Inside the Murdoch-Dominion Settlement Chatter

The wallet buster for Fox and the Murdochs in Dominion v. Fox News will whittle down to two calculations: putative damages, and alleged “diminution of enterprise value.”
The real wallet buster for Fox and the Murdochs will whittle down to two calculations: putative damages and alleged “diminution of enterprise value.” Photo: Justin Tallis/AFP
Eriq Gardner
March 13, 2023

Perhaps the greatest legal mystery in Dominion’s $1.6 billion lawsuit is why Fox News hasn’t yet settled to make this P.R. nightmare go away. Tucker Carlson’s texts and Rupert Murdoch’s deposition, in particular, have been an unprecedented embarrassment for the network, evidencing not only the cynicism behind Fox’s decision to air 2020 election nonsense, but also the contempt of its hosts for their own audiences. But as I wrote last month, this case is not quite as straightforward as most think. It’s not just about whether Fox News defamed Dominion, or about the sanctity of the First Amendment. If liability was the sole issue, I bet this dispute would have settled by now. 

Instead, lawyers on both sides are currently gaming out what they can achieve at trial and on appeal. After all, Fox isn’t seriously contesting that lies were told on its shows in the aftermath of Trump’s loss. Sure, it’s challenging how many lies there were, and who should be faulted for what the ex-president’s lawyers were saying, but Fox’s attorneys know they’ll be defending culpability in front of a jury in Delaware, which is only slightly better than arguing before a panel of CNN talking heads. And Fox is perfectly capable of throwing money (or its insurers’ money) to make a legal problem over a big lie go away, as it did with Seth Rich.

As for Dominion, I’ve heard the chatter that the company is eager for a trial showdown to publicly shame Fox for lying through its teeth. I don’t think that’s a perfect read on the situation, though. Dominion has already achieved that, especially now that the evidence has been showcased in the media. The punditocracy has rendered its verdict, and the only ones left to convince are Trump supporters, whose likelihood of ever being persuaded here seems roughly equivalent to all four No. 1 seeds in the NCAA Tournament losing in the opening round.

So what’s the real hold up to a negotiated resolution? A dollar figure, of course. Naturally, everyone involved is looking at Dominion’s unusually large damages target with very different expectations for what a trial and subsequent appeal would deliver. Right now, either Dominion or Fox is misjudging the financial situation, and it’s not obvious to me which side is making the error. Maybe the judge’s summary judgment rulings, after a hearing next week, will provide more clarity by narrowing the scope of the battle. But if no deal arrives to avert a trial scheduled to last six weeks, I’d expect both sides to continually assess whether rejecting the best offer remains the wisest course. A start doesn’t necessarily mean a finish. There’s even precedent for a large settlement coming suddenly in the middle of a big libel trial against a media company.

Dominion’s Math

The number that keeps getting mindlessly repeated ad nauseam is $1.6 billion, although nobody seems to want to accept that this headline figure is a bit of a tease. Sure, it was in the complaint, but the true value of Dominion v. Fox is whatever a jury says. Maybe it’s $1.6 billion. Perhaps it’s $1.6 trillion. Or maybe it’s $15.9 million, which represents the value of canceled contracts from Dominion’s customers frightened by Trump supporters, according to the company’s own damages expert.

Dominion better hope the verdict is more than $15.9 million: Based on the $12.5 million that Dominion reports it spent on legal fees through October, plus the cash it’s currently burning on lawyers (roughly half a million dollars per month), the expense of this case has almost certainly surpassed $15.9 million already, with the price of a six-week trial still to come. Maybe a jury adds these out-of-pocket costs to Fox’s tab. Maybe.

The real Murdoch wallet busters—and the reason why Dominion is willing to invest in what very well could become the most expensive defamation lawsuit in American history—comes down to two calculations. The first is what Dominion claims to be its “diminution of enterprise value.” That, allegedly, is $921 million, a figure that Fox ridicules in its court papers as resting on the “implausible assumption that Dominion, a thriving enterprise that has gained, not lost, customers since the 2020 election, will somehow lose all its customers and go out of business by 2031.” Fox argues that Dominion can’t substantiate this astronomical sum and wants a judge to rule on summary judgment that it’s out of bounds. Dominion, which also counts $72 million in “lost opportunities,” responds that the attack on its damages theory “goes to the quantum of harm, not its existence” and thus this factual issue should go to a jury. Although receiving scant attention in the press, a judge’s direction on this billion-dollar point could very well shake up the calculus for each side on the upside and risk of going to trial.

Second, there’s the beckoning controversy over punitive damages. That would be the form of punishment that’s meant to send a message that deters the defendant from behaving inappropriately again. Interestingly enough, for all the attention that everyone (especially legal pundits) pay to the need for a public figure plaintiff like Dominion to prove “actual malice” (knowledge of falsity or reckless disregard of the truth), Fox argues that punitive damages are only available if Dominion demonstrates “common law malice,” meaning that the network basically intended to cause it harm. Dominion disagrees, and the judge will soon clarify. 

In Delaware, there’s no explicit cap on how much punitive damages a jury may assess, but as I explained a few weeks ago, the Supreme Court has previously instructed that there should not be a big difference between a plaintiff’s actual harm and the size of the punitive award. At most, the Constitution implicitly tolerates a single digit multiplier, justices once suggested, which is another reason why that question over the diminished value of Dominion’s business is so consequential. It may also factor in the assessment of punitive damages.

This all leads to one ironic but entirely plausible scenario that I can’t get out of my head. It’s that Dominion successfully convinces the judge and jury that Fox News knowingly spread falsehoods about its role in the 2020 election, but Dominion is only able to score damages closely tied to lost contracts. A legal victory thus becomes a financial loss for the plaintiff, leading Fox News executives and pundits to spin anyone who will listen that it actually won at trial. That fate would certainly be a teachable denouement.