Obsidian Finance Group v. Cox

In defamation suits, the matter at issue must be of public concern and a plaintiff must show that the defendant acted negligently in publishing an assertion of fact, regardless of whether the writer is a member of the institutional media.

Blogger Crystal Cox published posts on several sites accusing Kevin Padrick and Obsidian Finance Group (“Obsidian”) of fraud, corruption, money-laundering, and other illegal activities. Kevin Padrick was the bankruptcy trustee for Summit Accommodators, Inc. (“Summit”); his primary task was to collect Summit’s assets for the benefit of clients whose funds had been misappropriated. In the ensuing defamation suit, the district court found all but one of Cox’s blog posts to be constitutionally protected opinions, but awarded compensatory damages to Padrick and Obsidian for the single remaining post because it contained an assertion of fact. Cox appealed the denial of her motion for a new trial; Padrick and Obsidian cross-appealed, contending the other blog posts should have gone to the jury. The Ninth Circuit found this case fell in the grey area between the defamation standards for public figures, which require a showing of actual malice, and private defamation suits under a negligence standard pursuant to Gertz v. Robert Welch, Inc. Declining to base First Amendment protections on whether a speaker is a journalist, the panel held that Gertz is not limited to institutional media defendants, and case law supports not providing institutional media with greater protection than other speakers. The panel also held that the blog post was of public concern because the allegations concerned whether Padrick was involved in a crime by assisting Summit in defrauding its clients. Further, the district court should have instructed the jury that Cox could not be found guilty unless she acted negligently. However, the panel found bankruptcy trustees are not public officials by virtue of court appointment or compensation. The panel also affirmed the district court’s summary judgment on the other blog posts, finding them to be pure opinions and lacking an assertion of objective fact. AFFIRMED, REVERSED, and REMANDED.