• by Wendy Davis , Staff Writer @wendyndavis, February 10, 2014

Last month, an appellate court handed self-styled “investigative blogger” Crystal Cox a big victory in a lawsuit brought by two subjects of her posts -- Obsidian Finance Group, which consults with businesses in financial trouble, and its co-founder, Kevin Padrick.

The decision was hailed as a major victory for bloggers, but it turns out that neither side is happy with the court's opinion in the case: Both Cox and Obsidian are now seeking changes to the decision.

The matter stems from a series of blog posts written by Cox, who criticized Obsidian and Padrick on ObsidianFinanceSucks.com, and other sites that she operates.

Obsidian and Padrick sued Cox for defamation based on the posts. A trial judge in Oregon dismissed the allegations relating to most of Cox's writings as “opinion” -- which can't be defamatory; only factual assertions, which can be proven true or false, can support libel verdicts. But the judge allowed a jury to decide whether one particular post was libelous. That post, which was published on Dec. 25, 2010 on “bankruptcycorruption.com," accused Padrick of failing to pay around $174,000 in taxes that were owed by a company for which he served as bankruptcy trustee.

The jury returned a verdict against Cox -- who represented herself at trial -- and ordered her to pay $2.5 million. Shortly afterward, UCLA law professor Eugene Volokh agreed to represent Cox. He filed an appeal on her behalf and last month, a three-judge panel of the 9th Circuit Court of Appeals reversed the verdict and sent the case back to the trial court.

The appellate panel said in its ruling that the trial judge should have told the jury to consider Cox's state of mind, including whether she acted with negligence, before awarding damages. Judges typically issue such instructions when mainstream media outlets are sued for libel. Without that type of instruction, the jury could find that Cox defamed Obsidian simply by publishing a false statement, even if she believed the statement to be true.

The trial judge didn't think Cox was eligible for that jury instruction, given that he believed she lacked the characteristics of a journalist -- such as “education in journalism,” “proof of adherence to journalistic standards such as editing, fact-checking, or disclosures of conflicts of interest,” “creation of an independent product rather than assembling writings and postings of others,” and “contacting 'the other side' to get both sides of a story.”

But the appellate court made clear that bloggers need not satisfy any sort of checklist of journalistic credentials in order to receive the same protections as mainstream media. That portion of the ruling is considered a sweeping vindication of bloggers' rights.

The dispute between Cox and Obsidian, however, has another wrinkle. After Obsidian complained about Cox's posts, she allegedly offered to help him clean up his online reputation for $2,500 a month. That allegation wasn't the basis of the lawsuit, but was reported on in the media while the case was pending. What's more, the 9th Circuit referred to those allegations in its opinion, writing that Cox “apparently has a history of making similar allegations and seeking payoffs in exchange for retraction.” The only basis cited by the court for that statement was a Dec. 11, 2011 New York Times article.

She is now asking the 9th Circuit to revise its opinion by removing that sentence from its opinion. “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 on authoritative findings 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,” her attorney argues in papers filed with the court late last month.

For its part, Obsidian also is asking the appellate court to reconsider its decision. Among other arguments, the company says that it should have been able to pursue libel claims for more than just one post. “Cox has repeatedly asserted that Plaintiffs are 'criminals' engaged in various specific crimes, including tax fraud, corruption, deceit on the government, money laundering, defamation, harassment, fraud against the government, and solar tax credit fraud,” the company's attorney writes in papers filed on Friday. “It is readily apparent that Cox does not mean her accusations in any loose, figurative, or hyperbolic sense. She is literally and seriously accusing plaintiffs of committing crimes, which is susceptible of being proved true or false.”

The 9th Circuit Court of Appeals hasn't yet indicated whether it will reconsider its ruling.