A Win for Dominion, But Not For Democracy

Photo: Julio Cortez / AP

Just as opening statements were set to begin in a Delaware courthouse, Dominion Voting Systems agreed to settle its defamation suit against Fox for over $787 million. I was both unsurprised and, like many others, very disappointed. 

The unsurprising part was that Fox wanted to settle and Dominion took the cash. After all, as I discuss below, the writing was already on the wall legally for Fox after losing the key issue of falsity on partial summary judgment before the trial even began. Further, Fox has a long history of paying out huge sums of money on its many misdeeds in order to avoid ultimate accountability, so this likely would be no different. As for Dominion, it’s a private company, and that’s a lot of money. If the fate of our democracy weren’t on the line, we’d all probably feel fine about it hitting paydirt.

Then there’s the disappointing part. This was more than just a defamation case. It was a case that got to the heart of what is deeply wrong and broken about our system, with Fox and its disinformation factory right at the center of it. It’s disheartening to know we won’t get a chance, at least in this case, to see Fox on trial for what it did to the entire country with its stream of lies about the 2020 election.

Let’s zoom out a bit and take a look at both Fox and Dominion to understand why a settlement here wasn’t surprising given the law, the players and the stakes. Then let’s talk about what we didn’t get to see in the case and how that’s a huge lost opportunity for our public discourse and the health of our democracy. Finally, and on a somewhat brighter note, let’s review what exposure still remains for Fox and other purveyors of false conspiracies and misinformation, as well as discuss ways to not let the value of this now-settled lawsuit disappear entirely.

What is the price of the truth?

At its most basic level, this was a high profile civil suit between two private companies with a great deal of money on the line. Fox was exposed because the judge had already ruled that Fox’s statements were false, and at trial the evidence would likely have shown, by a clear and convincing standard, that Fox also knew they were false or at least acted in reckless disregard of the truth. That’s a bad hand for Fox to play and a recipe for high damages.

If I were one of Fox’s lawyers (Heaven forbid), I would have advised the company to settle and avoid the media circus that would further damage the company’s brand. Even after such a spectacle, Fox would very likely still be found liable for defamation, which would then turn this into a case for damages of two types: compensatory and possibly punitive.

In calculating compensatory damages, I would have told Fox to consider the valuation of Dominion in 2020. In 2018, the company was only worth around $80 million, around the time Staple Street (a private equity firm) bought a 76.2% stake in it. After that investment, and by the time of the 2020 election according to Fox’s own exhibits, Dominion soared in value to $226 million. But that’s still less than one-third of the settlement price of $787 million. And it’s not as if Dominion is dead; it will still operate and be profitable in many markets. 

I would have also told them to consider who owns Dominion and would benefit from the settlement. If you were a principal at Staple Street, you’d be looking at a 20x return on your initial investment of $38.3 million in 2018. That’s a really great deal for you. If you passed on the settlement, you might get more money at trial, especially in terms of punitives, but there’s always a risk that the jury could include some die-hard Fox viewers or election deniers, that the matter might get tied up for years on appeal, or that a higher court could strike the punitives as excessive. It makes good economic sense to take the money today.

Further, it’s not like Fox hasn’t settled massive cases before when it was clearly in the wrong. As Trip Gabriel of the New York Times observed, such payouts are par for the course at Fox:

Murdoch's history of settling scandalous claims

--$139 million in 2013 over phone hacking by London tabloid

--$90 million in 2017 over sexual harassment by Roger Ailes and Bill O’Reilly.

--$787.5 million to avoid being found guilty of “actual malice” today

The key takeaway is this: For Fox, being hit for bad behavior is now just another cost of doing business. That is a troubling conclusion, because it means that Fox will not actually change its behavior, it will simply bake such costs into its operations and its balance sheet.

Dominion understandably tried to put a positive gloss on this, arguing that the money payment equated to justice. “Over two years ago, a torrent of lies swept Dominion and election officials across America into an alternative universe of conspiracy theories causing grievous harm to Dominion and the country,” Dominion’s CEO said. “Today’s settlement of $787.5 million represents vindication and accountability.”

But while $787.5 million is by any measure a great deal of money, especially to a smaller company like Dominion and its new owners, it is an absorbable cost for Fox, which has $4 billion in cash on hand and reportedly nearly $14 billion in annual revenue last year. Further, as Angelo Carusone of Media Matters noted in an interview, Fox’s lies are in the end still profitable for the company because the demand and thus the reward for such lies still outweigh the potential costs of uttering them:

Part of the perverse incentive here is for Fox to give their audience those lies and extremism so that then they can leverage that audience…to pressure the cable companies into sort of artificially inflating what's called the “demand score” which is the ratio that cable carriers use to make these determinations. That’s how Fox is able to get their rates so high.

So if you’re making this sort of calculus, you’re willing to pay a little bit of money up front because Fox will make that back three or four fold. If they’re successful at renegotiating their cable renewals right now, at what they are currently trying to get, they will make three or four times the amount of money just in extra profit because of the increases they’re demanding than what they had to pay out to Dominion today.

So, vindication for Dominion? Perhaps. Accountability from Fox? Not a chance. Even a settlement in the billions would not have changed Fox’s behavior.

And that means the truth, accountability, and a change in business practices cannot be forced upon Fox by way of a money lawsuit, and we should stop expecting it. Specifically, the settlement does not require Fox to provide any apologies or retractions on air, and if Fox’s post-settlement statement is any indication, they are already busy recasting the truth. Fox’s Neil Cavuto read a statement from the company on air that is really quite something:

We acknowledge the Court’s rulings finding certain claims about Dominion to be false. This settlement reflects FOX’s continued commitment to the highest journalistic standards. We are hopeful that our decision to resolve this dispute with Dominion amicably, instead of the acrimony of a divisive trial, allows the country to move forward from these issues.

It is difficult to listen with a straight face while Fox touts its “continued commitment to the highest journalistic standards.” And can the country truly “move forward” without a public airing of what Fox did?

The public should get to hear the truth

The settlement puts the Fox part of the Big Lie story on ice, at least for now. The loss to the public, and our collective interest in the truth, is a profound one. Among the over 7,000 exhibits and dozens of witnesses involved, we would have finally also seen some key, bad actors at Fox take the stand. These would have included Rupert Murdoch, Tucker Carlson, Lou Dobbs, Sean Hannity, Jeannine Pirro, Maria Bartiromo and others, all being questioned under oath by Dominion’s lawyers about why they told the lies they did. While this wouldn’t have moved any true Fox believers, it would eat away at the edges of the center, where elections are fought and won.

Perhaps more importantly, the media news cycle would have stayed on Fox, pinning the network down in many ways. Fox understood this and was willing to pay to make the attention go away.

That’s why we can’t let that happen.

Can we salvage anything here?

Now, for some brighter news. There are some concrete ways that we can soften this blow to transparency and the truth. 

For starters, there is still another case out there, with an even bigger claimed price tag. Smartmatic, a software company defamed by Fox over false claims of its involvement in a stolen 2020 election, has a $2.7 billion lawsuit pending against the network in New York, and it has vowed to pick up where Dominion left off. “Dominion’s litigation exposed some of the misconduct and damage caused by Fox’s disinformation campaign,” a Smartmatic spokesman said on Tuesday. “Smartmatic will expose the rest.” While we should reasonably also expect that case to settle before trial, the media coverage can now shift to Smartmatic’s claims, keeping Fox’s lies and misdeeds front and center.

Fox is also potentially exposed now to lawsuits by its own shareholders, in what are called “derivative” suits, for having lost shareholder value due to the damaging false statements. Such lawsuits probably won’t damage the company very seriously financially, but they could serve as another way to keep the media spotlight on Fox’s lies.

It would further be quite valuable to see Democrats in Congress take up the question of disinformation, conspiracies and false election claims by Fox and other networks, with public hearings that could air what the network sought to prevent from coming to light. One goal would be to see if Congress could regulate or deter this kind of concerted, damaging campaign in the future in order to protect our democracy. Perhaps—and I’m admittedly conjecturing here—Congress could consider authorizing consumer class actions against companies that knowingly or recklessly promote false claims for the sake of ratings and audience. Such actions are already authorized at the state level for false or misleading commercial speech, and while there are considerable First Amendment concerns at play with a network that fashions itself as “news,” there might still be a constitutionally acceptable way to fashion such legislation if a court were to find the network was not news but rather only commercial entertainment.

Nor is the legal drama completely over. For its part, Dominion is not nearly done with its defamation lawsuits. It still has a case pending against OAN and another against Newsmax in the same court with the same judge in Delaware. And it has additional claims against many individuals who spread election lies, including MyPillow CEO Mike Lindell, Overstock.com founder Patrick Byrne, and former Trump attorneys Rudy Giuliani and Sidney Powell. 

In other words, while Fox played a major part in the Big Lie, it was not the only player, and its settlement with Dominion does not end the matter for the public. It is incumbent upon the media, our political leaders, and voters to not let the issue die because of a single big payout. The story runs far deeper than that, and the truth is something in which we all must continue to invest.