Defamation and Blogging - The 9th Circuit Has Spoken

What First Amendment protections are afforded a blogger sued for defamation? This was the question presented recently in a case just decided in the most liberal appellate court jurisdiction in the USA, the 9th Circuit Court of Appeals.

The issue was one of first impression, and is a critically important legal decision in light of the emergence of bloggers and the alternative media. It is of obvious concern to anyone that blogs, like Mr. TF, all the guest posters and contributors here, too, so an in depth discussion is warranted.

The set up is here, courtesy of

https://hosted.ap.org/dynamic/stories/U/US_BLOGGER_DEFAMATION?SITE=AP&SE...

“GRANTS PASS, Ore. (AP) -- A federal appeals court ruled Friday that bloggers and the public have the same First Amendment protections as journalists when sued for defamation: If the issue is of public concern, plaintiffs have to prove negligence to win damages.

The 9th U.S. Circuit Court of Appeals ordered a new trial in a defamation lawsuit brought by an Oregon bankruptcy trustee against a Montana blogger who wrote online that the court-appointed trustee criminally mishandled a bankruptcy case.

The appeals court ruled that the trustee was not a public figure, which could have invoked an even higher standard of showing the writer acted with malice, but the issue was of public concern, so the negligence standard applied.

Gregg Leslie of the Reporters Committee for the Freedom of the Press said the ruling affirms what many have long argued: Standards set by a 1974 U.S. Supreme Court ruling, Gertz v. Robert Welch Inc. [(1974) 418 U.S. 323, 350], apply to everyone, not just journalists.

"It's not a special right to the news media," he said. "So it's a good thing for bloggers and citizen journalists and others."

The jury in that case found against the blogger. The blogger lost BIG TIME, as the jury gave Padrick and his company $2.5 Million.

That case is special to us all, because it shows the consequences of posting statements on the internet, any one of which could lead to an expensive lawsuit, and a huge verdict.

So, naturally, a pointed question must be asked, if we as a group are going to have any rights to stand up and say what we want without fear of crippling lawsuits that will chill our very free speech rights and squelch our dissent big time: “what, if any, legitimacy should be given to bloggers?”

The previous argument, advanced by the monopolistic legacy media,, witnessing their slow and inexorable demise, was that bloggers get no special protection, because they are nobody’s. Pure and simple. Only journalists–that is, credentialed elite from the nation’s liberal/progressive indoctrination camps, err, universities–get First Amendment protections, not some blogger or bloggers hammering away on mommy’s computer in the basement.

Bloggers, naturally, felt otherwise.

The critical cases on defamation law come from the US Supreme Court: the New York Times Co. v. Sullivan (1964) 376 U.S. 254, and Gertz v. Robert Welch, Inc. (1974) 418 U.S. 323, 350. Remember, defamation is a civil tort. Defamation is a non-contractual civil wrong, that we, as a society, seek to discourage. If one engages in defamation, by spoken words (slander) or written words (libel), then if there is any harm that such false statements of fact cause, then the person uttering the defamatory statements must pay for the harm caused by an award of money damages.

In California, the jury instructions on defamation are here [ https://www.justia.com/trials-litigation/docs/caci/1700/ ]. These elements are basically the same all across the USA:

A local attorney states this on his webpage/blog, and this is as good an explanation as I have found:

In California, a claim for defamation involves a false statement made by one person about another person, which causes harm to a person’s property, business, profession or occupation. Defamatory statements are typically made using two methods:

(1) Slander: Making defamatory statements by a transitory (non-fixed) representation, usually an oral representation; or (2) Libel: Making defamatory statements in a printed or fixed medium, such as a magazine or newspaper.

In order to meet the elements for a defamation cause of action, a successful action must include:

1. A false and defamatory statement about another;

2. The unprivileged publication of the statement to a 3rd party (not including the person defamed by the statement);

3. Damage to the person defamed. Publication, in the context of defamation, does not mean it must be in print. Rather, it is considered published when it is made to a 3rd party.

California also recognizes “defamation per se”, or defamation that is presumed to cause damages without the need for any proof by the defamed person. Defamation per se is typically asserted in instances where there are attacks on a person’s professional character, allegations that an unmarried person is unchaste, allegations that a person is infected with an STD, or allegations that the person has committed a crime of moral “turpitude”.

There are several defenses to an action for defamation: 1. Truth. If the person who made the alleged defamatory statement was telling the truth, it is an absolute defense to an action for defamation. For example, if a rumor being spread around about a person is actually true, passing along this rumor is not defamation. 2. Privilege. Another defense to a defamation claim is allowed when statements are made in court, by legislators on the floor of the legislature, or by judges sitting on a trial, no matter how false or outrageous.

Opinion. If statement is an opinion as opposed to a fact, there is no defamation. This distinction often depends upon the context of the statement being made, who made it and whether the community would perceive that person to be in a position to know it as fact. For example, a statement by your spouse or family member that you engaged in an act is far less likely to be considered opinion than a person’s statement who just met you.

Fair Comment. Similar to opinion, if a fair comment on a matter of public interest is made, then the person making the statement is not likely to be liable for defamation. For example, citizens discussing the allegations surrounding a local political scandal are likely exercising a free comment on the public situation.

Consent. On a rare occasion, a person may argue as a defense that the defamed person actually consented, or agreed to, the dissemination of the allegedly defamatory statement.

Under the First Amendment of the US Constitution, where a public figure brings an action for defamation, they must also prove the statement was made with “actual malice” in addition to the elements above. In other words, they must prove the person making the defamatory statement knew the statement to be false, or issue the statement with reckless disregard as to its truth. For example, a politician suing a newspaper over false allegations of corrupt conduct may prove the allegations were indeed false but receive no damages because the statements were not made with “actual malice”. In the defamation context, a public figure extends to a much broader range then celebrities and politicians. For example, a person may be “involuntarily” thrust into the public spotlight during a high-profile criminal case, or due to their relationship with a public figure, without ever intending to receive the publicity.

“The Supreme Court's landmark opinion in New York Times Co. v. Sullivan began the construction of a First Amendment framework concerning the level of fault required for defamation liability. 376 U.S. 254. Sullivan held that when a public official seeks damages for defamation, the official must show "actual malice"-that the defendant published the defamatory statement ''with knowledge that it was false or with reckless disregard of whether it was false or

not." Id. at 280. A decade later, Gertz v. Robert Welch, Inc., held that the First Amendment required only a "negligence standard for private defamation actions." 418 U.S. 323, 350 (1974).”

So, as one can see, there is a gray area which, as in this case, exists between the intersection of Sullivan and Gertz, an area “not yet fully explored by this Circuit, in the context of a medium of publication-the Internet-entirely unknown at the time of those decisions.”

At last, this case would set a true precedent regarding blogging and the internet as concerns standards governing the liability, if any, of bloggers who post defamatory material.

So, getting to the issue at hand, there has always been friction with regard to whether bloggers should be afforded traditional journalistic protections.

Is there any surprise that the legacy media HATES the bloggers, and wants them NOT to have any protections? Keep reading.

So, the confrontation finally resulted in a trial, then an appeal. See, if a blogger gets sued for defamation, and settles, there is NO LEGAL PRECEDENT, AND NO DEFINITIVE RULING. The ONLY way the case law changes is when a blogger courageously steps up and commits to having a jury decide the case, and thereafter, if one or both decide to formally appeal the case to the appellate court. Naturally, the stakes are high, and stacked heavily against the blogger. There is NO huge news organization backing the blogger, so absent a kind soul volunteering his or her time, there usually is no chance for the blogger. But every now and then, there is a case that attracts some attention, and a volunteer steps from the shadows.

That is exactly what happened recently.

The issue came to a head in the Obsidian Finance Group, LLC, Kevin Padrick v. Crystal Cox matter, a case arising in the trial court in Oregon. There was a jury trial, a verdict against the blogger, and both sides appealed various aspects of the underlying jury verdict. There are two case numbers representing two appeals, 12-35238 and 12-35319, arising from the underlying district court case D.C. No. 3:11-cv-00057 HZ, and which were argued and submitted on November 6, 2013 in Portland, Oregon.

From the Opinion: “Kevin Padrick is a principal of Obsidian Finance Group, LLC (“Obsidian”), a firm that provides advice to financially distressed businesses. In December 2008, Summit Accommodators, Inc. (Summit), retained Obsidian in connection with a contemplated bankruptcy. After Summit filed for reorganization, the bankruptcy court appointed Padrick as the Chapter 11 trustee. Because Summit had misappropriated funds from clients, Padrick's principal task was to marshal the firm's assets for the benefit of those clients.

After Padrick's appointment, Crystal Cox published blog posts on several websites that she created, accusing Padrick and Obsidian of fraud, corruption, money-laundering, and other illegal activities in connection with the Summit bankruptcy. Cox apparently has a history of making similar allegations and seeking payoffs in exchange for retraction. See David Carr, When Truth Survives Free Speech, N.Y. Times, Dec. 11, 2011, at B 1. Padrick and Obsidian sent Cox a cease-and-desist letter, but she continued posting allegations. This defamation suit ensued.”

The trial court found that all but one of the blogger’s posts were “posts were constitutionally protected opinions because they employed figurative and hyperbolic language and could not

be proved true or false.”

The problem, though, was that there was at least some of the blogging that was a ““provable fact assertion”-i.e., that Padrick, in his capacity as bankruptcy trustee, failed to pay $174,000 in taxes owed by Summit.”

As a result of that factual assertion [Padrick, as bankruptcy trustee, failed to pay substantial taxes], the trial judge allowed that single defamation claim to proceed to a jury trial.

Hotly contested at trial of this issue was the legal standard that should govern a claim of defamation when the lawsuit involved a blogger and supposed matters of public concern. The blogger, Ms. Cox, raised two First Amendment arguments:

(1) Because the alleged false statement involved a matter of public concern, then Padrick and his company had to prove BOTH the blogger’s negligence (negligence is a legal concept that means a person had a duty to act reasonably under the circumstances, but did not; typically the argument is asserted that the person “knew or should have known” the statement was false, but published it anyway), AND that they could not recover PRESUMED damages absent proof that the blogger acted with ACTUAL MALICE (actual malice is SUPER DIFFICULT to prove, because it requires a showing that the blogger KNEW the post was false or acted with reckless disregard of its truth or falsity);

(2) Ms. Cox, the blogger, also argued that Padrick and Obsidian were public figures [bankruptcy trustee and his company], and as public figures, the blogger argued that Padrick and Obsidian were required to prove that Cox made the statements against them with actual malice.

The trial judge rejected Ms. Cox’s legal arguments. The trial judge felt that ““Padrick and Obsidian were not required to prove either negligence or actual damages because Cox had failed to submit “evidence suggestive of her status as a journalist.” [citations]. The [trial judge] also ruled that neither Padrick nor Obsidian was an all-purpose public figure or a limited public figure based upon Padrick's role as a bankruptcy trustee, finding that they had not injected themselves into a public controversy, but rather that Cox had “created the controversy.””

In short, the trial judge REJECTED the notion that blogger is entitled to any sort of journalistic protection. Does that not sound like the same, tired meme from the legacy media, trying to protect the crippled, failing fiat ponzi scheme of the broken federal reserve system? Entrenched, legacy bureaucrats protecting THEIR tired, worn system at all costs, is that not readily apparent? Newspapers? What’s that? Blogging? We ARE IT, and it is time the old school judges and legacy media embrace us.

Anyway, back to the analysis.

After closing arguments, the judge read the law to the jurors. This part of the trial is known as jury instruction. The judge told the jury that under Oregon law, “"Defendant's [the blogger, Ms. Cox’s] knowledge of whether the statements at issue were true or false and defendant's intent or purpose in publishing those statements are not elements of the claim and are not relevant to the determination of liability.” The judge also told the jury that "plaintiffs [Obsidian and Padrick] are entitled to receive reasonable compensation for harm to reputation, humiliation, or mental suffering even if plaintiff does not present evidence that proves actual damages . . . because the law presumes that the plaintiffs suffered these damages."

So, what happened, is that proof that the statement was made was all that was required, and it matter not one bit whether Ms. Cox knew or should have known of the falsity of the statement. Secondly, the most galling part, is that neither Obsian or Padrick had to prove any harm at all. The law “presumes”–legal gobbledygook for “makes up out of thin air because we say so”– that Obsidian and Padrick had suffered harm and therefore, the jury only has to make up a number out of thin air which they can guess at and which has no basis at all in fact. Kind of like fiat FRN’s come to think of it . . .

With that legal set up, there should be no surprise: the jury found against the blogger, and awarded substantial compensation in favor of Padrick and Obsidian.

Following the trial, Ms. Cox made some arguments in front of the trial judge, pointing out that it was wrong for the court to instruct the jury as it did, that is, by failing to tell the jury that Ms. Cox was entitled to certain First Amendment protections “including requiring plaintiffs to establish liability by proving that [she] acted with some degree of fault, whether it be negligence or 'actual malice."' The trial judge also rejected the blogger’s arguments that a showing of fault was required because the defendants were public figures and that the blog post referred to a matter of public concern," and thus concluded that a showing of fault was not required to establish liability, and that presumed damages could be awarded.

So, the only options were to pay the huge verdict or appeal the jury verdict and the judge’s instruction based on application of an incorrect legal standard.

At this point, also, the blogger managed to attract the attention of a UCLA law professor, who helped her in the effort to appeal the trial court’s ruling. [“Though Cox acted as her own attorney, UCLA law professor Eugene Volokh, who had written an article on the issue, learned of her case and offered to represent her in an appeal.” From the news article, here: https://hosted.ap.org/dynamic/stories/U/US_BLOGGER_DEFAMATION?SITE=AP&SE... ]

Law Professor Volokh came aboard, and the rest is history.

In the appeal, Volokh admitted both that (1) the blog post contained an assertion of fact which (2) the jury correctly concluded was false and defamatory. The appeal was only based on the trial court’s incorrect legal rulings that “liability could be imposed without a showing

of fault or actual damages and . . .Padrick and Obsidian were not public officials.”

Naturally, Obsidian and Padrick wanted the verdict upheld. They asserted various arguments. First, they argued that only the “institutional press”–that is, the legacy, mainstream media–were afforded protection under a negligence standard. What they were arguing is that BECAUSE the blogger was NOT mainstream press, then Obsidian and Padrick did not have to prove the blogger’s fault. They claimed that defamation against a blogger was governed by a standard of strict liability, that is, they claimed they only had to prove that the false statement was made, and voila, winner winner chicken dinner!

Not so fast said the Court. Gertz did instruct that there was a need to shield "the press and

broadcast media from the rigors of strict liability for defamation" [citation], but the Court in this case said: “holding in Gertz sweeps more broadly.”

The court said this:

“Like the Supreme Court, the Ninth Circuit has not directly addressed whether First Amendment defamation rules apply equally to both the institutional press and individual speakers. But every other circuit to consider the issue has held that the First Amendment defamation rules in Sullivan

and its progeny apply equally to the institutional press and individual speakers. [citations] We agree with our sister circuits.”

“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. As the Supreme Court has accurately warned, a First Amendment distinction between the institutional press and other speakers is unworkable: "With the advent of the Internet and the decline of print and broadcast media . . . the line between the media and others who wish to comment on political and social issues becomes far more blurred." Citizens United, 558 U.S. at 352. In defamation cases, the public-figure status of a plaintiff and the public importance of the statement at issue--not the identity of the speaker-provide the First Amendment touchstones.”

The Court then delivered a stunning victory to the blogger: “We therefore hold that the Gertz negligence requirement for private defamation actions is not limited to cases with institutional media defendants.”

This means that a private, basement-dwelling blogger or contributor, cannot be successfully sued under a strict liability standard, that is, for simply making the false statement of fact. Instead, the blogger must be shown to have made the statement on the basis that the blogger knew, or should have known of the falsity of the statement. This is a HUGE victory for internet bloggers on this point alone.

But, like any case, there was not just one argument. Obsidian and Padrick also argued that there was another reason why jury’s verdict should stand under the strict liability standard that the trial court applied [thus making their case easier to prove because there was no requirement of proving fault of the blogger in making the statement]. Obsidian and Padrick argued that the negligence standard, requiring them to prove fault, only arose, unlike here, in the context of defamation involving matters of public concern. They argued, that Obsidian and Padrick were not engaged in such matters of public concern, and thus, they should NOT have to prove fault. They argued that strict liability thus applied, and that they should win because they proved the false statement was made, even though they did not prove that the false statement was made by the blogger who knew or should have known the statement was false.

The 9th Circuit opinion, citing many other examples, disagreed with Obsidian and Padrick’s analysis that the blogger’s statement was about a purely private matter involving nothing of public concern [“Cox’s allegations in this case are similarly a matter of public concern.”] The Opinion summarized WHY the blogger’s statement involved a matter of public concern:

“Padrick was appointed by a United States Bankruptcy Court as the Chapter 11 trustee of a company that had defrauded its investors through a Ponzi scheme. That company retained him and Obsidian to advise it shortly before it filed for bankruptcy. The allegations against Padrick and his company raised questions about whether they were failing to protect the defrauded investors because they were in league with their original clients.”

This “public concern” rationale protects all sorts of potentially defamatory statements. Any one of us already has expressed statements relating to gold and silver being manipulated on the COMEX, about knowing stooges helping perpetrate the massive fraud and manipulation, that there are those in the pocket of the fraudsters who actively make their living spouting the constant stream of lies about gold and silver manipulation, etc. We should all rejoice at the 9th Circuit’s opinion, since at this point, it is beyond dispute that what we talk about here, metals, manipulation, currencies, central banking, all of it, are matters of public concern. Even that evil man JC is fair game for comment, because he actively is involved in the dialogue supporting the ongoing manipulative schemes. We all now have some protections that before we did not have.

In delivering another stunning victory to the blogger, on the issue whether the statement involved a matter of public concern, the Court said this:

“Because Cox's blog post addressed a matter of public concern, even assuming that Gertz is limited to such speech, the district court should have instructed the jury that it could not find Cox liable for defamation unless it found that she acted negligently. See Gertz, 418 U.S. at 350. The court also should have instructed the jury that it could not award presumed damages unless it found that Cox acted with actual malice. Id. at 349.”

Wow, what an amazing, crystal clear victory for the blogger!

The Court did give Obsidian and Padrick a slight victory, of no real consequence, because the Court found that neither Obsidian nor Padrick were public officials. The blogger argued that “the jury therefore should have been instructed that, under the Sullivan standard, it could impose liability for defamation only if she acted with actual malice. [citation].” The Court disagreed. To this is a big <yawn>, because the victories on the other arguments meant that the Court had no choice but to reverse the judgment and send it back to the trial court.

The Opinion wiped out the huge judgment for Obsidian and Padrick, and requires them to once again, have a trial, in front of a jury, where the trial judge has to instruct the jury that the jury can only find the statements defamatory IF Obsidian and Padrick PROVE that the blogger knew or should have known the statement was false. That is a very difficult standard to prove, far harder than a strict liability standard, which has no such requirement at all.

What will happen at the re-trial? Well, first, will there even BE a retrial under this heightened standard that Obsidian and Padrick must meet? Who knows. If there is a re-trial, what evidence will Obsidian and Padrick bring to bear on the question as to the fault of the blogger in making the statement? How can they prove Ms. Cox knew the statement was false? How can they prove that she should have known the statement was false? Isn’t it more likely that Ms. Cox was spouting an opinion based on inferences of wrongdoing, which means that there is proof that she had some basis to make her statement, or, in other words, there is at least some evidentiary basis to support her defense to the defamation claims, unlike what she faced in the earlier trial where the only defense was that she did not make the statement at all?

More realistically, Obsidian and Padrick will slink off into the distance and never appear again. How many thousands of dollars did Obsidian and Padrick spend, for naught, on this case taking the blogger to trial? What an utter waste of time and money, only to end up with the blogger not only winning, but convincingly so, and paving the way for the rest of the blogging community to enjoy freedom in posting with lessened fear of being sued! Hooray is what I say!

I have been wanting to weigh in on this concept for a long time, and I thank TF for bringing this case to my attention. He graciously agreed to allow me to offer up this analysis, and I thank him profusely for the opportunity to be of service.

Keep these concepts in mind when posting and blogging. Oh yeah, and keep on stacking.