The defamation action by Dominion (makers of voting machines in the US) over Fox News was settled today for US$787.5 million, just under half of what Dominion had sought in its lawsuit.

So what can one say about this? Short answer: I’m not sure.

If it had proceeded to trial, Fox would have relied on the First Amendment free speech jurisprudence developed by the Supreme Court of the United States, most notably Times v Sullivan decided in 1964 at the height of the US civil rights movement. In 1960 the NY Times had run an ad by those supporting Martin Luther King that had criticised the police in Montgomery, Alabama. The ad had some factual errors (picayune ones about what song the protesters had sung and the number of arrests and things of that sort). The Montgomery police commissioner sued for damages. The judge in Montgomery, Alabama ruled the errors had been defamatory and the jury awarded half a million in damages (about US$5 million in today’s moolah). The NY Times took the case all the way to the Supreme Court, which took four years. And there the Justices of the Supreme Court held that suing in defamation, if it’s a public figure who is suing, required the plaintiff to show actual malice (basically, that they knew what they were publishing was false) or a reckless disregard for whether it was true or not. Actually, one of the Supreme Court Justices would have made it flat-out impossible for a public figure to sue for defamation, full stop, such was his commitment to free speech.

At any rate, that’s the basic test still in play in the US – malice in the sense of knowingly lying or a reckless disregard for whether what was published was true or not. And on that test you can take it from me that it’s very, very hard to win as a suing plaintiff. But be clear, by that I mean that if the defendant has the money to go all the way to the top court it’s hard for a plaintiff to win. You can certainly win damages from juries at first instance where the lie of the land is favourable to the plaintiff – which, of course, was precisely what the US Supreme Court recognised was happening in Alabama in the late 1950s and early 1960s where juries were incredibly hostile to Martin Luther King and the civil rights protesters and uber sympathetic to sheriff plaintiffs. To guard against that you get this very high bar for plaintiffs to have to pass over.

So why the settlement by Fox? Again, who knows? On the legal test alone Dominion had a very hard row to hoe. On the other hand, of course, the lawsuit was in Delaware. The jury was in Delaware. Some well-known politician (who is that again?) is from Delaware. Delaware leans so far to the Democrats that you have to go back to Dukakis in 1988 to find a Presidential election when Delaware plumped for the Republican candidate. So perhaps Rupert and Fox quite plausibly expected a bad jury result. And then on top of that we need to know if Fox News had defamation insurance or not. I have no idea but be clear, this matters. Want to know why News Corp and Andrew Bolt never appealed the woeful s.18c hate speech decision Bolt lost? Well, I’m guessing they had defamation insurance and the insurer didn’t want to appeal. But again, I really don’t know if Fox had defamation insurance and if so whether it would cover this case.

Then there were the emails of Tucker Carlson and other Fox presenters saying they thought the claims against Dominion were false. That alone, though, wouldn’t get you over the Times v Sullivan threshold as any news publisher will regularly have to run claims made by people where the publisher disagrees with those claims. Otherwise we really would be living in a pandemic-type state with only ‘approved’ statements being allowed to be aired. Or, maybe Rupert Murdoch didn’t want to be forced to testify?

Then there is the background issue of costs. In the entire anglosphere outside the US we have the British costs rule. Sue someone and win and the loser pays your legal costs (or, in fact, about 2/3 of your costs). Likewise, sue someone and lose and you pay their legal costs (or, again, about 2/3 or their costs). This is the rule here, in Canada, India, Singapore, Britain, but not the US. In the US, each side pays its own legal costs. This opens up way more lawsuits that a British ‘costs rule’ would deter. But it also opens up a bit of lawfare. When I started my first university job in Hong Kong my next door neighbour was an American woman who’d been a Wall Street corporate litigator, usually defending actions. She’d tell me that regularly her clients would be sued for big figure amounts but then a settlement would be offered just a bit less than what it would cost the company to defend the action. And the hard-nosed business calculation would be to settle – because the US has no ‘costs rule’. Of course even going to the US Supreme Court would not cost Fox US $787.5 million. But it would run into a very big number.

So in the end Rupert and Fox decided it was better to settle (with no apology or admission of wrongdoing beyond the perfunctory reciting of what the judge had said). That’s not my cup of tea. My personality is never to settle if I think I’m in the right, consequences be damned. But that sort of loose-cannon approach does not make for the best business outcomes. One thing we know for sure is that Rupert Murdoch is a genius businessman.

One other thing we know for sure. This settlement will be trumpeted on CNN and the old establishment media outlets that all lean left as an indictment of Fox with its much, much higher TV ratings. Rupert is probably betting those lefty gloatings won’t diminish his Fox ratings one iota (currently Fox’s ratings are higher than CNN and MSNBC combined) and anyway, he’s got an upcoming 2024 election looming with a Republican party whose base loves Trump. In fact, after the bogus Manhattan indictment, Trump is now the big frontrunner to win the Republican Presidential nomination for next year’s election. One thing we all know for certain is that Trump helps ratings on both sides of the political divide.

That’s about the extent of what I can say about this very, very large payout by Fox News.