How Fox News Will Fight a $2.7 Billion Suit About the 2020 Election

Fox News
Fox News Media

Fox News' studio set in New York.

Will Fox News tell the American public that it's high time for Donald Trump to shoulder the blame for his perpetual lying? That became a much more distinct possibility when Fox responded in court Monday to a $2.7 billion defamation lawsuit from voting technology company Smartmatic.

Filed on Feb. 4, Smartmatic's 285-page complaint details what everyone who watched Rupert Murdoch-owned cable news networks in the weeks following Election Day pretty much saw firsthand: Without evidence, pundits like Lou Dobbs, Maria Bartiromo and Jeanine Pirro encouraged guests like Rudy Giuliani and Sidney Powell to run wild with conspiracy tales of election fraud. Smartmatic alleges being defamed through false statements that its technology was designed to steal the election.

Fox News' defense strategy is now coming into focus.

Led by a team of attorneys at Kirkland Ellis, Fox News is now demanding dismissal with the argument that the First Amendment allows the news media to host a forum for interviewing Trump's lawyers, even if these guests engineer outrageous allegations.

"Following the 2020 presidential election, one thing was undeniably newsworthy: whether then-President Trump’s unconventional efforts to challenge the results of the election would succeed," states the dismissal motion (read in full here).

The motion adds, "When a sitting President and his surrogates claim an election was rigged, the public has a right to know what they are claiming, full stop. When a sitting President and his surrogates bring lawsuits challenging election results, the public has a right to know the substance of their claims and what evidence backs them up, full stop. In that context, interviewing lawyers advocating for the President is fully protected First Amendment activity, whether those lawyers can eventually substantiate their claims or not. Here, Fox provided precisely that kind of newsworthy information, allowing the President’s surrogates themselves to explain their allegations and evidence. If those surrogates fabricated evidence or told lies with actual malice, then a defamation action may lie against them, but not against the media that covered their allegations and allowed them to try to substantiate them."

The suit filed last week by Smartmatic and a team of attorneys led by J. Erik Connolly (the same lawyer who pursued ABC News in the "Pink Slime" case) was warmly greeted by those who believe there should be repercussions for deceit about the election results. Time will tell if Smartmatic's complaint (read here) is any sort of slam dunk, but as the lawsuit plays out in New York state court, it does raise an intriguing question that may puzzle a judge (and perhaps appellate courts that touch this dispute): When a good portion of the country, egged on by the nation's most powerful individual, is saying crazy stuff, how does one apportion responsibility and attribute damage for specific lies?

For now, Fox News wants a judge to give Smartmatic's opening salvo a healthy review under First Amendment precedent. Besides a motion to dismiss, Fox News is also testing New York's recently passed anti-SLAPP law, which means that Smartmatic will need to show a substantial basis in law and fact before the plaintiff is allowed to proceed any further.

In its complaint, Smartmatic points to comments like the one that Giuliani made on Lou Dobbs Tonight on Nov. 12. Referring to Smartmatic, Giuliani said, "They have a terrible record and they are extremely hackable. … What the heck was Georgia doing hiring this company?” (In fact, Georgia hadn't used Smartmatic.) That same program, Dobbs commented,  "[States] have no ability to audit meaningfully the votes."

Fox News now looks to protect certain statements under the cover of the neutral-reporting doctrine, which protects unbiased communications about matters of public concern even if those involve defamatory claims. Fox News also leans on precedent for protecting the press when covering elements of a judicial proceeding. And insofar as the hosts themselves describing allegations, Fox News' latest court memorandum characterizes those as being in the context of hosts asking guests to comment. "If that were enough to allow a defamation claim to go forward, Smartmatic could sue virtually every news outlet in the nation," states the motion, which also adds that Fox News hardly ran exposés in which it purported to have independently uncovered election manipulation or fraud by Smartmatic.

Of course, Fox News must also defend some fairly outlandish stuff spouted by Powell on its airwaves. For example, here's what she said to Bartiromo on Nov. 15: "President Trump won by not just hundreds of thousands of votes, but by millions of votes that were shifted by this software that was designed expressly for that purpose. … We have so much evidence I feel like it's coming in through a firehose.”

So how's Fox News aiming to shield itself from that? The defendant also maintains that Smartmatic hasn't alleged facts that, if true, would rise to the conclusion that false statements were published with actual malice.

Although Smartmatic calls itself "an under-the-radar company prior to the 2020 U.S. election," it's hard to imagine it won't be deemed a public figure given that its business arises from an activity — election administration — that is a quintessential public concern. And Smartmatic seems to realize that in order to prevail in this case and recover substantial damages, it will need to demonstrate that the defendants had knowledge of falsity or reckless disregard for truth. The complaint alleges both.

At least when it comes to the Fox News defendants, though, the complaint possibly gets carried away by claiming they are knowing members of a "conspiracy" with Powell and Giuliani. As this conspiracy is explained in the complaint, Fox News was losing ground with Trump's followers after calling Arizona for Joe Biden. It needed a way to reclaim its favored status among right-wing followers. So what happened? According to Smartmatic, the defendants "invented" the story of a stolen election with Smartmatic cast as the "villain." And even if Fox News employees didn't participate in the writing of this script, hosts like Dobbs "did not try to stop" Powell and Giuliani from spreading disinformation.

Is it really a "conspiracy" when a news network allows guests to speak — even unreliable ones like Trump's lawyers?

Fox News thinks not, responding that it was covering these allegations not because it deemed them to be true but rather because it deemed them to be newsworthy. As the dismissal motion states, “The logic of Smartmatic’s position is that the press must censor all discussion of even the most pressing of public controversies to escape imputation of actual malice, even in the context of statements by objectively newsworthy third parties during live television interviews. That is not and cannot be the law."

On Friday, Fox News canceled Lou Dobbs' show. The network has publicly denied that the move had anything to do with the lawsuit, but it's hard to believe that given the timing, the decision to take Dobbs off the air didn't at least generate some discussion on how it would play in court.

Gary Bostwick, a media lawyer based in Los Angeles, says, "I would bet the decision to do [the cancellation]  — the precipitation — was the lawsuit. When I tried the Masson v. New Yorker matter, ... The New Yorker was exonerated while the jury hung on a verdict [for] my client, Janet Malcolm. That’s an instructive illustration of how organizations can prove they had no actual malice even if their writers can’t."

Although today's motion by Fox News only briefly touches on damages — its filing attacks "Smartmatic’s effort to saddle Fox with billions of dollars of liability just for covering all sides of a vigorous debate of profound national importance" — expect that subject area to become a very, very hot and legally intriguing one should the suit survive this initial challenge.

That's because Smartmatic's demand for $2.7 billion worth of damages is largely based on presumed damages. Ever since the Supreme Court's 1974 opinion in Gertz v. Robert Welch, Inc., the recovery of presumed damages is disfavored in libel cases unless there's a showing of malice. (That provides a second reason why Smartmatic will need to demonstrate Fox News' knowledge of falsity or reckless disregard for truth. Smartmatic pushes the position that there were "obvious reasons to doubt" what Trump's lawyers were claiming, which may give the judge some pause in considering whether to dismiss this case.)

Through its complaint, Smartmatic admits that it only provided election software to Los Angeles and nowhere else in the country. Meaning, the only contract that it could really stand to lose in the United States was in a pretty liberal county where election officials are unlikely to believe Giuliani's and Powell's tales of a stolen vote total.

So what forms the basis of Smartmatic's calculation of being harmed to the tune of $2.7 billion? Smartmatic says that it "hoped to have a case study to show other U.S. jurisdictions how well it could service American elections." The company adds that election clients — many in other countries —  have "expressed serious concerns about continuing to do business with Smartmatic or being associated with the Smartmatic," not that they have already cut ties. Finally, the valuation of harm is largely based on revised profit forecasts, which include the expectation that its investment in a side company called Airlabs that sells air-quality management (read: pollution) tools will be hurt.

Can presumed damages be rebutted? And is there any limit to them? Those are questions to be resolved down the line. Eventually, the judge could hear arguments about this — with Fox News potentially contending that any excessive award would violate the First Amendment and the due process clause of the 14th Amendment.

And that would just be the beginning of the damages arguments' complexity.

As the case moves forward, Fox News appears primed to challenge how Giuliani's and Powell's lies on Bartiromo's, Dobbs' and Pirro's shows harmed Smartmatic's reputation compared to what Giuliani and Powell were saying elsewhere. And there's also the issue of what Trump himself was saying. While no one is going to argue that a recently obscure company like Smartmatic is "libel-proof," a prospective trial might have to delve into the delicate issue of what kind of additional damage to Smartmatic's reputation occurred once the company had already been tarnished.

"A plaintiff can sue more than the first person to publish a defamatory statement, so Fox wouldn't be able to escape liability by pointing to Trump or to other loud voices in the echo chamber," says Jonathan Peters, a media law professor at the University of Georgia. "However, this could be relevant to harm and damages, for which courts and juries commonly consider the degree of the injury and responsibility for it."

By nodding to the blowback Fox News got after calling Arizona for Trump, Smartmatic's complaint implicitly acknowledges that when it comes to cries of election fraud, Fox News wasn't really leading the charge. In today's motion, Fox News plays up the fact that it was largely Trump's surrogates making wild allegations.

If a judge refuses to dismiss the case just based on that, what will remain for Fox News may be to go the rest of the way by arguing that the true damage was caused when the president of the United States — with hopes of clear personal gain — rattled off one lie about the election after the next. If a jury trial is yet another exercise in constructing a narrative, then Fox News may need a villain to deflect blame. And in a New York courtroom, there's probably none better right now than Trump.