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An Oregon blogger’s disparaging “almost stream of consciousness-like” statements about the trustee in a bankruptcy case are protected opinion under the First Amendment, a federal judge in Portland recently ruled.
The opinion in Obsidian Finance Group v. Cox highlights the importance of courts’ consideration of the “looser, more relaxed communication style” of the Internet in their evaluations of allegedly defamatory online communications.
“Blogs are a subspecies of online speech which inherently suggest that statements made there are not likely provable assertions of fact,” U.S. District Judge Marco A. Hernandez said in his Aug. 23 order dismissing the overwhelming majority of defamation claims against self-described investigative blogger Crystal Cox, who often writes about whistleblowers in the real estate industry.
Cox operates the website obsidianfinancesucks.com, where she publishes critical statements about Obsidian Finance, an advisory and investment firm that specializes in unique and difficult business situations and transactions, and its senior principal Kevin Padrick. Cox alleges that Padrick engaged in misconduct in connection with his duties as trustee in the bankruptcy proceedings involving an Oregon financial firm, accusing Padrick, for example, of participating in “illegal activity,” lying to investors and committing “fraud against the courts.”
Padrick denied the allegations and, asserting that Cox’s statements damaged his and Obsidian’s reputations, sued her for defamation.
Noting, however, the “obviously critical blog title on which [the allegedly defamatory statements] appeared, the creation of a forum for ‘heated debate,’ the extensive use of hyperbolic and figurative language, and the posting of several questions rather than statements,” Hernandez concluded that, under the totality of circumstances, a reasonable reader could not conclude that the statements at issue implied a provably false assertion.
This legal standard for statements of opinion was adopted by the U.S. Supreme Court in its 1990 seminal opinion case, Milkovich v. Lorain Journal Co. The Milkovich Court described two broad categories of opinion protected by the First Amendment: language that cannot be proved true or false by a core of objective evidence and “loose, figurative, or hyperbolic language which would negate the impression that the writer was seriously maintaining” an actual fact, or where the “general tenor of the article” negates the impression that actual facts are being asserted.
Thus, statements must be considered in context, courts have held. This evaluation generally requires a consideration of general context, which refers to the entire work at issue, and broader context, which refers to the publication in which the work appears.
In its discussion of the broader context of Cox’s online statements, the Oregon court noted that the setting and format of blog posts “create a looser, more relaxed communication style, which is less likely to be understood as containing statements of fact or implying factual assertions,” the judge said.
Moreover, Cox’s use of figurative and hyperbolic language, including terms like “jackass,” “thugs” and “fishy circumstances,” would lead a reasonable reader to “understand that [Cox’s] postings generally consist of a fanciful diatribe, fueled by her subjective belief of pervasive corruption . . . .”
In contrast to these posts, one that appeared on a different website, bankruptcycorruption.com, could lead reasonable readers to reach differing conclusions about whether the statements that appeared there contained or implied an assertion of objective fact, according to the court, which declined to dismiss the defamation claim based on this post.
While the title of this site still suggested a certain bias, it was not as strong or specific as that of obsidianfinancesucks.com, the judge said. Moreover, certain statements in this post contained or implied assertions that could be proved true or false, including an allegation that as trustee of the bankruptcy estate, Padrick engaged in tax fraud, the court ruled.