Amicus Tells Court Blogger “Extorts” Her Subjects

(UPDATED) Montana blogger Crystal Cox won a significant First Amendment appellate victory for bloggers last week, but that hasn’t stopped the controversy over whether she uses blogs to shake down reporting subjects for money in exchange for retractions.

(This tardy update is what comes from this reporter not reading all the documents on file in the 9th U.S. Circuit Court of Appeals case.)

To begin, Cox’ lawyer Eugene Volokh told the 9th Circuit on January 31 he liked the opinion holding that bloggers have the same First Amendment protections as traditional media.  But he asked the court to retract one sentence in the opinion that said she “apparently” extorts money from subjects of her stories to win retractions.

He argued the claim was based on a sole New York Times story and not vetted in any court.

What we missed was Las Vegas lawyer Marc Randazza’s request on Monday to file an amicus brief in Volokh’s rehearing request.  Randazza says he wants to add to the record that “the courts observations are correct and should stand, albeit augmented with stronger sources.”  He says, “Cox is an extortionist, and has been identified as such in public records.”

He points to findings in the U.S. District Court of Nevada, the Montana Realty Regulation Board and WIPO, the World Intellectual Property Organization.  Randazza says he has been subject to her “extortive scheme.”  A copy of his full brief at simplejustice blog.

Underlying Case

In January, the circuit held for the first time that bloggers like Cox have the same First Amendment protections as traditional media.  That was a big victory for bloggers generally and included overturning a $2.5 million libel verdict against Cox based on her accusations of fraud against a bankruptcy trustee.

What Cox didn’t like was a single sentence in the opinion by Judge Andrew Hurwitz that stated, “Cox apparently has a history of making similar allegations and seeking payoffs in exchange for retraction.”

Volokh asked the court to amend its opinion to remove the claim of “payoffs,” based on the New York Times article in 2011.

The libel dispute stems from her creation of several websites critical of Kevin Padrick, the head of Obsidian Finance Group, which advises financially distressed businesses.  One company Obsidian advised was Summit Accommodators, which later filed for bankruptcy.  The bankruptcy court appointed Padrick as trustee to recover assets from Summit, according to the court.

Cox set up several blogs and posted multiple times accusing Padrick and Obsidian of fraud, corruption, money laundering and other illegal activity, according to the court.

The trial court rejected all but one of the postings as hyperbolic opinion.  One statement that could be construed as claiming to be fact, was allowed to go to trial as libelous.  It accused Padrick of tax fraud while administering assets of a company in bankruptcy.  The libel trial resulted in a verdict favoring Padrick and $2.5 million in damages.

The circuit’s original decision found Cox, was entitled to a new trial in Oregon, where the first libel trial was held.

The next move over whether the circuit should revise the opinion on the subject of Cox’ conduct is up to Hurwitz and Judges Arthur Alarcon and Milan Smith, the other members of the panel.

Case: Obsidian Finance Group v. Cox, No. 12-35238

 

ORIGINAL STORY:  Despite her First Amendment court victory, Montana blogger Crystal Cox doesn’t like the 9th Circuit Court of Appeals suggestion that she shakes down reporting subjects for money in exchange for retractions.  So she has asked for a retraction of her own from the court.

In January, the circuit held for the first time that bloggers like Cox have the same First Amendment protections as traditional media.  That was a big victory for bloggers generally and included overturning a $2.5 million libel verdict against Cox based on her accusations of fraud against a bankruptcy trustee.

What Cox didn’t like was a single sentence in the opinion by Judge Andrew Hurwitz that stated, “Cox apparently has a history of making similar allegations and seeking payoffs in exchange for retraction.”

Last week, her lawyer Eugene Volokh asked the court to amend its opinion, not to change the substance of the ruling, but to delete the offending sentence.  The claim of “payoffs” was based on a single New York Times article in 2011.

“A judicial assertion of misconduct by a named person, even a judicial assertion modified with the word ‘apparently,’ could be based on the record in a case, or authoritative finding by another court.  But it ought not be based on a newspaper column, which was written without the benefit of cross-examination, sworn testimony, or the other safeguards of the judicial process,” Volokh wrote. He said there “seems to be no ‘history’ of ‘seeking payoffs’ claimed in the article, he said.

Not surprisingly, some news outlets repeated the sentence but omitted the term “apparently,” he said.  Journalists may perceive it as a factual finding, not just recitation of a newspaper column’s claim.

Thus Cox has asked for the court to redact the sentence from its opinion.

Original Ruling

Cox created several websites critical of Kevin Padrick, the head of Obsidian Finance Group, which advises financially distressed businesses.  One company Obsidian advised was Summit Accommodators, which later filed for bankruptcy.  The bankruptcy court appointed Padrick as trustee to recover assets from Summit, according to the court.

Cox set up several blogs and posted multiple times accusing Padrick and Obsidian of fraud, corruption, money laundering and other illegal activity, according to the court.

The trial court rejected all but one of the postings as hyperbolic opinion.  One statement that could be construed as claiming to be fact, was allowed to go to trial as libelous.  It accused Padrick of tax fraud while administering assets of a company in bankruptcy.  The libel trial resulted in a verdict favoring Padrick and $2.5 million in damages.

The circuit’s original decision found Cox, was entitled to a new trial in Oregon, where the first libel trial was held.

“The protections of the First Amendment do not turn on whether the defendant was a trained journalist, formally affiliated with traditional news entities, engaged in conflict-of-interest disclosure, went beyond just assembling others’ writings, or tried to get both sides of a story,” wrote Hurwitz, a recent appointee of President Obama.

Joining Hurwitz in the decision were Judges Arthur Alarcon and Milan Smith.

Case: Obsidian Finance Group v. Cox, No. 12-35238

 

2 comments for “Amicus Tells Court Blogger “Extorts” Her Subjects

  1. February 5, 2014 at 7:58 am

    It’s my understanding that Volokh took this case pro bono, so good for him going the extra mile for his client.

  2. February 16, 2014 at 10:15 pm

    Crystal Cox has NEVER been under investigation for Extortion. Crystal Cox has no Criminal Complaint and certainly no conviction in a Court of Law for the Felony Crime of Extortion. Marc Randazza has lied, slandered and defamed Crystal Cox to hide his own unethical, unlawful, unconstitutional action in connection to organized Crime in the Porn Industry. More on What Drives Marc Randazza.

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