An unusual Oregon libel case recently captured the attention of the blogosphere and mainstream press. In late November, blogger Crystal Cox was hit with a $2.5 million verdict for defaming Obsidian Finance Group and its principal. Obsidian Finance Group, LLC v. Cox, Case No. CV-11-57-HZ, 40 Media L. Rep. 1084 (D. Ore. Nov. 30, 2011) (Hernandez, J.). More notable than the size of the judgment against the pro se defendant was the court's controversial discussion of who is to be considered a journalist in the online sphere, in order to determine whether statutory or First Amendment protections applied to the blog in question.

In January 2012, Cox filed a Motion for New Trial and in the alternative, for Remittitur. The motion, co-authored by leading First Amendment scholar Professor Eugene Volokh of UCLA Law School, argues that the jury should have been instructed, consistent with New York Times Co. v. Sullivan, that it could find defendant liable only if she acted with "actual malice." Alternatively, even if the Sullivan standard did not apply, the motion argues the jury should have been instructed, consistent with Gertz v. Robert Welch, Inc., that it could hold defendant liable for proven compensatory damages only if it found that defendant acted negligently, and that it could hold defendant liable for presumed damages only if it found that defendant acted with "actual malice." The motion also argues that the evidence presented to the jury did not support $2.5 million in damages, whether proven or presumed, arising from the single Internet post considered at trial.

The motion is supported and supplemented by an amicus curiae brief filed by the Electronic Frontier Foundation. That brief additionally challenges the court's ruling that Oregon's retraction statute does not apply to the Internet, and that because defendant Cox was not a member of the "media," Oregon's shield law does not apply.


The Obsidian Finance saga began in earnest last summer with U.S. District Court Judge Marco Hernandez's denial of plaintiff's motion for partial summary judgment on liability regarding the 10 blog entries submitted. Despite the fact that Cox was unrepresented and filed little relevant opposition, the court on its own held that plaintiffs failed to address "the obvious First Amendment issues raised by defendant's statements" and that "defendant's statements are expressions of opinion protected by the First Amendment." The court added that although Cox had not moved for summary judgment, it would sua sponte grant summary judgment for her, pursuant to F.R.Civ.P.56(f), unless plaintiffs successfully opposed that conclusion.

In response, plaintiffs newly submitted 16 different blog entries. The court again found that all were "protected by the First Amendment" because "no reasonable juror could conclude that the statements contained provable assertions of fact." With regard to one newly submitted post, however, the court concluded that "reasonable readers could

reach differing conclusions about whether the statements contain or imply an assertion of objective facts." While nearly all of the posts were made on a single website, the post in question appeared on a different website. The court noted that it was one of only two postings submitted by plaintiff from that site, and therefore "a full assessment of the flavor or tenor of the website is not possible."

While the court noted that the post in question contained "several none-provable, figurative or subjective-type words which tend to negate the impression that defendant asserts provable statements of fact," because so little material from the website was presented by plaintiffs, the court found that it could not "collectively examine the surrounding posts to determine the frequency with which defendant uses these words." The court added that "while the post is somewhat confusing and uses some unclear terms such as 'liquidating trust,' it reads more like a factual narrative" than the other 25 posts plaintiffs provided.

The court held that the context of the post in question "does not necessarily negate the impression that the statements are incapable of being proved true or false. On the one hand, a reasonable reader may view the title of the website [], the fact that the statements appear on a blog, and the use of loose, figurative language, as dispelling such impression. However, … a different reader could reasonably understand the statements to imply provable assertions of fact." The case proceeded to trial on this single post.

Just before trial, the court ruled on a number of legal issues. First, defendant argued that plaintiffs were precluded from general damages because plaintiffs had failed to seek a retraction in accordance with the requirement of Oregon's retraction statute. The court held that "because the statements at issue in this case were posted on an Internet blog, they do not fall under Oregon's retraction statutes." The statute, enacted in 1955, applies to "a defamatory statement published or broadcast in a newspaper, magazine, other printed periodical, or by radio, television, or motion pictures." While there are no appellate decisions, Oregon's state trial courts have frequently applied the retraction statute to Internet statements made by traditional newspapers and broadcasters.

The court also held that Oregon's shield law did not apply to defendant in the first instance because "the record fails to show that she is affiliated with any newspaper, magazine, periodical, book, pamphlet, news service, wire service, news or feature syndicate, broadcast station or network, or cable television system." The Oregon shield applies to any "medium of communication," which includes, but is not limited to, the litany of particular media the court listed. The brief submitted by Electronic Frontier Foundation challenges the court holding that Cox's status as an Internet publisher precluded her from shield law protection.

Most significantly, the court held that because the individual plaintiff, a bankruptcy trustee, was not a public figure "actual malice" did not apply and, because the defendant was not "media" even the negligence standard of Gertz was not triggered. The court found that defendant failed to bring forth any evidence "suggestive of her status as a journalist," citing "no evidence of (1) any education in journalism; (2) any credentials or proof of any affiliation with any recognized news entity; (3) proof of adherence to journalistic standards such as editing, fact-checking, or disclosures of conflicts of interest; (4) keeping notes of conversations and interviews conducted; (5) mutual understanding or agreement of confidentiality between the defendant and his/her sources; (6) creation of an independent product rather than assembling writings and postings of others; or (7) contacting 'the other side' to get both sides of a story."

The court also rejected the argument that the blog "referred to a matter or issue of public concern, further implicating First Amendment protections." The court held that "similarly to the plaintiff's status as a lawyer in Gertz [plaintiff's] status as a bankruptcy trustee does not make statements about his actions in that role a matter of public concern." The jury instructions therefore allowed them to find for plaintiffs simply if the defendant published a defamatory communication which damaged them.

At press time, the motions are still pending.

A version of this article was published in the MLRC MediaLaw Letter.