Obsidian Finance Group, LLC v. Cox
2011 WL 3734457, 812 F.Supp.2d 1220, 2011 U.S. Dist. LEXIS 94355 (2011)
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Rule of Law:
For a statement to be actionable as defamation, it must imply a provably false assertion of fact; statements made on online blogs that have a biased tenor, are full of hyperbolic and figurative language, and are part of a heated debate are generally protected as opinion under the First Amendment.
Facts:
- Kevin Padrick is an attorney and a principal of Obsidian Finance Group, LLC.
- Padrick and Obsidian Finance were involved as the Chapter 11 Trustee in the bankruptcy proceedings of Summit Accommodators, Inc.
- Crystal Cox, describing herself as an 'investigative blogger,' published numerous posts about Padrick and Obsidian on her websites, including 'obsidianfinancesucks.com' and 'bankruptcycorruption.com'.
- In her posts, Cox accused Padrick and Obsidian of various forms of serious misconduct, including corruption, theft, fraud, lying, and hiring a hitman.
- Cox used inflammatory and hyperbolic language, repeatedly calling Padrick a 'thug,' 'liar,' 'thief,' 'evil,' and a 'jackass.'
- One specific post on 'bankruptcycorruption.com' alleged that Padrick's firm failed to report a specific transaction on tax returns, resulting in an unpaid tax liability of approximately $174,000.
- Padrick and Obsidian Finance alleged that these statements were false and damaged their personal and professional reputations.
Procedural Posture:
- Obsidian Finance Group, LLC and Kevin Padrick sued Crystal Cox for defamation in the U.S. District Court for the District of Oregon, a court of first instance.
- Plaintiffs filed a motion for partial summary judgment on the issue of liability.
- The court denied plaintiffs' motion, preliminarily determining the statements were protected by the First Amendment.
- The court then notified the parties of its intent to grant summary judgment for the defendant, Cox, on its own initiative.
- Plaintiffs filed a memorandum in opposition, which included new blog posts as evidence, which the court construed as a supplemental motion for summary judgment.
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Issue:
Do a series of blog posts containing hyperbolic, accusatory, and vitriolic language against a person and a company constitute non-actionable opinion protected by the First Amendment?
Opinions:
Majority - Hernandez, District Judge
No, for most of the posts. With the exception of one specific post containing detailed factual allegations, the blog posts do not constitute actionable defamation because when viewed in their totality, a reasonable factfinder could not conclude that they imply a provably false assertion of fact and are thus protected opinion under the First Amendment. The court applied the Ninth Circuit’s three-part test for distinguishing protected opinion from actionable fact. First, considering the broad context, the websites' names ('obsidianfinancesucks.com,' 'bankruptcycorruption.com') and the nature of blogs predispose a reader to skepticism, suggesting one-sided viewpoints rather than objective facts. The general tenor of the posts suggests a personal vendetta, reading more like a diary than a factual report. Second, the specific context is saturated with hyperbolic, figurative, and imaginative language ('thug,' 'liar,' 'hitman,' 'evil') which negates the impression of factual assertion. Third, while some statements in isolation might seem provable (e.g., 'broke many laws'), the surrounding vitriolic context renders them non-actionable rhetorical hyperbole. However, one post detailing specific allegations of tax fraud, including a specific unpaid tax amount ($174,000), reads more like a factual narrative and is less dominated by hyperbole. A reasonable reader could interpret this specific post as implying a provable assertion of fact, so it is not protected as opinion.
Analysis:
This case illustrates the significant protection afforded to online speech, particularly on platforms like blogs that are known for opinion and exaggeration. It establishes that context is paramount; even direct accusations of criminal conduct may be deemed non-actionable opinion if they are embedded in a broader context of diatribe and hyperbole. However, the decision also carves out a crucial exception, demonstrating that this protection is not absolute. When a blogger transitions from generalized invective to specific, detailed factual allegations (like the tax fraud claim), the speech may cross the line into actionable defamation, stripping it of First Amendment protection as 'opinion.'
