To anyone who has ever lived in a small town, the characters are as familiar as Main Street: The judge with the smudged reputation. The curmudgeon who criticizes everyone in a public position. The inveterate writer of letters to the editor whose conspiratorial diatribes seem to contain a grain of truth--and just as frequently border on the libelous.

The town is Canon City, the prison community of 13,000 southwest of Colorado Springs. The judge is Paul Keohane, who was voted out of his chambers in 1988 after a controversial ruling on a sexual assault case. Steve Stewart, a former city councilman, is the omnipresent critic who, in a private conversation later relayed to the judge, hinted that Keohane was bribed. The letter writer is Terri Campbell, a grandmother who also questioned the judge's ethics.

Since the incident nearly six years ago, each has enjoyed a hearty dose of local notoriety. This week, however, it wasn't the bartender or barber rehashing the dirty details of the story. It was the Colorado Supreme Court.

The state's top court, which heard oral arguments Monday, is scheduled to rule later this year on Keohane's slander and libel lawsuits against Stewart and Campbell in 1988. And despite their small-town origins, the cases could have implications for free speech far outside of Canon City.

Most people acknowledge the birth of the case as 1987, when local anesthesiologist Michael Gallagher was charged with sexual assault for masturbating into the mouth of a teenage patient. A year later, Judge Keohane agreed with three defense psychiatrists that Gallagher was mentally impaired at the time of the assault, and sent the physician to a state mental hospital instead of jail.

Not surprisingly, the trial provoked strong sentiments in Canon City. After one tense exchange with Keohane at the trial, for instance, Councilman Stewart stormed out of the courtroom, observing that Keohane was "the best judge that money can buy."

The next day, Stewart wandered into the offices of the local newspaper, the Daily-Record, and purportedly asked the reporter covering the trial: "What do you think? Was he paid in drugs or money?...Do you think Keohane was paid off in cash or cocaine?"--words that the newspaper never printed.

Stewart wasn't the only one airing his opinions. In the November 8, 1988, edition of the Fremont Observer, a feisty local weekly that had sprung up a year earlier in the wake of residents' widespread distrust of local officials ("Just The Facts," August 7, 1991), Campbell asked: "Does anyone seriously think there was anything besides a conspiracy between the 3 psychiatrists which are fellow doctors, the officer of the court and defense, to do anything but let this man off?"

In yet another letter in the same edition of the Observer (both were written under false names) Campbell mused that a "judge is really in a position to clean up financially." By way of example, she presented a scenario in which an unnamed judge approaches an "old buddy, who just committed a heinous crime and stands to lose his license to practice law or medicine" and offers "a way out" of his dilemma in exchange for a "home in another state" and "some six-figure money."

The day the letters appeared, Keohane lost his bid for re-election to the bench. He sued a year later, charging Stewart with slander, and Campbell and the Observer's editor, Grover Wilkerson, with libel. A district court jury in Colorado Springs sided with Keohane and awarded him $101,000 in damages, to be split among Stewart, Campbell and Wilkerson.

All three appealed. Last April the Colorado Court of Appeals overturned Keohane's libel verdict against Campbell and Wilkerson but upheld the slander verdict against Stewart. Now Keohane has asked the Supreme Court to reconsider the Campbell-Wilkerson libel case; Stewart has asked the high court to reconsider the slander case.

The appeals court quickly reversed Campbell's verdict. The judges concluded that her letters were couched in the hypothetical and didn't presume any inside knowledge of the Gallagher case, and that readers generally recognize letters to the editor as opinion--and thus protected speech.

On Monday, Keohane, who is representing himself, disagreed, telling the Supreme Court that Campbell's letters were so specific--the phrase "some six-figure money," for example--that readers might conclude she knew something special. Also, he pointed out that her letters never appeared in a designated "Letters to the Editor" section of the Observer.

Stewart's case is just as sticky. Keohane has argued that "it is inconceivable that Stewart would even suggest that stating that a judge was bribed and paid off with illegal drugs does not constitute defamation."

Yet Stewart responds that he did nothing wrong, for two reasons. First, he argues that his remarks were a legally protected part of the unruly performance evaluations that people such as Keohane must endure while they hold elected office.

Second, Stewart points out that in most slander cases, the target of the defamatory remarks generally must prove that he has suffered some damage--either financially or to his reputation. But in this case, Stewart notes that his remarks were part of a private conversation heard by only one person, the newspaper reporter.

As a result, Stewart concludes that Keohane's name could not have been too sullied by the incident. (Indeed, Canon City mayor Paul Fassler says there is "no doubt in my mind" the judge lost his office because of the unpopular Gallagher verdict, not Stewart's comments or even Campbell's letters.)

On Monday, most of the seven justices seemed sympathetic toward Keohane. Yet Stewart's lawyers warn that if critical comments like Stewart's and Campbell's are not protected, the implications could be chilling. "A public official shouldn't be able to sue a citizen for a comment made about that official's performance in office," says Stephanie Welsh, an attorney with Holland & Hart who is handling Stewart's appeals for free.

"This is a very dangerous case," adds David Miller, a staff attorney for the American Civil Liberties Union, which is also working on Stewart's case. "If the Supreme Court sustains the court of appeals' decision, then people really would be muzzled with their opinions--perhaps irresponsible opinions, but part of the public discourse."
Keohane responds that if he wins the case, there would still be adequate elbow room for people to vigorously criticize their government. With Stewart and Campbell, he says, "we're not talking about a situation where people are attacking the system generally," adding that "there's [still] a certain protection for general public" criticism.

As frequently happens with long-running cases, most of the players have moved on. Stewart, a real estate broker, left Canon City for Colorado Springs a little over a year ago. "This case finally convinced my wife that there is so much layered corruption in Canon City that it would take longer than our lifetimes to clear it out," he says. Still, he adds, "I can't say that the notoriety [from the slander case] has hurt our reputation. It's enhanced it, actually."

Terri Campbell has not been so fortunate. She says she is on the verge of losing the motel she has run for years, the Skyline, because of legal fees accumulated defending herself from Keohane's libel suit. "You can't believe what it's cost," she says.

Despite his legal victories, Keohane has probably fared worse than anyone, at least financially. A good-size chunk of his original libel lawsuit--which in addition to Campbell and Wilkerson named several directors of the Observer--was tossed out of court for being frivolous.

As a result, Keohane had to cover the $36,000 the directors spent defending themselves from the suit. Although he had established a busy private practice since being voted off the bench, the debt helped force him in November 1991 to seek protection in bankruptcy court.

As for Canon City, Mayor Fassler says the Gallagher trial, which set off the whole mess, maintains more of a grip on the local imagination than the endless First Amendment wrangling it spawned. The current libel and slander trials, he notes, "just don't pop up much anymore as topics of conversation.


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