Fox News Says Smartmatic Was 'Losing Money' Before Lawsuit
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Fox News Responds to Smartmatic’s ‘Extravagant’ $2.7 Billion Defamation Lawsuit, Claims Voting Company Was ‘Losing Money Hand Over Fist’ Long Before It Sued

 

A Fox News correspondent holds a Fox News microphone in a September 25, 2019 file photo.

Fox News Network, LLC and several of its hosts on Thursday filed an answer and counterclaim after a New York State trial judge refused to dismiss most of a $2.7 billion defamation lawsuit by voting technology company Smartmatic against the conservative channel, current host Maria Bartiromo, and former host Lou Dobbs.  The Feb. 4, 2021 lawsuit surrounded Fox’s coverage of the 2020 presidential election.

The judge did dismiss Jeanine Pirro as a defendant.

“The election was not stolen, rigged, or fixed,” Smartmatic said in its blockbuster filing.  “These are facts. They are demonstrable and irrefutable.”

Fox moved on Feb. 8, 2021 and on April 26, 2021, to have the lawsuit thrown out of court on the basis of the pleadings alone.  New York State Supreme Court Justice David B. Cohen kept most of the claims alive, especially as to Fox as a corporate defendant.

The new responsive documents — totaling hundreds of pages of direct responses and exhibits — include blanket denials of liability and a counterclaim.  The counterclaim takes dead aim at Smartmatic’s listed dollar amount — saying $2.7 billion is an “extravagant” number that Fox claims “is divorced from reality.”

Fox alleges that Smartmatic “premised” its claim “on the implausible notion that a company that has been losing money hand over fist the better part of a decade was on the brink of accomplishing the historic feat of 75% earnings growth over the next five years.”

“That fantastical claim was tailor-made to grab headlines — which Smartmatic ensured it did by touting it in its own press releases,” the lawsuit indicates.

“[B]y Smartmatic’s telling, it stood to make nearly $2 billion in annual revenue in 2025—a figure more than four times its highest reported revenues within the past nine years and more than 16 times its reported revenues in 2020,” the counterclaim indicates (emphases in original).

Those figures are cited to a report prepared by Daniel R. Fischel, an expert hired by Fox News’s law firm to examine the finances of the company’s legal foe Smartmatic.

Fox’s response and counterclaim states (again, emphases in the original):

As the Fischel Report documents in greater detail . . . future revenues of that magnitude would dwarf Smartmatic’s actual earnings over the past eight years combined and would require the company to accomplish the remarkable feat of increasing its earnings by a whopping 74.35% over the next five years, with a 33.55% profit margin to boot. And all of that from a company whose public earnings reports show $82.8 million in losses over the past five years, producing a five-year historical revenue weighted profit margin of -12.39%.
Smartmatic thus did not even get basic facts about itself right.  But more fanciful still, Smartmatic insists that these phantom losses are all attributable not to the nationwide (indeed, global) coverage of the President’s allegations against it, but to a handful of segments on Fox News. That claim does not pass the straight-face test.

While Smartmatic’s damages claim may be fantasy, its chilling effect is quite real. On top of the already-significant costs that Fox News has incurred and will continue to incur defending against Smartmatic’s novel legal theories, Fox News must also incur costs to debunk Smartmatic’s multibillion-dollar damages claim. And that is to say nothing of the chilling effect such a claim has on others who may not be able to defend themselves or face even a minimal risk of such staggering liability if their own speech comes under similar attack. A damages claim so divorced from reality should be seen for what it is: a naked attempt to grab the kind of attention that will magnify the very chilling effect on free-speech and free-press rights that the Anti-SLAPP is supposed to guard against.

The counterclaim involves a single civil rights allegation under New York law.  In essence, Fox says Smartmatic’s lawsuit involved “a matter of profound public concern: allegations made by the sitting President of the United States of America and his legal team and surrogates in the wake of the 2020 presidential election.”  Discussion about those matters, per Fox, is protected by New York Law, which places “strict burdens on persons who sue members of the media for defamation . . . without a substantial basis in law.”

Also named a defendants in the Smartmatic case were Rudy Giuliani and Sidney Powell.  The trial judge dismissed Powell as a defendant because she had virtually no contacts to New York State, where the case was filed.  Some of the claims against Giuliani were also dismissed; some remain intact.

Separate yet substantially similar response documents by were filed Thursday as to Dobbs and Bartiromo as individual defendants.

Smartmatic responded to the Thursday filing via an email to Law&Crime.

“It is ironic that Fox claims that Smartmatic’s lawsuit is without basis after the Court found that the lawsuit had a substantial basis in law and fact,” said Smartmatic attorney Erik Connolly. “The decisions of courts across the country regarding these defamatory statements speak for themselves; and, the courts are saying something very different than Fox.”

The voting technology company also reacted gleefully last week to the New York State trial judge’s decision to keep most of the case alive.

“Smartmatic is very pleased that the Court denied Fox’s motion and decided that the case should proceed to discovery,” Connolly said via a press release on March 8.  “The defamatory statements by Fox News about Smartmatic caused catastrophic damage to its business and reputation in the United States and worldwide. This lawsuit will help to undo that damage.”

“FOX’s and the other defendants’ lies had consequences; not only for my company but for the integrity of elections and the people who administer them,” said Antonio Mugica, CEO of Smartmatic, also on March 8. “FOX’s reckless disregard for truth has caused debilitating harm to our ability to conduct our business globally as well as in the United States. We look forward to our day in court.”

Read the Fox corporate filing and the Fischel report below:

[Editor’s note:  this piece has been updated to include a statement issued in the late afternoon hours of Thursday, March 17, by Smartmatic attorney Erik Connolly.]

[File photo by Drew Angerer/Getty Images.]

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Aaron Keller holds a juris doctor degree from the University of New Hampshire School of Law and a broadcast journalism degree from Syracuse University.  He is a former anchor and executive producer for the Law&Crime Network and is now a Senior Editor for the Law&Crime website. DISCLAIMER:  This website is for general informational purposes only.  You should not rely on it for legal advice.  Reading this site or interacting with the author via this site does not create an attorney-client relationship.  This website is not a substitute for the advice of an attorney.  Speak to a competent lawyer in your jurisdiction for legal advice and representation relevant to your situation.