Voting technology company Smartmatic USA Corp. sufficiently alleges in its $2.7 billion defamation lawsuit against Fox executives that the corporation may be directly liable for disinformation that was part of Fox News’s 2020 post-election coverage, the New York Supreme Court First Appellate Department wrote in an unsigned opinion. The allegations also “satisfy the applicable pleading requirements for alleging ‘actual malice,’” the court said.
However, the court dismissed Smartmatic’s claims for vicarious liability—that Fox Corp. exercised complete control over Fox News and can be held liable for its actions. The decision modifies a lower court order denying Fox Corp.'s motion to dismiss the suit.
Smartmatic’s allegations that Fox Corp. wholly dominated Fox News with regard to the disinformation campaign “cannot, on their own, furnish a proper basis for vicarious liability,” the court wrote. The complaint lacks allegations of “total corporate dominance based on veil piercing or some other showing that the subsidiary lacks a true separate corporate existence,” which is required to establish vicarious liability, the court said.
The decision to allow the direct liability claims to proceed is consistent, the court noted, with the Delaware courts’ findings in a similar case in which voting machine manufacturer Dominion Voting Systems Inc. sought to hold Fox Corp. liable for statements made on Fox News’s 2020 election broadcasts. The Delaware Court of Chancery also ruled two weeks ago that Fox and Rupert Murdoch must face claims from investors that they are responsible for financial losses resulting from the Smartmatic and Dominion cases.
Smartmatic is demanding a jury trial in the case alleging Fox executives, including Murdoch and his son Lachlan Murdoch, directed Fox News to air “conspiracy theories” claiming the company rigged the 2020 US presidential election against Donald Trump. The lawsuit also names Fox News and several on-air personalities, but Fox Corp. sought to be dismissed from the case saying it can’t be held liable for statements made by the news outlet and its employees.
Fox “attempted, and failed, to have this case dismissed, and it must now answer for its actions at trial,” said Smartmatic’s attorney, Erik Connolly of Benesch Friedlander Coplan & Aronoff LLP. “We look forward to presenting our evidence at trial,” he added.
Fox in a statement said it “will be ready to defend this case surrounding extremely newsworthy events when it goes to trial. As a report prepared by our financial expert shows, Smartmatic’s damages claims are implausible, disconnected from reality, and on their face intended to chill First Amendment freedoms.”
Benesch Friedlander Coplan and Aronoff LLP represented Smartmatic. Clement & Murphy PLLC and Mintz & Gold LLP represented Fox.
The case is Smartmatic USA Corp. v. Fox Corp., N.Y. App. Div., 1st Dep’t, No. 2024-01388, 1/9/25.
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