A New York appeals court handed a significant procedural victory to Fox News on Thursday, ruling that the network can dig into how a federal criminal indictment against Smartmatic has affected the voting technology company’s business value.
The decision from the Appellate Division, First Department, effectively reopens the discovery phase of the massive defamation lawsuit.
The court found that recent criminal allegations involving Smartmatic’s activities in Los Angeles County and Venezuela are fair game for Fox’s legal team as they prepare their defense.
This ruling hinges on a “superseding indictment” that added Smartmatic as a defendant in a federal case. The justices called the development “unusual and unanticipated,” noting that preventing Fox from investigating the impact of these criminal charges would cause “substantial prejudice” to the network’s case.
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In a statement following the ruling, FOX News Media expressed satisfaction with the outcome.
“We are pleased with the court’s decision to grant our request to conduct discovery into the impact on Smartmatic’s business of its indictment and allegations in the criminal case involving Smartmatic’s business activities in Los Angeles County,” the company said.
The legal battle stems from Smartmatic’s claim that Fox News defamed the company by airing false reports of vote-rigging during the 2020 U.S. Presidential election. Fox, however, argued that Smartmatic’s business reputation and “lost profits” may have been damaged by its own legal troubles rather than the network’s broadcasts.
The appellate judges agreed that while the criminal case—which involves separate bribery and money-laundering allegations in the Philippines—doesn’t prove or disprove the defamation claims, it is “plainly relevant” to how much money Smartmatic actually lost.
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The court’s order specifically clears the way for Fox to investigate allegations of misconduct in both Venezuela and Los Angeles County. Previously, a lower court official had limited the scope of what Fox could look into, but the appeals court overruled that distinction, stating that both jurisdictions were part of the new substantive allegations against the voting company.
While Fox won the right to more information, the court stopped short of pausing the entire lawsuit. It denied Fox’s request to stay the proceedings until the criminal trial concludes, noting that the two cases involve different sets of facts and legal issues.
For now, the “note of issue”—the document signaling that a case is ready for trial—has been vacated. This ensures that Fox’s lawyers have the time they need to pursue this new line of questioning before the parties head to a jury.
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