Big Lie Means Big Payout in Defamation Lawsuit Against Fox News

The monetary settlement in U.S. Dominion, Inc. v. Fox News Network, LLC[1] appears to be the largest ever in a defamation case in state or federal court in the United States. The largest judgment in a US defamation case was awarded against Alex Jones in 2022 – $965 million for propagating false conspiracy theories about the mass shooting at Sandy Hook Elementary School.

This enormous settlement, and the court rulings that preceded it, illuminate lessons for media companies and other potential defendants in defamation claims. Those lessons are set forth below. That said, the First Amendment continues to provide robust protection for media companies and journalists who do not make knowingly false statements. Under New York Times Co. v. Sullivan,[2] in defamation lawsuits involving public figures (or in certain jurisdictions, statements made in a public forum), plaintiffs must demonstrate that the allegedly defamatory statement was made with actual malice. Traditionally, the actual malice standard requires plaintiffs to show that defendants had knowledge that the statement was false or acted in reckless disregard of its truth or falsity,[3] but recently courts have also considered whether the defendant intended the defamatory meaning.[4]

Background

Dominion is a national and global supplier of elections technology. Following the 2020 presidential election, Fox News and its employees and guests made and promoted a number of false statements about Dominion, including that its voting machines were faulty and flipped millions of ballots from Donald Trump to Joe Biden. Dominion sued Fox News for defamation, alleging that Fox News knew that these statements were false, but continued to promote them because Fox News was concerned about losing viewers to competitor networks and “the lies were good for Fox’s business.”

In a March 2023 ruling on the parties’ motions for summary judgment, the Superior Court of Delaware found that the evidence in the case “demonstrates that it is crystal clear” that Fox News’s claims about 2020 election fraud involving Dominion’s voting machines were false and that those falsities had exposed Dominion to “public contempt, hatred, ridicule, aversion, or disgrace.” The court’s ruling meant that the primary remaining issue for the jury to determine at trial was whether Fox News acted with “actual malice,” meaning that Fox News made the statements with the knowledge that those statements were false or with reckless disregard for their falsity.

On the eve of trial, and following revelations that Fox News may have suppressed evidence that it was required to disclose during the discovery process, the court issued a ruling requiring the appointment of a special master to investigate whether Fox News withheld evidence and failed to comply with its discovery obligations in this case.

The parties agreed to settle this case after jurors had been selected but before opening statements.

Lessons Learned and Implications

This settlement offers simple lessons:

• Media companies should endeavor to tell the truth.
• Media companies should not allow their employees to make repeated, knowingly false statements. Rather, they should issue corrections or retractions upon knowing they had made false statements, even if doing so may negatively affect their viewership and stock price.
• Media companies should not reprimand their employees who refute false statements made by their colleagues.
• The First Amendment does not enable media companies to make knowingly false statements without facing liability for defamation, even if the false statements are about matters of public concern.

As discovery in the Dominion lawsuit revealed, many of Fox News’s executives and television personalities admitted privately among themselves in writing and in sworn deposition testimony that they did not believe the information that Fox News was publicly disseminating about the 2020 election. The size of Fox News’s settlement with Dominion is significant and suggests that Fox News believed it would risk a substantial adverse judgment (including punitive damages) had it proceeded with trial.

While the settlement resolves Fox News’s liability to Dominion, other similar lawsuits will continue against Fox News. In particular, Smartmatic’s defamation lawsuit against Fox News, which we previously wrote about, remains pending before the Supreme Court of New York. In addition, Fox News’s executives and some of its directors already face at least one shareholder derivative lawsuit for allowing the company to risk significant liability by propagating the Big Lie.

[1] C.A. N21C-03-257 EMD (Del. Super. Ct. 2021).

[2] 376 U.S. 254 (1964).

[3] St. Amant v. Thompson, 390 U.S. 727 (1968).

[4] Palin v. New York Times Company, 588 F. Supp. 3d 375, 401-402 (S.D.N.Y. 2022).