The Fox/Dominion Settlement Highlights the Importance of Discovery in Proving 'Actual Malice'

Critics argue that excessively strict pleading standards prevent plaintiffs with meritorious defamation claims from obtaining the evidence they need to support them.

Damning evidence that Dominion Voting Systems uncovered during discovery in its defamation case against Fox News seems to have played a decisive role in the settlement that the parties reached this week. That outcome suggests that satisfying the "actual malice" standard for defamation cases involving public figures may not be as difficult as critics sometimes imply. At the same time, it underlines concerns that getting as far as discovery may be impossible when courts require that plaintiffs first make a plausible case that they can meet that test.

After the 2020 presidential election, Fox repeatedly promoted a conspiracy theory alleging that Dominion participated in a massive election fraud scheme aimed at denying Donald Trump a second term. If Dominion's case had gone to trial, the company would have had to present "clear and convincing evidence" that Fox either knew that story was false or recklessly disregarded that likelihood.

That standard, which the Supreme Court has said the First Amendment requires in defamation cases involving public figures, is not easy to satisfy. But Fox, which will pay Dominion the jaw-dropping sum of $787.5 million to make the case go away, clearly thought the company had a good shot at winning, and it is not hard to understand why.

Even as Fox lent credence to election conspiracy theorists such as Rudy Giuliani and Sidney Powell, communications revealed during discovery showed, Fox executives, producers, hosts, and reporters were privately dismissing their claims as "really crazy," "comic book stuff," "MIND BLOWINGLY NUTS," "insane," "unbelievably offensive," and "complete bullshit." They described Powell, a frequent Fox guest who accused Dominion of helping Joe Biden steal the election but never presented any evidence to support that charge, as a "crazy would be lawyer," a liar, and "a complete nut" who was telling a story that "doesn't make sense" and seemed to be "losing her mind."

As Fox implicitly recognized by settling the case, those contemporaneous concessions were powerful evidence of actual malice. But they came to light only because Dominion's lawsuit survived Fox's motion to dismiss the case, a decision that allowed discovery to proceed.

At that stage of the case, Dominion did not have access to the texts and emails that would later reinforce its claims. Delaware Superior Court Judge Eric Davis nevertheless ruled that Dominion had "adequately alleged actual malice." That conclusion was based on publicly available evidence that contradicted Giuliani and Powell's tall tale.

"The failure to investigate a statement's truth, standing alone, is not evidence of actual malice, 'even if a prudent person would have investigated before publishing the statement,'" Davis noted. "But a speaker cannot 'purposefully avoid[]' the truth and then claim ignorance. If the plaintiff offers 'some direct evidence' that the statement 'was probably false,' the Court can infer that the defendant 'inten[ded] to avoid the truth.'"

In this case, Davis said, Dominion's complaint "supports the reasonable inference that Fox either (i) knew its statements about Dominion's role in election fraud were false or (ii) had a high degree of awareness that the statements were false. For example, Fox possessed countervailing evidence of election fraud from the Department of Justice, election experts, and Dominion at the time it had been making its statements. The fact that, despite this evidence, Fox continued to publish its allegations against Dominion, suggests Fox knew the allegations were probably false."

Davis noted that Dominion had sent corrective emails to "Fox's reporters and producers, including those who oversaw and managed content for Lou Dobbs Tonight, Sunday Morning Futures, Mornings with Maria, Justice w/ Judge Jeanine, Hannity, and other Fox shows." Those emails "provided information to disprove the false claims Fox made about the company with links to independent sources."

Fox also heard directly from credible sources who contradicted Powell's claims. Ben
Hovland, a member of the U.S. Election Assistance Commission, "notified Fox that the 2020 Election was 'the most secure election we've ever had,'" Davis noted. J. Alex Halderman, director of the University of Michigan's Center for Computer Security & Society, "also told Fox that there 'is absolutely no evidence…that Dominion Voting Machines changed any votes in this election.'" Despite those communications and numerous other debunkings by independent experts, state and local officials, and federal agencies, Davis said, "Fox continued to promote known lies on its broadcasts, websites, social media accounts and subscription service platforms."

Davis added that, according to Dominion's complaint, "several of Fox's personnel openly disclaimed the fraud claims as false." In a tweet she posted nine days after the election, for example, Fox reporter Jacqui Heinrich corrected a tweet in which Trump had cited Hannity and Lou Dobbs Tonight to support his claim that Dominion was implicated in election fraud. Quoting "top election infrastructure officials," Heinrich noted that "there is no evidence that any voting system deleted or lost votes, changed votes, or was in any way compromised." After Giuliani and Powell laid out their conspiracy theory at a bizarre press conference on November 19, Fox White House Correspondent Kristin Fisher called it "colorful" but noted that it was "light on facts," adding that "much of what [Giuliani] said was simply not true or has already been thrown out in court."

Hosts such as Lou Dobbs nevertheless "continued to push the fraud claims," Davis noted. He thought "the nearby presence of dissenting colleagues…further suggests Fox, through personnel like Mr. Dobbs, was knowing or reckless in reporting the claims."

In short, even without the incriminating messages that Dominion obtained during discovery, there was considerable evidence that Fox was, at best, willfully blind to information that undercut the narrative that Giuliani, Powell, and Dobbs were pushing. Davis therefore concluded it was "reasonably conceivable that Dominion will establish actual malice by clear and convincing evidence at trial."

That "reasonably conceivable" standard, which is based on Delaware law, is less demanding than the federal rule established by a pair of Supreme Court decisions in 2007 and 2009. Under those precedents, which did not deal specifically with defamation cases but have been extended to cover them, claims must be not just "conceivable" but "plausible." Surviving a motion to dismiss requires "well-pleaded factual allegations" that "plausibly give rise to an entitlement to relief."

That requirement, critics argue, creates an obstacle that may be impossible to overcome in defamation cases: Before they can proceed to discovery, plaintiffs need evidence of actual malice that they may be unable to obtain without discovery. "The plausibility standard bars plaintiffs from discovery whether or not discovery in the particular case might prove to be overly burdensome or expensive for the defendant," University of Tennessee law professor Judy Cornett writes in a 2017 law review article. "And in cases where the defendant's state of mind must ultimately be proven by the plaintiff—like public figure libel cases—the bar to discovery puts plaintiffs in a catch-22 situation. The plaintiff must allege facts from which knowledge of falsity or reckless disregard of truth or falsity must be inferred, but the plaintiff has no access to the tools of discovery with which to learn these essential facts."

University of Tennessee law professor Glenn Harlan Reynolds concurs. The plausibility standard "makes pleading actual malice very difficult for libel plaintiffs," he writes in a 2020 paper, "since it requires proof of a subjective doubt about the truthfulness of the publication. In the absence of an objective standard based on, say, what a 'reasonably prudent person' would or would not have published, plaintiffs must prove state of mind—and [they] must make their case before discovery can produce things like emails or internal memos that might be evidence of such doubts."

The evidence that persuaded Davis to let Dominion proceed with its case might have been sufficient to establish plausibility. But this case was unusual in the extent to which the challenged statements were at odds with readily available information.

Reynolds notes the successful 2015 libel lawsuit against Rolling Stone, which he argues was likewise unusual. University of Virginia Associate Dean of Students Nicole Eramo sued the magazine in federal court over a 2014 story that portrayed her as indifferent to an alleged rape on campus. Charlottesville police later concluded there was no "substantive basis" to believe that crime had actually occurred. In her complaint, Reynolds notes, Eramo "was able to demonstrate actual subjective doubts" about the veracity of the story "because an independent investigation by the Columbia Journalism Review, which the Rolling Stone's lawyers must surely have regretted, made such doubts plain." He adds that "few future plaintiffs will be so lucky."

A ruling that the plausibility pleading standard does not apply in defamation cases, Reynolds argues, would make the process fairer to plaintiffs without overturning the actual malice test that the Supreme Court established in 1964. "Requiring plaintiffs to prove actual subjective malice by a clear and convincing evidence standard is a very high burden already," he writes. "Requiring them to also demonstrate plausible factual support at the pleading stage, before any discovery, is to make that burden almost insuperable. Rather than return libel law to its pre-1964 stage, such a ruling would merely return things to their state a decade or so ago."

In an interview with The New York Times, Dominion lawyer Rodney Smolla described the case as "an example of how plaintiffs can win—and win big—under the actual malice standard." But Smolla added that the evidence Dominion obtained through discovery was crucial. "The fact that the court here gave Dominion the opportunity to engage in discovery paved the way for the victory," he said. "This case is the ultimate example of that—it's really hard to make an actual malice case without discovery."