Fox Settles Dominion Defamation Case for $787.5 Million

Some legal experts and Democrats are downright crestfallen that the defamation suit brought by Dominion against Fox News is going away. No moment-by-moment courtroom updates, no cross-examination of Tucker Carlson as fodder for late-night shows, and no apologies for the conspiracy theories about the 2020 election that were broadcast night after night on Fox News’ popular prime time shows.

But there’s nothing surprising about this outcome. A settlement was always a possibility—even a likelihood—no matter how recalcitrant the parties seemed to be. And when it comes to the business interests of both Dominion and Fox News, a settlement was the most sensible conclusion to the seemingly endless drama.

Oh, and by the way, news outlets should be elated.

Trump’s “The 2020 Election Was Stolen” Campaign

Even as the votes were being counted during the November 2020 presidential election, former President Donald Trump and his allies began laying the groundwork to contest the results. In states that turned out for Joe Biden, they challenged everything from the method of voting to the actual counting of the votes in an attempt to show election fraud.

Attorneys Rudy Giuliani and Sydney Powell led one prong of the attack by claiming that the electronic voting machines flipped votes from Trump to Biden. They aired their theory about the voting technology on several prime time opinion shows hosted by several Fox News personalities, including Sean Hannity, Maria Bartiromo, and Tucker Carlson—the last of whom announced his departure from Fox News on April 24.

They also tested their theory by filing lawsuits in swing states. But every court that considered the theory rejected it, concluding that Trump’s attorneys failed to present any evidence that the voting machines either malfunctioned or were hacked. Ultimately, the House of Representatives rejected the election lies and certified the Electoral College vote in favor of Joe Biden. The rest is history.

US Dominion v. Fox News Network

The machines used to count the 2020 election votes were manufactured by Dominion Voting Systems and Smartmatic. Once the dust had settled, Dominion brought a defamation lawsuit against Fox News in Delaware state court (where Dominion is incorporated, along with the majority of publicly-traded companies). Dominion claimed that the accusations about their voting machines were false, and that such allegations caused severe damage to its reputation. The technology company sought $1.6 billion in damages. The case was assigned to Judge Eric Davis and ultimately scheduled for trial beginning Monday, April 17, 2023.

Judge Davis hammered the defendant Fox News in several pretrial rulings. He ruled that many on-air statements about the voting machines were false. Fox’s defense that the statements were not of fact, but instead were privileged as opinion, were rejected by the judge. If that were not enough, Judge Davis sanctioned Fox on the eve of trial for the late disclosure of the actual relationship between Fox and Chairman Rupert Murdoch. He then authorized Dominion to redo certain depositions, and even threatened to appoint a special master to investigate the behavior of Fox and its lawyers. So Fox was on the litigation ropes.

But not all was rosy for Dominion. To win its defamation case, it would still have to prove that Fox uttered the falsehoods with “actual malice.” That’s a legal term that comes from the Supreme Court case, New York Times v. Sullivan, a First Amendment case. The actual malice standard requires a plaintiff in a defamation case against a public figure to prove that the defendant either knew the statements were false when they made them or acted with “reckless disregard for the truth.” This is another legal phrase that essentially means that the defendant had serious doubts about the truth of the statements.

Proving actual malice against a media company is incredibly hard—and harder still when the person claiming they were defamed is a public figure. In fact, if the defamation lawsuit is brought by a public figure, the media almost always wins. Former Alaska governor and Republican vice presidential candidate Sarah Palin found this out the hard way in a recent defamation case she brought against The New York Times. Thus, Dominion faced an uphill battle in trying to prove that Fox personalities and their guests made false claims about its voting machines with actual malice.

The Case Settles

As the trial date approached, the media went into a frenzy. The coverage by Fox’s competitors (including The New York Times, CNN, ABC, and the Associated Press) was on the whole critical and even celebrated the prospect of Fox getting its comeuppance. A jury was picked, and the trial lawyers geared up for opening statements on April 17.

In the meantime, the lawyers were working behind the scenes to settle the case. On the eve of the trial, with the help of a mediator, they reached a deal. According to media reports, Fox agreed to pay Dominion $787.5 million and acknowledged that Judge Davis had found it had aired false statements. The settlement document itself has not been released.

You may have heard a collective sigh of relief from the Fox hosts who would have had to testify in the defamation trial. You may also have heard wailing and gnashing of teeth from Fox’s competitors who were denied the chance to see Fox’s on-air talent paraded in front of the jury.

Settlement A Good Deal for Everyone

But the settlement ultimately made sense for both parties. The payout is the largest public defamation settlement in U.S. history; Dominion CEO John Poulos called it “historic.” In essence, Dominion got a boatload of money and was able to tell the world that, in the words of their lawyer, Justin Nelson, “lies have consequences.”

Dominion also avoided the risk of losing on appeal, both on the issue of the judge’s factual determinations and his refusal to allow Fox to argue that the offending statements were privileged as opinion. Neither of the court’s rulings was a slam dunk for Dominion.

One particularly thorny issue related to Dominion’s damages. Dominion would have had to prove with reasonable certainty the financial amount of the reputational harm it suffered. Defaming someone’s business is what lawyers call “defamation per se,” and entitles a plaintiff to recover “nominal damages.” But Dominion was asking for a whole lot more than just nominal damages. Proving harm would have been difficult.

And while Fox ended up having to pay a lot, the sum was half of what Dominion had asked—and Fox, of course, is flush with billions. The settlement won’t affect its operations, and Wall Street didn’t seem too upset about it. Fox managed to avoid having Rupert Murdoch and his son Lachlan Murdoch from having to testify at trial.

But one legal issue shouldn’t be overlooked. By settling the case, Fox avoids the risk that the U.S. Supreme Court will take enough interest in the case to consider stripping the media of their “actual malice” shield, which Justices Clarence Thomas and Neil Gorsuch have suggested it should. Instead of rejoicing in what the media perceives to be Fox’s misfortune, journalists should be grateful.

Back to Business as Usual?

The bottom line of the Dominion case is that the parties split the baby on the money and Fox acknowledged the judge’s factual determinations without having to apologize for or retract the statements that offended Dominion.

At least, that’s what’s public. Only the parties know what the other terms in the settlement agreement are. We can only wonder if Tucker Carlson’s surprise departure from Fox News has anything to do with the resolution of the Dominion lawsuit.

Related Resources:

Sidney Powell Puts the Kraken Back in the…Wherever You Keep a Kraken (FindLaw’s Federal Courts Blog)

Would You Want Rudy Giuliani as Your Attorney? (FindLaw’s Legally Weird Blog)

3 Damage Control Lessons from Giuliani (FindLaw’s Practice of Law Blog)

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