Finance Gurus Defend Blog Defamation Award

PORTLAND, Ore. (CN) - A financial company has urged a federal judge to uphold a $2.5 million jury verdict against a self-described investigative blogger.

On the website ObsidianFinanceSucks.com, Crystal Cox 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.

The trial centered on one BankruptcyCorruption.com blog post that the court said was capable of a defamatory meaning.

In November 2011 a jury found Cox was liable for $2.5 million in damages based on the one blog post. Cox asked U.S. District Judge Marco Hernandez to order a new trial in January.

In an amicus curiae brief for Cox, the Electronic Frontier Foundation called for Hernandez to overturn the jury award as a threat to free speech, excessive, and based on the wrong standard of defamation law.

Obsidian Finance and Kevin Padrick filed an opposing brief Tuesday that slammed Cox for disobeying the court's 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.

"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," he added.

Obsidian and Padrick say the evidence "easily supported the damage awards" because of how serious Cox's false accusations of criminal activity were.

The plaintiffs also the Electronic Frontier Foundation's brief, rejecting the notion that Oregon's media shield law did not apply to Cox because she disclosed her source in the allegedly defamatory 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 argued.

Even if Cox was associated with a media outlet, the shield law would still not apply because she defamed them, and Oregon's retraction law does not apply to Internet posts, their brief states.

"The Oregon Legislature has not expanded the coverage of the retraction statute to internet bloggers like defendant," according to the filing. "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."

Attorney Matt Zimmerman from Electronic Frontier told Courthouse News 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 in a January interview. "That's a bit of a dangerous precedent."

Zimmerman said the foundation was also concerned with the judge'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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