Defamed Firm Fights New Trial for Blogger

PORTLAND, Ore. (CN) - An "investigative blogger" who criticized a financial company does not deserve a new trial, says a company who claims just one of her posts did $2.5 million in damage to its image.

Obsidian Finance Group and its cofounder Kevin Padrick sued Crystal Cox in January 2011, accusing her of defamation in a federal complaint.

Cox, who calls herself an investigative blogger, operated the website obsidianfinancesucks.com, which accused Oregon-based Obsidian Finance Group of corruption, tax fraud and money laundering.

Before the case went to trial, the court found that only one blog post on "bankruptcycorruption.com" was capable of a defamatory meaning, and the trial centered around that post.

In November 2011 a jury found Cox liable for $2.5 million in damages for the one post. Cox sought a new trial in January, challenging U.S. District Judge Marco Hernandez's order.

In conjunction with Cox's motion, the Electronic Frontier Foundation filed an amicus brief, arguing that the jury award should be overturned because it is a threat to free speech, was excessive, and was based on the wrong legal standard of defamation.

Last week Obsidian Finance and Padrick filed an opposition to the motion for a new trial, slamming Cox for disobeying the court orders.

"Remarkably, defendant Cox seeks to have the court and plaintiffs go through the time and expense of a new trial so that the jury can consider whether she acted negligently and/or maliciously when she falsely accused plaintiffs of criminal conduct," attorney Steven Wilker wrote in the motion.

"We say remarkably because just one day before trial, Cox willfully disobeyed this court's order to bring to Court documents requested by plaintiffs that were directly relevant to her negligence and malice - that is, to the issues she now claims are so critical to the case that justice demands she be given a new trial."

Padrick said the evidence "easily supported the damage awards" because of the seriousness of Cox's false accusations.

Padrick also addressed the amicus brief from the Electronic Frontier Foundation, rejecting the notion that Oregon's media shield law did not apply to Cox because she disclosed her source in the post.

"Although defendant claims to be a journalist and investigative blogger, she is not affiliated with 'any newspaper, magazine or other periodical, book, pamphlet, news service, wire service, news or feature syndicate, broadcast station or network, or cable television system," the plaintiffs said in their motion.

They added that even if Cox were associated with a media outlet, the shield law still would not apply because she defamed them, and Oregon's retraction law does not apply to Internet posts.

"(T)he Oregon Legislature has not expanded the coverage of the retraction statute to Internet bloggers like defendant. Unless and until it does so, Internet bloggers like defendant cannot rely on the retraction statute to limit the damages of plaintiffs who have not followed the statutory procedures for seeking retractions from those entities that are subject to it," the plaintiffs said.

Electronic Frontier's attorney Matt Zimmerman told Courthouse News in January that he hopes Judge Hernandez will apply the defamation standard "equally and across the board."

"The judge identified a tiered defamation standard depending on what your media status is," Zimmerman said. "That's a bit of a dangerous precedent."

Zimmerman said the foundation also is concerned Judge Hernandez's "unnecessary rulings on whether or not Cox was a journalist."

That ruling affects Oregon shield law and "leaves Oregon online speakers in a bit of a state of flux," Zimmerman said.

"One doesn't necessarily have to agree with what Ms. Cox said to believe that the court came to the wrong opinion here," Zimmerman said.

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