Obsidian Finance Group, LLC v. Cox
- Summarized by Dean Rallis , Hahn & Hahn, LLP
- 10 years 12 months ago
- Citation:
- No. 12-35238 / D.C. No. 3:11-cv-00057-HZ (for publication)
- Tag(s):
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- Ruling:
- The Ninth Circuit reversed and remanded for new trial the District Court’s granting judgment in favor of the bankruptcy trustee against a blogger on one count for defamation, and affirmed the District Court’s dismissal of all remaining defamation counts based on First Amendment protected speech.
- Procedural context:
- The District Court entered judgment against the defendant blogger on the one remaining count for defamation, and dismissing all other defamation counts. The judgment awarded the plaintiff trustee and his firm $1.5 million and $1.0 million, respectively, in compensatory damages. Defendant blogger appealed the judgment, and plaintiffs filed a cross-appeal of the District Court’s dismissal of all other causes of action.
- Facts:
- The debtor hired Plaintiffs Obsidian Finance Group, LLC and its principal, Kevin Padrick, in connection with a potential bankruptcy. After the debtor filed its chapter 11 bankruptcy petition, the Bankruptcy Court appointed Padrick as the chapter 11 trustee. Following Padrick’s appointment, Defendant Crystal Cox commenced publishing blog posts on various websites accusing Padrick of criminal and wrongful conduct including, inter alia, fraud, corruption, money-laundering, deceit on the government, tax crimes, and fraud against the government. Plaintiffs filed a defamation suit against Cox. The District Court dismissed all but one of the Plaintiff’s claims holding that Cox’s blog posts were expressions of opinion and, therefore, protected under the First Amendment. On the Plaintiff’s cross-appeal, the Ninth Circuit noted that while opinions are protected speech, a statement that “may . . . imply a false assertion of fact” is actionable. Applying a three-prong test to determine if a statement contains an “assertion of objective fact,” the Ninth Circuit determined that the District Court did not commit an error in dismissing all but one of the defamation causes of action. Addressing the remaining count on which the District Court entered judgment in favor of the Plaintiffs, the Ninth Circuit ruled that Plaintiff Padrick was not a “public figure,” and because Cox’s blog posts addressed “matters of public concern,” Cox could not be liable for defamation unless she was found to have acted negligently. Further, “presumed damages” could not be awarded unless Cox was found to have acted with actual malice. Since the District Court failed to instruct the jury accordingly, the Ninth Circuit reversed the judgment in favor of the Plaintiffs and remanded the case to the District Court for a new trial.
- Judge(s):
- SMITH, ALARCÓN AND HURWITZ, Circuit Judges,
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