The Fox-Dominion Settlement
One of the big stories this week/month was the settlement on the eve of trial of the defamation case between Dominion Voting Systems and Fox News. The case settled during the first day of trial and at or near the conclusion of jury selection, for nearly $800,000,000.
A quick recap: following the 2020 Presidential election multiple theories were floated relating to the validity of the election. Many of these were broadcast on Fox News, among those theories relating to the validity of Dominion’s voting machines and software.
Dominion sued Fox for defamation, alleging that the company (through its executives, anchors, etc.) knowingly made false statements about its products and as a result caused substantial damages. The company sought some $1.6 billion in damages. Fox denied these allegations, asserting that the information it broadcast was relevant to the public interest, and was likewise protected by the First Amendment. The judge in the case issued a series of pre-trial rulings, among those that the statements were, in fact, false, and the case was scheduled to begin a jury trial on Monday, April 17.
Monday came and went with an announcement that the trial had been adjourned for one day to allow the parties to explore a possible settlement. When the parties could not reach one, jury selection began. During what became a three-hour lunch break, Fox and Dominion finally reached a settlement, and the case was over.
Today we’re going to talk about why cases settle, and why they settle when they do.
The average person might look at the Fox-Dominion case and ask why it got this far if it was just going to settle. That would be a fair question. The practical answer would be that the parties needed to engage in pre-trial discovery (the process by which parties to lawsuits ask for and exchange information), which is true. Dominion did not have access to the many emails and text messages between Fox Anchors and executives (some of which were very harmful) and it’s likely that Fox did not have early access to any information which supported Dominion’s claim of damages. So, it’s not entirely surprising that discovery was necessary.
Okay, but why then didn’t the case settle after discovery, but well before the parties prepared for trial?
Legal disputes settle at many different points. Sometimes they settle before papers are even filed, where each side has determined that an early resolution is in their own best interest and these interests align. Sometimes they settle after discovery, when the parties each have a complete picture of the case and are able to agree (without actually agreeing) as to what an appropriate outcome should be.
Other times, however, cases simply cannot be settled until there is a real, in-your-face threat of a trial and (in this case) by extension a jury verdict. It may be that one side is being unreasonable with its demands or offers, or the other failing to recognize its own strengths/weaknesses. What often happens, however, is that when the Court presses “Go” and a prospective jury is brought into the Courtroom, things get real very quickly. All of a sudden parties really start to think about what testimony might actually come in, and (particularly in high profile cases) how it will be perceived. They start to really consider the uncertainty of the whole thing; or how their fate is now in the hands of these 12 (or in New York, 6) jurors whom they’ve never met.
And that’s why it was not at all surprising to see the settlement come when it did. What took so long? Likely a combination of the factors above: Dominion appeared to be dug in on its demands, including a public acknowledgement by Fox that it knew the statements were false (or, ultimately, a public acknowledgment of the Judge’s ruling that the statements were false); Fox was likely dug in on some technical legal issues on which it thought it could win (whether at trial or on appeal). But ultimately, when the rubber hit the road, and when they were each facing a jury of “peers”, everyone recognized what was at stake. Fox in particular, being a large publicly traded company, had more absolute risk and therefore more incentive in the end to settle, particularly given the damaging written communications and the prospect of its most famous anchors and CEO testifying in open court.
There’s a saying mediators often use that a successful mediation is one where both sides walk away mutually unhappy with the resolution. In this case I’m not sure that Dominion walked away unhappy, and to that degree it seems like a win. Fox certainly took a hit to its reputation and its wallet; however, by settling the case the company was able to contain the fallout, at least for now.
