## Facts

- Summit Accommodators, Inc., accused of misappropriating client funds, retained Obsidian Finance Group, LLC for bankruptcy-related advice.
- The bankruptcy court appointed Kevin D. Padrick, Obsidian’s principal, as Chapter 11 trustee to marshal Summit’s assets for creditors.
- Crystal Cox operated multiple websites and published posts accusing Obsidian and Padrick of fraud, corruption, money laundering, and other wrongdoing tied to the bankruptcy.
- Obsidian and Padrick demanded retraction; Cox continued posting, and they sued for defamation in federal court in Oregon.
- On summary judgment, the district court held most posts were nonactionable opinion and rhetorical hyperbole, but allowed one post (Dec. 25, 2010) to proceed as implying a provable factual assertion that Padrick failed to pay $174,000 in Summit taxes while serving as trustee.
- At trial on that single post, the jury was instructed that Cox’s state of mind was irrelevant to liability and that damages could be presumed; the jury awarded $2.5 million in compensatory damages.

## Issues

1. Whether First Amendment defamation limits for speech on matters of public concern (fault and actual-damages requirements) apply to nontraditional speakers such as bloggers, not just institutional media.
2. Whether a court-appointed Chapter 11 trustee is a “public official” requiring proof of actual malice.
3. Whether a private-figure plaintiff may recover for a defamatory statement on a matter of public concern without proof of fault and without proof of actual damages.

## Decision

- Affirmed the summary judgment ruling that the other posts were protected opinion and not actionable.
- Held First Amendment defamation protections do not depend on whether the defendant is institutional media; a blogger is entitled to the same constitutional limits.
- Held Padrick was not a “public official” for defamation purposes; actual malice was not required on that basis.
- Reversed and remanded for a new trial on the Dec. 25, 2010 post because the jury was not instructed to require at least negligence and proof of actual damages for a public-concern defamation claim.

## Legal Principles

- For defamation involving a matter of public concern, liability may not be imposed without proof of fault; for private-figure plaintiffs, the constitutionally minimum standard is at least negligence.
- In public-concern defamation actions by private figures, presumed damages are not permitted absent proof satisfying the constitutional standard governing such awards.
- First Amendment defamation constraints turn on the public-concern character of the speech, not the speaker’s status as institutional press versus blogger.
- A court-appointed bankruptcy trustee is not a “public official” merely because of appointment and court compensation; public-official status requires substantial responsibility for, or control over, governmental affairs.
- Statements that cannot reasonably be understood as asserting provable facts, including rhetorical hyperbole and nonverifiable opinion, are not actionable as defamation.

## Conclusion

The Ninth Circuit ruled that bloggers receive the same First Amendment protections as traditional media in defamation cases and that, when the speech addresses a matter of public concern, a private-figure plaintiff must prove at least negligence and actual damages; because the jury was not instructed on those requirements for the single actionable post, the damages judgment was reversed and the case remanded for a new trial on that claim.


Obsidian Fin. Grp., LLC v. Cox, 740 F.3d 1284 (9th Cir. 2014)