Happy Monday, I’m Eriq Gardner.

Welcome back to The Rainmaker, my private newsletter focused on the legal maneuvering inside Hollywood, Silicon Valley, Washington, and Wall Street.

This week, I take a look at how Fox News is playing defense in those blockbuster libel suits over the 2020 election, and share my view of how it’s likely to end. Plus: Steve Wynn’s Chinese connections, Alan Dershowitz’s cancellation, and some high-volume Jimi Hendrix.

But first…

Another story ripe for adaptation in my opinion—Ryan Murphy, call my agent—is Ike Perlmutter’s War Over Tennis Courts. It’s hard to do this one justice with a short summary, but let’s give it a try.

Perlmutter, of course, was the reclusive chairman of Marvel Entertainment who rescued the company from bankruptcy in the 1990s and sold it to Disney in 2009 for $4 billion. He later semi-retired to a swank Palm Beach community where, according to legal filings, he ended up feuding with his neighbor, Toronto businessman Harold Peerenboom, over the operation of the community’s tennis courts. (It’s a long story.) That’s when the mass mailings started going out.

Some mailings, sent anonymously to other neighbors in this community, painted Peerenboom as a sex offender, a Nazi, and a corrupt business person. Other letters, sent to more than a thousand inmates in prisons across Florida, with Peerenboom falsely listed as the sender, included provocations such as: “While your [sic] in jail, I am writing to your mom, telling her exactly what kind of scumbag you are.” If this was about control of those tennis courts, this was the nastiest way imaginable to win a local community political fight.

Peerenboom attempted to link these mailings to Perlmutter by surreptitiously lifting his DNA at a deposition. He hired Marc Kasowitz to pursue a libel suit over what was stated in those mailings. Word of a positive DNA test was leaked to The New York Times. Then, Perlmutter’s buddy Donald Trump got elected president, and Customs and Border Protection agents intercepted a “hate mail kit” that they traced to one of Peerenboom’s former employees. It appeared that the bulk of those nasty mailings hadn’t come from the Marvel guy after all. A huge twist!

Perlmutter beat the libel suit, but this war isn’t quite over. Now a Palm Beach judge is allowing Perlmutter and his wife to proceed with a malicious prosecution claim against Kasowitz’s law firm. Kasowitz argued that any suit accusing the firm of knowingly maintaining a libel claim without merit should have to await the end of the counterclaims over DNA theft as well as any Peerenboom appeal. The judge rejected a motion to dismiss. Read the decision here.

• Twitter kicked Elon Musk’s ass at the hearing to expedite. Setting an October trial date, Delaware Chancellor Kathaleen McCormick said, “The reality is delay threatens irreparable harm to the sellers.”

• Casino honcho Steve Wynn argues that delivering a message from Chinese authorities to Trump doesn’t compel him to register as a foreign agent. He says he wasn’t hiding anything and there was no ongoing relationship.

• A New York judge has set Feb. 6, 2023 as the trial date in writer Jean Carroll’s defamation suit against Donald Trump for denying sexual assault.

• Mark Zuckerberg’s Meta is facing a trademark infringement lawsuit from another Meta company that is engaged in immersive technology. Here’s the complaint, being led by attorneys at Pryor Cashman.

• Speaking of trademarks, Quidditch is now Quadball. Got it?

The first thing to understand about these libel suits is how invasive they are for Fox News. The network has already turned over minute-by-minute ratings charts, emails about ratings, MyPillow advertising revenue, most communications with the White House, internal documents that include mentions of both “Trump” and “election,” and so forth. But that’s not good enough, say Dominion’s lawyers, who are demanding to see Sean Hannity’s texts. They are also wondering why, after providing nearly a half million documents about their company, that Fox has only offered thousands of their own. A discovery referee agreed, and pushed Fox to keep digging. Meanwhile, the potential witness list is getting personal: James Murdoch was recently served a subpoena for documents and a deposition next month. Dominion wants to see communications between him and his father; between him and his brother Lachlan Murdoch; and anything that precipitated his decision two years ago to leave the company’s board.

For its part, Fox News is preparing for next year’s trial by adding Dan Webb to its legal team. A former U.S. Attorney for the Northern District of Illinois and now co-executive chairman at Winston & Strawn, Webb is perhaps best known in media circles for leading Beef Products Inc. to a huge settlement, worth at least $177 million, in the “pink slime” libel suit against ABC News. (Interestingly, his former teammate in that case, J. Erik Connolly, is spearheading Smartmatic’s lawsuit. Connolly once called Webb his mentor.) This time, Webb is on defense and is preparing to tell a jury that when the President of the United States issues statements about how a voting tech company helped steal the election, that’s “newsworthy”—and that the responsible thing for any news organization is to report the allegations first, ask questions later.

This notion that Fox News should be allowed to echo defamatory presidential statements with impunity didn’t persuade Delaware Superior Court Judge Eric Davis upon his initial review of the case late last year. At the time, Davis refused Fox’s call to adopt a “neutral reportage privilege,” meaning that media companies would have no liability for accurately and dispassionately reporting charges made by public figures.

It’s precisely those sorts of journalistic questions that are likely to be revisited at trial. Fox News might not have carte blanche, but the network could argue that giving Trump and reps like Rudy Giuliani and Sidney Powell a microphone doesn’t qualify as “actual malice”—a necessary hurdle when public figures sue for defamation. In response, Dominion will likely point to the way that some of Fox’s personnel openly disclaimed any election fraud, and the fact that the voting company served warning letters to Fox in the months after the election. Plus, of course, Dominion continues to seek evidence that Fox employees knew Trump has been lying through its teeth.

Maybe this case gets to trial and results in a mammoth verdict—let’s say $1 billion. Well, of course that result would invite an appeal, for which the defendant has already lined up star attorney Paul Clement. Wouldn’t it be ironic if Fox News pushes to make it tougher to pursue libel cases just as conservative justices like Clarence Thomas and Neil Gorsuch are teasing they’d make it easier by rolling back the “actual malice” standard articulated in Times v. Sullivan? That’d be a fascinating dynamic. But is this case really going to end with a trial verdict? I have doubts. My theory is this case will be settled.

I mention all this because I get a similar vibe from US Dominion v. Fox. What stands out to me isn’t just the huge sum of damages alleged, but the fact that this case is playing out in the liberal state of Delaware, a place where there’s no cap on punitive damages. Thomas Clare, the defamation law specialist who typically swings in conservative circles and is now representing Dominion, knows exactly what he’s doing here. He’s taken advantage of the fact that both Dominion and Fox are incorporated in Delaware to bring the case in New Castle County Superior Court, which, unlike Chancery Court, has jury trials. (The Smartmatic case, meanwhile, is being pursued in New York state court, which has a busier docket and a pretty permissive approach to pre-trial appeals. It could take a decade for Smartmatic to get to trial. The Dominion result, I think, will be more consequential for both of them.)

So we have the potential for jurors in Joe Biden’s backyard to send a message to Fox News with a massive verdict. That’s one factor, but there’s something else that, I believe, may set in motion a huge settlement, one that could top the “pink slime” case.

A month ago, Delaware Superior Court Judge Eric Davis allowed Dominion to advance in a separate libel suit against Fox Corp., the parent company of Fox News. The ruling was based, in part, on how the Murdochs have historically exercised a high level of control over editorial matters. What’s significant here is not particularly obvious. According to experts and insiders I’ve consulted, the ruling likely means that Fox Corp.’s wrap-around insurance policy comes into play.

Most media companies maintain E&O (errors & omissions) insurance to cover defamation claims. In the Pink Slime suit, for instance, ABC News had three insurers providing $50 million in coverage and a fourth providing an additional $25 million in excess coverage. (The fourth from AIG contested its obligation with the argument that ABC’s policy had a “carve-out” for situations when ABC defamed with actual malice without an advance green light from outside counsel. As far as I can tell, AIG was forced to pay up.)

Fox News surely has E&O insurance too, even if its deductibles are higher given recent history like the Seth Rich controversy. But now it probably gets to tap an additional pot of insurance money—the parent company’s umbrella policy. And this one, I hear, could have hundreds of millions available.

So now we need to factor the calculus from insurers. They’re typically risk-averse. Do insurers with a stake in the outcome really want to face a Delaware jury being told by the plaintiff to punish Fox to the tune of billions? And if there’s a reasonable settlement offer on the table, say $200-300 million, Fox might nudge them to accept by hinting they could face a bad faith claim by refusing. Meaning, the insurers would arguably be on the hook for the entire verdict regardless of the policy limit.

Finally, would Fox settle? The company may be demanding documents from Dominion during the discovery phase in an effort to prove statements like “Dominion was founded by Hugo Chavez to flip elections in Venezuela” (which is pretty much what Powell told Lou Dobbs in Dec. 2020). But I’m not getting the sense that Fox sees truth as its best defense. Instead, Fox is rallying around the freedom of the press as its strongest card. That, and a healthy bit of skepticism about the damages supposedly sustained by a voting tech firm. Is telling a jury that election conspiracies may have damaged American democracy, but not this particular plaintiff, really such a terrific hand to play at trial?

I don’t think so, and I also suspect it’s significant that Fox has been telling investors in security filings that it doesn’t expect the outcome of these cases to have a material adverse effect on the business. (See note 8.) Should the company lose big, that trial result might lead to cascading consequences. Why risk it if you can get the insurer to foot the bill and you don’t have to admit wrongdoing? That’s why I think, sooner or later, this one gets resolved without the drama. Don’t book your Wilmington airfare just yet.

• As I previously wrote, a trial begins next week over Penguin Random House’s attempt to buy Simon & Schuster. On Friday, the defendants made their trial brief publicly available for the first time in redacted form. Here’s the nut: “To block a merger under Clayton Act § 7, the government must prove that it is likely to cause a ‘substantial lessening of competition’ in a ‘line of commerce.’ Alleged harm to 85 books does not constitute a substantial lessening of competition by any definition.”

• With the fate of its antitrust exemption still under review, Major League Baseball has come to a $185 million settlement over unpaid wages for minor leaguers.

• Alan Dershowitz talks about life at Martha’s Vineyard these days.

• Steve Bannon has been found guilty of contempt of Congress.

• Jimi Hendrix’s heirs are currently in a transatlantic battle (lawsuits in both New York and the United Kingdom) over whether royalties are owed to the estates of Jimi’s former band members Noel Redding and Mitch Mitchell. Interestingly, the guys playing bass and drums in this litigation recently admitted in court filings to obtaining both third-party litigation funding as well as “after-the-event” insurance, which provides protection in case they lose and are ordered to pay Hendrix’s legal costs. Who’s backing this play against the frontman? No word yet, but stay tuned.