't know what that protection is."
Concluding, Smith said this was a "very interesting and challenging case."
Smith and Hurwitz were joined by 9th Circuit Judge Arthur Alarcon.
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