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In August 2021, the Fox Company board of administrators gathered on the corporate’s film studio lot in Los Angeles. Among the many subjects on the agenda: Dominion Voting Programs’ $1.6 billion defamation lawsuit in opposition to its cable information community, Fox Information.
The swimsuit posed a menace to the corporate’s funds and popularity. However Fox’s chief authorized officer, Viet Dinh, reassured the board: Even when the corporate misplaced at trial, it could finally prevail. The First Modification was on Fox’s aspect, he defined, even when proving so might require going to the Supreme Courtroom.
Mr. Dinh instructed others inside the corporate that Fox’s attainable authorized prices, at tens of thousands and thousands of {dollars}, might outstrip any damages the corporate must pay to Dominion.
That dedication knowledgeable a sequence of missteps and miscalculations over the subsequent 20 months, based on a New York Instances overview of courtroom and enterprise information, and interviews with roughly a dozen individuals straight concerned in or briefed on the corporate’s decision-making.
The case resulted in one of many largest authorized and enterprise debacles within the historical past of Rupert Murdoch’s media empire: an avalanche of embarrassing disclosures from inner messages launched in courtroom filings; the most important recognized settlement in a defamation swimsuit, $787.5 million; two shareholder lawsuits; and the benching of Fox’s prime prime-time star, Tucker Carlson.
And for all of that, Fox nonetheless faces a lawsuit searching for much more in damages, $2.7 billion, filed by one other topic of the stolen-election concept, the voting software program firm Smartmatic, which might now construct on the proof produced within the Dominion case to press its personal appreciable claims.
Within the month because the settlement, Fox has refused to remark intimately on the case or the various subsequent setbacks. That has left a string of unanswered questions: Why did the corporate not settle earlier and keep away from the discharge of personal emails and texts from executives and hosts? How did one of the crucial doubtlessly prejudicial items of proof — a text from Mr. Carlson about race and violence — escape high-level discover till the eve of the trial? How did Fox’s pretrial evaluation so spectacularly miss the mark?
Repeatedly, Fox executives neglected warning indicators in regards to the injury they and their community would maintain, The Instances discovered. In addition they failed to acknowledge how far their cable information networks, Fox Information and Fox Enterprise, had strayed into defamatory territory by selling President Donald J. Trump’s election conspiracy theories — the central situation within the case. (Fox maintains it didn’t defame Dominion.)
When pretrial rulings went in opposition to the corporate, Fox didn’t pursue a settlement in any possible way. Executives had been then caught flat-footed as Dominion’s courtroom filings included inner Fox messages that made clear how the corporate chased a Trump-loving viewers that most popular his election lies — the identical lies that helped feed the Jan. 6 Capitol riots — to the reality.
It was solely in February, with the overwhelming detrimental public response to these disclosures, that Mr. Murdoch and his son with whom he runs the corporate, Lachlan Murdoch, started severely contemplating settling. But they made no main try to take action till the eve of the trial in April, after nonetheless extra damaging public disclosures.
On the heart of the motion was Mr. Dinh and his overly rosy state of affairs.
Mr. Dinh declined a number of requests for remark, and the corporate declined to answer questions on his efficiency or his authorized choices. “Discussions of particular authorized technique are privileged and confidential,” an organization consultant stated in an announcement.
Defenders of Mr. Dinh, a high-level Justice Division official beneath President George W. Bush, say his preliminary place was sound. Due to the energy of American free speech protections, Dominion wanted to clear a excessive bar. And unfavorable rulings from the Delaware decide who oversaw the case damage Fox’s probabilities, they argue.
“I believe Viet and Fox carried out simply the proper technique by shifting down two paths concurrently — first, mounting a robust authorized protection, one which I believe would have ultimately gained on the appellate stage, and, second, repeatedly assessing settlement alternatives at each stage,” stated William P. Barr, the previous lawyer normal beneath Mr. Trump who labored with Mr. Dinh earlier in his profession.
After all, the case would have been tough for any lawyer. As the inner information confirmed, executives knew conspiracy theories about Dominion had been false but didn’t cease hosts and friends from airing them.
That positioned Fox within the final hazard zone, the place First Modification rights give solution to the authorized legal responsibility that comes from knowingly selling false statements, referred to in legalese as “precise malice.”
An Unanswered Letter
The autumn of 2020 introduced Fox Information to a disaster level. The Fox viewers had come to anticipate favorable information about President Trump. However Fox couldn’t present that on election night time, when its resolution desk crew was first to declare that Mr. Trump had misplaced the vital state of Arizona.
Within the days after, Mr. Trump’s followers switched off in droves. Scores surged on the smaller right-wing rival Newsmax, which, in contrast to Fox, was refusing to recognize Joseph R. Biden’s victory.
The Fox host who was the primary to discover a means to attract the viewers again was Maria Bartiromo. 5 days after the election, she invited a visitor, the Trump-aligned lawyer Sidney Powell, to share particulars in regards to the false accusations that Dominion, an elections know-how firm, had switched votes from Mr. Trump to Mr. Biden.
Quickly, wild claims about Dominion appeared elsewhere on Fox, together with references to the election firm’s supposed (however imagined) ties to the Smartmatic election software program firm; Hugo Chávez, the Venezuelan dictator who died in 2013; George Soros, the billionaire investor and Democratic donor; and China.
On Nov. 12, a Dominion spokesman complained to the Fox Information Media chief government, Suzanne Scott, and the Fox Information Media government editor, Jay Wallace, begging them to make it cease. “We actually weren’t enthusiastic about constructing a litigation file as a lot as we had been making an attempt to cease the bleeding,” Thomas A. Clare, certainly one of Dominion’s attorneys, stated just lately at a autopsy dialogue of the case held by a First Modification advocacy group, the Basis for Particular person Rights and Expression.
As Fox famous in its courtroom papers, its hosts did start together with firm denials. However as they continued to present oxygen to the false allegations, Dominion despatched a letter to the Fox Information normal counsel, Lily Fu Claffee, demanding that Fox stop and proper the file. “Dominion is ready to do what is important to guard its popularity and the security of its workers,” the letter warned.
It got here amid greater than 3,600 messages that Dominion despatched debunking the conspiracy theories to community hosts, producers and executives within the weeks after the election.
Such letters usually set off inner opinions at information organizations. Fox’s attorneys didn’t conduct one. Had they finished so, they could have realized of an e-mail that Ms. Bartiromo obtained in November about certainly one of Ms. Powell’s authentic sources on Dominion.
The supply intimated that her data had come from a mix of goals and time journey. (“The wind tells me I’m a ghost however I don’t consider it,” she had written Ms. Powell.)
Dan Novack, a First Modification lawyer, stated that if he ever stumbled upon such an e-mail in a shopper’s information, he would “bodily wrest my shopper’s checkbook from them and settle earlier than the police arrive.”
Fox, nonetheless, didn’t reply to the Dominion letter or adjust to its requests — now a key situation in a shareholder swimsuit filed in April, which maintains that doing so would have “materially mitigated” Fox’s authorized publicity.
The Case
Three months after the election, one other voting know-how firm tied to the Dominion conspiracy, Smartmatic, filed its own defamation suit in opposition to Fox, searching for $2.7 billion in damages. Dominion instructed reporters that it was making ready to file one, too.
Mr. Dinh was publicly dismissive.
“The newsworthy nature of the contested presidential election deserved full and truthful protection from all journalists, Fox Information did its job, and that is what the First Modification protects,” Mr. Dinh stated on the time in a rare interview with the authorized author David Lat. “I’m by no means involved about such lawsuits, actual or imagined.”
Mr. Dinh was saying as a lot inside Fox, too, based on a number of individuals accustomed to his actions on the time. His phrases mattered.
A refugee of Vietnam who fled the Communist regime and landed along with his household within the United States virtually penniless, he graduated from Harvard and Harvard Regulation and was a clerk for Justice Sandra Day O’Connor. As an assistant lawyer normal for George W. Bush, he helped draft the Patriot Act increasing authorities surveillance powers. He and Lachlan Murdoch later turned so shut that Mr. Dinh, 55, is godfather to certainly one of Mr. Murdoch’s sons.
Mr. Dinh took a hands-on strategy to the Dominion case, and ultimately break up with a key member of the surface crew, Charles L. Babcock of Jackson Walker, based on a number of individuals with data of the inner discussions.
After disagreement over one of the simplest ways to formulate Fox’s protection, Jackson Walker and Fox parted methods. George Freeman, government director of the Media Regulation Useful resource Heart and a former assistant normal counsel for The Instances, stated Mr. Babcock’s exit had left Fox down a seasoned defamation protection lawyer. “He’s most likely the perfect trial lawyer within the media bar,” Mr. Freeman stated.
By then, Mr. Dinh was fashioning the authorized crew extra in his personal picture, having introduced in a longtime colleague from the Bush administration, the previous solicitor normal Paul Clement.
Mr. Clement’s presence on the Fox crew was itself a sign of Mr. Dinh’s willingness to take the case all the way in which to the Supreme Courtroom — few members of the conservative authorized bar had extra expertise there.
Mr. Dinh employed Dan Webb, a former U.S. lawyer, for the position of lead litigator, succeeding Mr. Babcock. Mr. Webb was recognized for representing a beef producer that sued ABC Information over reviews a few product typically known as “pink slime.” The case was settled in 2017 for greater than $170 million.
The Fox authorized crew primarily based a lot of the protection on a doctrine referred to as the impartial reportage privilege. It holds that information organizations can’t be held financially answerable for damages when reporting on false allegations made by main public figures so long as they don’t embrace or endorse them.
“If the president of the US is alleging that there was fraud in an election, that’s newsworthy, whether or not or not there’s fraud within the election,” Mr. Clement instructed Jim Geraghty, a author for National Review and The Washington Post. “It’s essentially the most newsworthy factor possible.”
Fox remained so assured, the corporate stated in reviews to buyers that it didn’t anticipate the swimsuit would have “a fabric opposed impact.”
However the impartial reportage privilege will not be universally acknowledged. Longtime First Modification attorneys who agree with the precept in concept had their doubts that it could work, provided that judges have more and more rejected it.
“Most astute media defamation protection attorneys wouldn’t, and haven’t for a really very long time, relied on impartial reportage — actually as a major line of protection, as a result of the chance {that a} courtroom would settle for it as a matter of First Modification legislation has continued to decrease over time,” stated Lee Levine, a veteran media lawyer.
An early warning got here in late 2021. The decide within the case, Eric M. Davis, rejected Fox’s try to make use of the impartial reportage protection to get the swimsuit thrown out altogether, figuring out that it was not acknowledged beneath New York legislation, which he was making use of to the case. Even when it was acknowledged, Fox must present it reported on the allegations “precisely and dispassionately,” and Dominion had made a robust argument that Fox’s reporting was neither, the decide wrote in a ruling.
That ruling meant that Dominion, in making ready its arguments, might have entry to Fox’s inner communications in discovery.
That was a pure time to settle. However Fox caught with its protection and its plan, which all the time foresaw a possible loss at trial. “There was a robust perception that the attraction might very properly be as necessary, or extra necessary, than the trial itself,” Mr. Webb stated on the autopsy dialogue of the case with Mr. Clare.
Issues Fall Aside
Fox executives didn’t foresee how daunting the invention course of would turn out to be.
At practically each step, the courtroom overruled Fox’s makes an attempt to restrict Dominion’s entry to non-public communications exchanged amongst hosts, producers and executives. The most important blow got here final summer season, after a ruling stating that Dominion might overview messages from the non-public telephones of Fox workers, together with each Murdochs.
The end result was a treasure trove of proof for Dominion: textual content messages and emails that exposed the doubts that Rupert Murdoch had in regards to the protection airing on his community, and assertions by many inside Fox, together with Mr. Carlson, that fraud couldn’t have made a fabric distinction within the election.
The messages led to much more damaging revelations throughout depositions. After Dominion’s attorneys confronted Mr. Murdoch along with his personal messages displaying he knew Mr. Trump’s stolen election claims had been false, he admitted that some Fox hosts appeared to have endorsed stolen election claims.
That appeared to have undermined Fox’s protection. However Mr. Dinh instructed Mr. Murdoch afterward that he thought the deposition had gone properly, based on an individual who witnessed the trade. Mr. Murdoch then pointed a finger within the course of the Dominion lawyer who had simply completed questioning him and stated, “I believe he would strongly disagree with that.”
Throughout Mr. Carlson’s deposition final 12 months, Dominion’s attorneys requested about his use of a crude phrase to explain girls — together with a rating Fox government. In addition they talked about a textual content wherein he mentioned watching a bunch of males, who he stated had been Trump supporters, assault “an Antifa child.” He lamented within the textual content, “It’s not how white men fight,” and shared a momentary want that the group would kill the individual. He then stated he regretted that intuition.
Mr. Carlson felt blindsided by the extent of the questions, based on associates and confirmed by a video leaked to the left-leaning group Media Matters: “Ten hours,” he exclaimed to individuals on the set of his present, referring to how lengthy he was questioned. “It was so unhealthy, the hate I felt for that man,” he stated in regards to the Dominion lawyer who had questioned him.
There is no such thing as a indication that Mr. Carlson’s texts tripped alarms on the prime of Fox at that time.
The alarms rang in February, when reams of different inner Fox communications turned public. The general public’s response was so detrimental that some individuals on the firm believed {that a} jury in Delaware — which was prone to be left-leaning — might award Dominion over a billion {dollars}. But the corporate made no critical bid to settle.
With outstanding First Modification attorneys declaring that Dominion had an exceptionally strong case, a siege mentality appeared to set in.
Within the interview with Mr. Geraghty, Mr. Clement stated Fox was being singled out for its politics. In contrast to mainstream media, which are likely to report on main occasions the identical means and have energy in numbers, he stated, “conservative media, or someone like Fox, is in a way more weak place.” He added, “In the event that they report it, and the underlying allegations aren’t true, they’re far more on the market on an island.”
Reflecting the view of Mr. Dinh’s supporters even now, Mr. Barr, the previous lawyer normal, stated the “mainstream media stupidly cheered on Dominion’s case,” which he stated they’d come to remorse as a result of it could weaken their First Modification protections. (He made an analogous argument in March in The Wall Street Journal.)
However Decide Davis had decided that Fox had set itself aside by failing to conduct “good-faith, disinterested reporting” within the segments at situation within the swimsuit. That was largely why, simply forward of opening statements, he dominated that Fox could not make impartial reportage claims that the conspiracy concept was newsworthy on the trial, knocking out a pillar of Fox’s technique. (He additionally dominated that Fox had, certainly, defamed the corporate in airing the false statements.)
Mr. Webb, who had already drafted a lot of his opening assertion and examined it with a spotlight group, needed to take away key elements of his remarks, he stated within the post-trial dialogue with Mr. Clare.
All alongside, the Fox board had been taking a wait-and-see strategy.
However the decide’s pretrial choices started to alter the board’s considering. Additionally, in these ultimate days earlier than the trial, Fox was hit with new lawsuits. One, from the previous Fox producer Abby Grossberg, accused Mr. Carlson of selling a hostile work environment. Another, filed by a shareholder, accused the Murdochs and several directors of failing to cease the practices that made Fox weak to authorized claims.
The weekend earlier than trial was to start, with jury choice already underway, the board requested Fox to see the inner Fox communications that weren’t but public however that might nonetheless come out within the courtroom.
That Sunday, the board realized for the primary time of the Carlson textual content that referred to “how white males struggle.” Mr. Dinh didn’t know in regards to the message till that weekend, based on two individuals accustomed to the matter. Fox’s attorneys believed it could not come out at trial, as a result of it was not related to the authorized arguments at hand. The board, nonetheless, was involved that Dominion was ready to make use of the message to additional undermine the corporate with the jury.
In an emergency assembly that Sunday night, the board — with an eye fixed on future lawsuits, together with these from Smartmatic and Ms. Grossberg — determined to rent the legislation agency Wachtell, Lipton Rosen & Katz to research whether or not some other problematic texts from Mr. Carlson or others existed.
Over that very same weekend, Lachlan Murdoch instructed his settlement negotiators to supply Dominion greater than the $550 million for which he had already obtained board approval.
In interviews, individuals with data of the deliberations disagreed about how a lot Mr. Carlson’s textual content contributed to the ultimate $787.5 million settlement worth.
By the point the board realized of the message, the Murdochs had already decided {that a} trial loss may very well be much more damaging than they had been initially instructed to anticipate. A considerable jury award might weigh on the corporate’s inventory for years because the appeals course of performed out.
“The distraction to our firm, the distraction to our progress plans — our administration — would have been terribly expensive, which is why we determined to settle,” Lachlan Murdoch stated at an funding convention this month.
However there was broad settlement amongst individuals with data of the discussions that the Carlson textual content, and the board’s initiation of an investigation, added to the strain to keep away from trial.
The textual content additionally helped result in the Murdochs’ resolution a number of days later to abruptly pull Mr. Carlson off the air. Their view had hardened that their top-rated star wasn’t value all of the downsides he introduced with him.
Fox’s bother has not ended. Within the weeks because the settlement and Mr. Carlson’s ouster, prime-time rankings have dropped (although Fox stays No. 1 in cable information), and new plaintiffs sued the community, most recently a former Homeland Safety official, Nina Jankowicz.
As certainly one of Ms. Jankowicz’s attorneys stated in an interview, the Dominion case “alerts that there’s a path.”
Nonetheless pending is the Smartmatic swimsuit. In late April, Fox agreed to hand over additional internal documents regarding a number of executives, together with the Murdochs and Mr. Dinh. In an announcement paying homage to Mr. Dinh’s early view of the Dominion case, the community stated that the $2.7 billion in damages sought by Smartmatic — working in just one county in 2020 — had been implausible and that Fox was protected by the First Modification.
“We might be able to defend this case surrounding extraordinarily newsworthy occasions when it goes to trial, seemingly in 2025,” the assertion stated.
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