Smartmatic Lawsuit May Be Bigger Threat for Fox Than Dominion

• After shelling out $787.5 billion to settle Dominion’s lawsuit, Fox has more troubles on the way.
• Smartmatic’s $2.7 billion suit may be an even bigger threat.
• The company now has Dominion’s roadmap and potentially more leverage.

Fox isn’t out of the woods yet.

The conservative media company averted a reputationally costly defamation trial with Dominion Voting Systems for the financially costly price of $787.5 million.

More headaches are looming.

Atop the list is a separate lawsuit from Smartmatic, another election technology company that sued Fox News Network and its parent company, Fox Corp., in the aftermath of the 2020 presidential election.

As with Dominion, Smartmatic was the subject of fantastical, false conspiracy theories spread by Sidney Powell and Rudy Giuliani, two attorneys who worked on behalf of then-President Donald Trump to reverse his election loss.

Fox News hosts brought on Powell and Giuliani as guests, who shared with the network’s millions of viewers a false, convoluted narrative describing how the two companies had common owners and had “flipped” votes from Trump to now-President Joe Biden.

Smartmatic’s defamation lawsuit asks for $2.7 billion in damages and was filed against Fox Corp.; Fox News Network; hosts Jeanine Pirro, Maria Bartiromo, and Lou Dobbs; and Powell and Giuliani. The claims against Powell were moved to a federal court in Washington, DC, on jurisdictional grounds. (Dominion has separate suits against Powell and Giuliani as well.) The suit is scathing.

“The Earth is round. Two plus two equals four. Joe Biden and Kamala Harris won the 2020 election for President and Vice President of the United States,” Smartmatic’s lawyers wrote. “The election was not stolen, rigged, or fixed. These are facts. They are demonstrable and irrefutable.”

The Smartmatic suit could be worse for Fox

For Fox News, things arguably look worse in the Smartmatic suit than the Dominion suit.

The Smartmatic case was filed in New York, and appeals courts have upheld several important legal victories as the case moves to trial. 

Fox has argued in court and public statements that any on-air statements about Smartmatic made in the wake of the 2020 election are protected by the First Amendment.

“We will be ready to defend this case surrounding extremely newsworthy events when it goes to trial, likely in 2025,” Fox News said in a statement on Wednesday. “As a report prepared by our financial expert shows, Smartmatic’s damages claims are implausible, disconnected from reality, and on its face intended to chill First Amendment freedoms.”

Dominion hired Clare Locke, a leading defamation law firm, for its case, as well as the firm Susman Godfrey.

Smartmatic also hired one of the country’s leading defamation lawyers: J. Erik Connolly. His practice, at Benesch, Friedlander, Coplan & Aronoff LLP, is arguably even more formidable than Dominion’s team. 

Until the $787.5 million settlement between Dominion and Fox News was announced Tuesday, vaulting the case atop the list of biggest publicly known defamation settlements, Connolly was responsible for the runner-up. In 2017, he secured the $177 million Disney paid to settle the infamous “pink slime” case against its subsidiary ABC News.

“Dominion’s litigation exposed some of the misconduct and damage caused by Fox’s disinformation campaign. Smartmatic will expose the rest,” Connolly said in a statement on Tuesday. “Smartmatic remains committed to clearing its name, recouping the significant damage done to the company, and holding Fox accountable for undermining democracy.”

Chip Somodevilla/Getty Images

The litigation in Dominion’s case made public much of Fox News’s inner workings. Hootan Yaghoobzadeh, a co-founder of Staple Street Capital, the investment firm that owns Dominion, told CNBC the revelations were necessary to protect Dominion’s reputation.

“It was very, very important to us for that truth to come out, for those documents to be shared with the world,” he said.

He also suggested they were able to squeeze Fox’s number as high as possible.

“They had never offered that amount before,” he said.

Smartmatic is going through a similar discovery process as Dominion, examining internal texts, emails, and other records from Fox executives, hosts, and staff.

With the Dominion case over, Smartmatic now has an extraordinarily thorough road map for making Fox’s life miserable. It also has the possible benefit of using evidence Fox may have withheld from the discovery process in the Dominion case.

Abby Grossberg, a former Fox News producer now suing the network, has alleged in court filings that she had recordings and transcripts of conversations between Fox hosts and Trump allies. Fox, she claimed, didn’t turn over to Dominion before the settlement. Her allegations prompted Davis to appoint a special master to investigate how Fox handled the recordings — a situation that became moot once a settlement was reached Tuesday. (Fox, for its part, has said it complied with discovery obligations and believed Grossberg’s suits were meritless.)

All of that means that Smartmatic could succeed in getting even more from Fox, particularly if Fox is willing to pay a premium to prevent additional embarrassing discovery evidence from becoming public.

Per a Wednesday Washington Post article, Fox executives were worried about the Dominion’s settlement’s impact on what Smartmatic could demand to settle.

At the same time, Fox could conceivably argue the opposite — that whatever reputational damage it was going to suffer has already been dealt with in the Dominion case. They may be willing to suffer the prospect that Smartmatic will disclose more embarrassing internal communications, betting that any additional damage is already priced in.

And, of course, there’s always the chance Fox will refuse to settle entirely and take its chances with Smartmatic at trial.

Aside from the Smartmatic case, Fox News has to deal with potential shareholder lawsuits. One shareholder already filed a suit earlier this year in Delaware Chancery Court alleging Fox Corp. breached its fiduciary duties by exposing itself to litigation from Smartmatic and Dominion by allowing Fox News to broadcast election lies in the first place.

Other shareholders may believe Fox Corp. overpaid with the settlement funds. It may also become the target of additional defamation lawsuits from plaintiffs who’d believe they’d get a good payout from the company.

Whatever it is, Fox Corp. can probably afford it.

Its stock hardly wobbled upon the settlement news on Tuesday. The company had nearly $4.1 billion of cash on hand in February, CEO Lachlan Murdoch said at the time.

The overall value of Fox Corp. — which also includes Fox Sports and the streaming service Tubi — is more than $17.6 billion.