Fox News Is Sued by Election Technology Company for Over $2.7 Billion

Smartmatic accused Rupert Murdoch’s network of promoting a false narrative about the 2020 election that damaged the company.

A Smartmatic representative demonstrates the company’s vote-processing system in 2018.
A Smartmatic representative demonstrates the company’s vote-processing system in 2018.Credit...Bob Andres/Atlanta Journal-Constitution, via Associated Press

Rupert Murdoch’s Fox Corporation and three of its popular anchors are the targets of a $2.7 billion defamation lawsuit filed on Thursday by a company that became a prominent subject of discredited theories about widespread fraud in the 2020 presidential election.

Smartmatic, an election technology company, filed the suit in New York State Supreme Court on Thursday against the Fox Corporation, Fox News and the anchors Lou Dobbs, Maria Bartiromo and Jeanine Pirro. As part of the same action, the company is suing Rudolph W. Giuliani and Sidney Powell, who made the case for election fraud as guests on Fox programs while representing President Donald J. Trump.

In its 276-page complaint, Smartmatic argues that Mr. Giuliani and Ms. Powell “created a story about Smartmatic” and that “Fox joined the conspiracy to defame and disparage Smartmatic and its election technology and software.”

“The story turned neighbor against neighbor,” the complaint continues. “The story led a mob to attack the U.S. Capitol.”

Smartmatic, which provided services for the 2020 election in only one county, filed its suit in the tense aftermath of a vote that Mr. Trump and his supporters have repeatedly and falsely described as rigged or stolen. Right-wing outlets, including Fox and its upstart competitors Newsmax and OANN, have given significant broadcast time to those seeking to subvert the election outcome at a time of a rancorous political divide, when conspiratorial notions have moved into the mainstream.

Smartmatic is seeking damages of “no less than $2.7 billion,” the complaint says, and is requesting a jury trial. Its move against Fox follows two lawsuits filed last month by Dominion Voting Systems: one against Mr. Giuliani, the other against Ms. Powell. Dominion is another company named by conspiracy theorists claiming election fraud.

Even after the storming of the Capitol on Jan. 6, a deadly riot that was led by Trump loyalists, the talk of fraud has not fully died down. In an appearance Tuesday on Newsmax, Mike Lindell, the MyPillow founder who has been one of Mr. Trump’s most ardent supporters, launched a verbal attack on Dominion. In a sign that Dominion’s lawsuits have had an effect on right-wing media, the Newsmax co-anchor, Bob Sellers, cut off Mr. Lindell and read a statement: “The election results in every state were certified. Newsmax accepts the results as legal and final. The courts have also supported that view.”

ImageFox Business Network anchor Lou Dobbs during a 2019 broadcast.
Fox Business Network anchor Lou Dobbs during a 2019 broadcast.Credit...John Lamparski/Getty Images

Mr. Giuliani and Ms. Powell repeatedly made the case for election fraud while appearing as guests on the Fox programs hosted by Ms. Bartiromo, Mr. Dobbs and Ms. Pirro in the weeks after the election, a time when powerful Republicans in Congress were sowing doubts about the election outcome and Senator Mitch McConnell of Kentucky, then the majority leader, had yet to congratulate Joseph R. Biden Jr. on his victory.

Smartmatic said in the complaint that the promotion of false claims on Fox “jeopardized” its “multibillion-dollar pipeline of business”; damaged its election technology and software businesses; and made it difficult for the company to get new business in the U.S., where it had made inroads after years of servicing elections in other nations.

“Fox News Media is committed to providing the full context of every story with in-depth reporting and clear opinion,” a spokeswoman for Fox said. “We are proud of our 2020 election coverage and will vigorously defend this meritless lawsuit in court.”

Ms. Powell, who said she had not seen or received notice of the suit, added: “Your characterization of the claims shows that this is just another political maneuver motivated by the radical left that has no basis in fact or law.”

Ms. Bartiromo, Mr. Dobbs, Ms. Pirro and Mr. Giuliani did not reply immediately to requests for comment.

In its frontal attack on Mr. Murdoch’s media empire, Smartmatic argues that Fox cast it as a villain in a fictitious narrative meant to help win back viewers from Newsmax and OANN. Each saw ratings surge in the weeks after the election thanks to their embrace of the fiction that Mr. Biden was not the rightful victor. The Smartmatic suit also argues that Mr. Giuliani and Ms. Powell sought to enrich themselves and improve their standing with Mr. Trump’s supporters by making claims that were damaging to the company.

Fox Corporation, with about 9,000 employees, is run by Mr. Murdoch, 89, and his elder son, Lachlan, its chief executive. For the company, $2.7 billion would be a hefty penalty. Fox Corporation made $3 billion in pretax profit on $12.3 billion in revenue from September 2019 to September of last year. It is valued at about $17.8 billion.

Smartmatic’s complaint takes into account not only the reputational and financial damage the company said it had suffered, but also the harm done to the United States by the claims promoted by Mr. Trump’s allies and the Murdoch-controlled networks he had long favored.

Mr. Dobbs, a Fox Business Network anchor, and Ms. Bartiromo, who hosts shows on Fox Business and Fox News, have been staunch supporters of the former president. On Nov. 29, Ms. Bartiromo conducted Mr. Trump’s first lengthy TV interview after the election. Ms. Pirro, a onetime prosecutor whose “Justice with Judge Jeanine” is a staple of Fox New’s Saturday night lineup, has been friends with Mr. Trump for decades.

Among the on-air exchanges the Smartmatic suit highlights is one between Ms. Powell and Mr. Dobbs on Nov. 16. Ms. Powell claimed on Mr. Dobbs’s show that Hugo Chávez, the deceased president of Venezuela, had a hand in the creation of Smartmatic technology, designing it so that the votes it processed could be changed undetected. (Mr. Chávez, who died in 2013, did not have anything to do with Smartmatic.)

“The Smartmatic software is in the DNA of every vote-tabulating company’s software and systems,” Ms. Powell said later on the show.

Mr. Dobbs added, “We don’t even know who the hell really owns these companies, at least most of them.”

After Smartmatic sent a letter in December asking for a correction and threatening legal action, the shows led by the three Fox anchors aired a segment in which an election expert, Eddie Perez, debunked a number of false claims about Smartmatic. The prerecorded segment showed Mr. Perez responding to questions from an off-camera voice. In an interview on Wednesday, Mr. Perez said that the finished product “almost looked like a deposition.”

The suit argues that claims made on Fox were demonstrably false, given that Smartmatic’s technology was used only in Los Angeles County and not in any of the contested states during the 2020 election.

Don Herzog, who teaches First Amendment and defamation law at the University of Michigan, said that the essence of the suit made sense. “You can’t just make false stuff up about people,” he said. He expressed doubt about the suit’s connection of the false statements on Fox to the attack on the Capitol, however, saying that the events of Jan. 6 had no bearing on whether the defendants had injured Smartmatic.

The suit’s success would depend on a variety of factors, Mr. Herzog added, including whether Smartmatic can persuade a jury that the company did not have the standing of a public figure before Mr. Giuliani and Ms. Powell made it better known.

If the court determines that Smartmatic was a public figure, the burden of proof for its claims will be higher. The company will have to show that Mr. Giuliani, Ms. Powell and the other defendants knew that their statements were false or that they had serious doubts about them. (“I don’t think the court will find them to be a public figure,” Mr. Herzog said.) In its complaint, Smartmatic claims the Fox anchors and the two guests acted with “actual malice” and “recklessly disregarded” the veracity of their statements.

While it may be difficult to persuade a jury that Fox is responsible for what its guests say on its programs, Timothy Zick, a William & Mary Law School professor who specializes in First Amendment law, said the network could be found responsible for the content of its broadcasts.

“If they knew that the segment was going to include these false statements, then I don’t think that relieves them of liability,” he said. “Republishing the false statements of others is also defamatory in circumstances like this.”

At times, the language of the Fox hosts echoed that of Mr. Trump’s lawyers. The lawsuit cites Ms. Powell referring to the supposed conspiracy as a “cyber Pearl Harbor,” a phrase repeated by Mr. Dobbs on his show and on Twitter.

Roberta A. Kaplan, a lawyer who is representing the writer E. Jean Carroll in her defamation suit against Mr. Trump, said that the profusion of defamation cases related to the former president was notable, given that such cases have long been considered difficult to win.

What’s changed, and why we’re seeing so many more defamation cases today than ever before, is because, frankly, we’re living in a world in which people with legitimacy and authority seem to feel no compunction whatsoever about just telling outright lies,” she said.

Antonio Mugica, chief executive of Smartmatic, in London in December.Credit...Henry Nicholls/Reuters

When Smartmatic started in April 2000, it offered its services to banks. The shift to election security came after Antonio Mugica, a company founder and its chief executive, was in Palm Beach County during the contested 2000 election. “We were in the first row watching that circus,” he said. “And it really caused an impact on all of us.”

The company had success offering its electronic voting machines, online voting platforms and software products to elections around the world. It was also used in the 2016 Republican presidential caucus in Utah. In 2018, Los Angeles County chose Smartmatic to implement a new election system, and its technology was used there in the presidential primary in March and again in the general election.

After Election Day, the company’s name, along with that of Dominion, became integral in the fraud conspiracies promoted by right-wing media outlets. Smartmatic employees and their family members received threats, including death threats, some of which were noted in the complaint.

“I had one in which I was told they were going to actually come kidnap me in London, where I was at the time,” Mr. Mugica said. “They were sending three people. ‘Plane is landing tomorrow.’”

Another threat, he said, targeted the teenage son of the company’s co-founder, Roger Piñate. “They were able to find his mobile number, which is spooky enough,” Mr. Mugica said. “And to call and threaten him over the phone.”

Smartmatic’s complaint includes the argument that the promotion of debunked theories about the election undermined democracy.

“You don’t just look at the effect of the conduct on the plaintiff, but you look at the broader effect that the messaging can have, and that’s the broader effect of this,” J. Erik Connolly, a lawyer who is representing Smartmatic, said. “If you’re awarding punitive damages, which are largely designed to say, ‘Don’t do this again,’ it’s a broader message. That is relevant to a broader message that a court or the jury should send here.”

Edmund Lee contributed reporting. Kitty Bennett contributed research.