The decision came in a defamation lawsuit where the panel ordered a new trial in the case of Crystal L. Cox, a blogger from Eureka, Montana. Cox was sued for defamation by attorney Kevin Padrick and his company, Obsidian Finance Group LLC, after she wrote about what she viewed as fraud, corruption, money-laundering and other illegal activities. Patrick and Obsidian were hired by Summit Accommodators, which had defrauded investors. Padrick and Obsidian advised Summit before a filing for bankruptcy and the U.S. Bankruptcy Court later appointed Padrick trustee in the Chapter 11 case.
A decision was made in the US court of appeals for the 9th circuit that ruled that bloggers were entitled to the same rights as journalists. Government officials have fought against the protection in a federal new shield law, but the decision was relavent in the Obsidian finance group vs. Cox case.
The decision was part of a derformation case of blogger Cox who was found guilty of deformation, and later ordered to new trial. Cox wrote against the Obsidian Co, and alleged corruption, fraud, tax crimes, money laundering etc on an article intitled “Obsidiansucks”
After investigation it was found that all but one of Cox’s allegations were protected. The allegation that implied that the Co. owed money in unpaid taxes made fairly specific allegations that readers could easily understand. “fairly specific allegations [that] a reasonable reader could understand . . . to imply a provable fact assertion”—i.e., that Padrick, in his capacity as bankruptcy trustee, failed to pay $174,000 in taxes owed by Summit.” This posting was allowed to trial, and the jury ruled in favor of Obsidian and 1.5 million plus an additional 1 million in damages of deformation was awarded to the co. The ruling was based on the fact that Cox was not able to submit evidence of her status as a journalist, as well as the controversy of public controversy and reckless regard that was created. The court later goes on to rule that this is a matter of public concern.
The district court’s jury cannot find Cox liable for defamation unless it found that she acted negligently. Also, a guilty verdict cannot be awarded along with presumed damages unless it found that Cox acted with actual malice.