Fox Can Challenge Smartmatic’s $2.7 Billion Defamation Claim Over 2020 Election

(Bloomberg) -- Fox Corp. can proceed with its claims that Smartmatic Corp.’s $2.7 billion defamation lawsuit wildly exaggerates the financial harm it suffered from broadcasts falsely accusing it of rigging the 2020 US election, a New York judge ruled.

Rejecting the voting machine firm’s request to toss out Fox’s counterclaims, Justice David B. Cohen on Tuesday ruled that Fox can argue Smartmatic is trying to chill its free speech rights with the giant lawsuit.

Cohen is expected to rule soon on Fox’s motion to dismiss Smartmatic’s defamation suit outright. For now, both the suit — which accuses Fox of running a “disinformation campaign” to advance Donald Trump’s vote-rigging theory — and Fox’s counterclaims will proceed in tandem.

The decision comes less than a year after Fox agreed to pay $787.5 million to settle a $1.6 billion defamation suit filed by another voting machine firm, Dominion Voting Systems Inc., which made similar allegations. The former president continues to falsely claim the 2020 election was stolen as he campaigns to return to the White House.

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In Tuesday’s ruling, Cohen rejected Smartmatic’s argument that Fox’s settlement with Dominion, on top of significant rulings against Fox in that case, was sufficient to justify tossing out Fox’s counterclaims. Instead, the judge found that Fox’s specific argument about the damages being exaggerated still needs to play out in court.

It’s a significant setback for Smartmatic, which claims its reputation was severely harmed when Fox News hosts and guests repeatedly amplified the election conspiracy theory even after it had been widely debunked. Fox guests including Rudy Giuliani falsely claimed Smartmatic conspired with Dominion and foreign hackers to flip millions of votes away from Trump.

Smartmatic didn’t immediately respond to a message seeking comment on the ruling.

Fox alleges in its counterclaims that Smartmatic’s demand for $2.7 billion is “fanciful.” It claims the voting machine company exaggerated its financial harm by falsely asserting that it “stood to make nearly $2 billion in annual revenue in 2025.” According to Fox, that’s more than four times Smartmatic’s highest reported revenues within the past nine years.

Fox claims the alleged exaggerations violate New York’s statute barring Strategic Lawsuits Against Public Participation, known as an anti-SLAPP law, which prohibits the filing of cases intended to chill free speech.

Fox, which has struggled to move on from legal fights over the 2020 election, has denied wrongdoing, saying the company’s journalists were reporting fairly on claims by a sitting president and his allies that the election was fraudulent. 

The case is Smartmatic USA Corp. v. Fox Corp., 151136/2021, New York State Supreme Court, New York County (Manhattan).

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