From Khalil v. Fox Corp., decided Monday by Judge Louis Stanton (S.D.N.Y.):
The plaintiff in this action is Majed Khalil, a Venezuelan businessman. During the course of the events giving rise to this action, he was also referred to as "Khalil Majed Mazoud." Defendants in this case are Lou Dobbs, Fox Corporation and Fox News Network, LLC. Defendant Lou Dobbs is a Fox personality, who hosted the show Lou Dobbs Tonight. Defendant Fox News Network, LLC is wholly owned by Defendant Fox Corporation …. The Complaint alleges that Dobbs was under contract with Fox during the time period when the allegedly defamatory remarks were made. The Complaint also alleges that Fox controlled multiple social media accounts related to Lou Dobbs, including a Twitter account in Dobbs' name, which has millions of followers.
The allegations in the Complaint stem from statements made by Lou Dobbs and Sidney Powell on Lou Dobbs Tonight and related Twitter posts following the 2020 election. During the show, the Complaint alleges that Dobbs held himself as a reporter of facts, not opinion. Fox described his show as "the #1 program on any business network among total viewers."
On November 7, 2020, Fox projected that President Trump lost the 2020 Presidential Election. Almost immediately following the election, Fox news channels, which generally cater to a conservative audience, began to report on theories that the election was fraudulent. One such theory of election fraud centered around two voting machine companies, Dominion Voting Systems … and Smartmatic Corporation …, which were allegedly formed by various individuals from Venezuela with the purpose of rigging elections.
Many of the accusations against Dominion and Smartmatic stemmed from Sidney Powell, who appeared repeatedly as a guest on Fox television programs, including Lou Dobbs Tonight. Powell told Fox viewers that Dominion was using software to either flip votes from votes for then-President Trump to Joe Biden or to simply add votes for Joe Biden. However, many prominent politicians, organizations, and government agencies countered Powell's narrative of the 2020 election, referring to her theories as "insane," "a national embarrassment," "unhinged," and "crazy." Even then-President Trump's campaign team distanced itself from her, stating, "Sidney Powell is practicing law on her own. She is not a member of the Trump Legal Team. She is also not a lawyer for the President in his personal capacity."
Both Dominion and Smartmatic also took steps to clarify that they were not involved in an election-rigging scheme. As early as November 12, 2020, Dominion began circulating a series of emails entitled, "SETTING THE RECORD STRAIGHT: FACTS & RUMORS" that contained links to independent sources disproving the false claims about Dominion's alleged role in rigging the election. These emails were sent to Fox reporters and producers. A Dominion representative also spoke with Fox Executive Editor Jay Wallace about the false information being spread about Dominion. Smartmatic emailed with Fox Business Network and informed Dobbs' coordinating producer that Smartmatic only provided software to support Los Angeles County in the election, and not—as Fox claimed—to the state of Georgia.
Furthermore, several election experts in November publicly stated that there was no credible evidence that the 2020 election was compromised through a computer alteration scheme.
Nonetheless, on December 10, 2020, the @LouDobbs account, run by Fox, tweeted, "the 2020 Election is a Cyber Pearl Harbor: The leftwing establishment have aligned their forces to overthrow the United States government #MAGA #AmericaFirst #Dobbs." In the tweet, the account posted a document, which refers to Khalil as one of "four names" "people need to get familiar with," and claims that Khalil is "a Venezuelan of Lebanese origin, who is the right hand and business front man of Jorge Rodriguez. He has been the effective 'COO' of the election project, under Chavez and Maduro. Khalil is a liaison with Hezbollah."
The document posted further stated, "We have a warning to the mainstream media: you have purposely sided with the forces that are trying to overthrow the US system. These four people and their collaborators executed an electoral 9-11 against the United States, with the cooperation and collusion of the media and the Democrat Party and China. It is a cyber Pearl Harbor. We have identities, roles, and background of Dominion. Smartmatic people. This will turn into a massive RICO filing. It is Smartmatic, Dominion Voting Systems, Sequoia, SGO … We have technical presentations that prove there is an embedded controller in every Dominion machine… We have the architecture and systems, that show how the machines can be controlled from external sources, via the internet, in violation of voting standards, Federal law, state laws, and contracts."
According to the Complaint, the document had no indication that it was authored or originated from a source other than the defendants. The Complaint alleges that those statements regarding Khalil were all false.
Later that day, Dobbs hosted Powell during his on-air show, telling viewers that Powell would discuss a "Pearl Harbor style cyber-attack on the 2020 election." Dobbs then displayed a graphic with the title "Four Names You Need to Know According to Sidney Powell," which included Khalil's name and referred to him as a "Rodriguez front man." Dobbs asked Powell, "you say these four individuals led the effort to rig this election. How did they do it?" Powell responded by accusing Khalil, along with three other individuals, of having "designed and developed the Smartmatic and Dominion programs and machines that include a controller module that allows people to log in and manipulate the vote even as it's happening."
Dobbs told Powell he would "like to put up this element from your investigation if we could have that full screen up so that we could all go through that with the audience. Because it's important as we look at these four names, we're talking about very large, a very large foreign intrusion and interference in the, in the election of 2020." At the end of the show, Dobbs informed Powell that he would "gladly put forward your evidence that supports your claim that this was a cyber Pearl Harbor, we have tremendous evidence already… of fraud in this election but I will be glad to put forward on this broadcast whatever evidence you have."
After the show was broadcast, Fox and Dobbs posted videos on Twitter with the caption that "@SidneyPowelll reveals groundbreaking new evidence indicating our Presidential election came under massive cyber-attack orchestrated with the help of Dominion, Smartmatic and foreign adversaries." The Complaint alleges that no such evidence was ever revealed and never existed.
The Complaint alleges that none of the Defendants ever approached Khalil to seek confirmation or denial of the claims against him regarding election fraud.
The court denied defendants' motion to dismiss, reasoning that plaintiff had sufficiently alleged that the statements were false, defamatory, and factual assertions rather than opinions. It also rejected defendant's "fair report" defense:
The Fair Report doctrine is codified in New York law. Under Section 74 of the New York Civil Rights Law, "a civil action cannot be maintained against any person, firm or corporation, for the publication of a fair and true report of any judicial proceeding, legislative proceeding or other official proceeding, or for any heading of the report which is a fair and true headnote of the statement published." …
While Defendants argue that the challenged statements constitute a report on an "ongoing investigation into electoral fraud, seemingly at the President's behest," this argument fails. Powell was not working on a case in an official capacity nor on behalf of a public agency during her investigation. In fact, on November 22, 2020, well before the December 10, 2020 statements, the Trump Campaign released a statement stating that "Sidney Powell is practicing law on her own. She is not a member of the Trump Legal Team. She is also not a lawyer for the President in his personal capacity."
More damning, however, is that at no point did Dobbs or Powell attribute the statements about Khalil to an official investigation or a judicial proceeding. A reasonable observer would have no grounds to believe that her statements constituted a report of an official proceeding.
And it rejected defendant's "neutral report" defense:
The parties dispute whether the Neutral Report doctrine will apply in this Court. However, it is unnecessary to reach that issue because even assuming, arguendo, that the doctrine does apply, it does not protect the Defendants in this action.
Under the Neutral Report doctrine, "when a responsible, prominent organization makes serious charges against a public figure, the First Amendment protects the accurate and disinterested reporting of those charges, regardless of the reporter's private views regarding their validity." Edwards v. National Audubon Soc'y (2d Cir. 1977). While the "Edwards opinion did not attempt precise definition" of the Neutral Report doctrine, the Second Circuit has provided other examples of when doctrine may apply, such as when "the public interest in being fully informed about such controversies that rage around sensitive issues demands that the press be afforded the freedom to report such charges without assuming responsibility for them." "It is equally clear, however that a publisher who in fact espouses or concurs in the charges made by others or who deliberately distorts these statements to launch a personal attack of his own on a public figure, cannot reply on a privilege of neutral reportage."
The doctrine is inapplicable here. The charge on which Dobbs and Fox News Corp were reporting was not made by a "responsible, prominent organization," rendering this case distinct from Edwards. As alleged in the Complaint, Sidney Powell was not a responsible source. Several election experts and government agencies had already debunked her theories of election fraud well before the challenged statements were made.
Even if Defendants could successfully show that their statements should be protected due to the public interest in being fully informed about "sensitive issues," they cannot avail themselves of the doctrine because the Complaint adequately alleges that Defendants espoused and concurred in the charges….
The Neutral Report Doctrine also requires that the challenged statements be neutral and dispassionate. The Complaint alleges facts which support a reasonable inference that the Dobb's reporting was neither accurate nor dispassionate. Rhetoric such as "9-11" and "Cyber Pearl Harbor" is impassioned advocacy, which makes this privilege inapplicable.
Furthermore, … Mr. Khalil is not a public figure, rendering the neutral report doctrine inapplicable. While defendants argue that Edwards should not be limited to its facts, it would be an extension of Edwards to apply it to a private figure. The Second Circuit has resisted extending Edwards to a private figure. The Court declines to extend Edwards here as well.
Finally, though Khalil was a private figure, New York law requires the application of the actual malice test to all statements on matters of public concern, whether or not about public figures; but the court said actual malice (meaning knowing or reckless falsehood) was adequately alleged:
To adequately pled actual malice, the plaintiff must show that a false statement of fact was made "with the knowledge that the statement was false or with reckless disregard to whether or not it was true." To satisfy the "reckless disregard" standard, a defendant must have made the false publication with a "high degree of awareness of … probable falsity," or must have "entertained serious doubts as to the truth of his publication." While mere allegations of negligence or "failure to investigate" are not enough to meet the actual malice standard, "the purposeful avoidance of the truth is in a different category."
"The Supreme Court has provided several factors to consider when determining whether a speaker acted with actual malice: (1) whether a story is fabricated or is based wholly on an unverified, anonymous source, (2) whether the defendant's allegations are so inherently improbable that only a reckless person would have put them in circulation, or (3) whether there are obvious reasons to doubt the veracity of the informant or the accuracy of his reports." This analysis typically requires discovery.
Here, Defendants repeatedly maintained their claims about Khalil long after Powell's election fraud theories were challenged. Numerous reports that declared the falsity of the claims against Dominion and Smartmatic and rejected Powell as an accurate source of information gave Defendants reasons to doubt Powell's veracity and the accuracy of her reports. While the complaint does not allege that the Khalil himself informed Defendants of the falsity of the claims against him, both Smartmatic and Dominion did so. Falsity of the claims against both companies would necessitate falsity of the claims against Plaintiff. Several government agencies stated that there was no evidence of fraud in the election, and even then-President Trump supporters rejected Powell's accusations.
While Defendant's failure to seek Khalil's comment on the statements standing alone is not enough to meet the actual malice requirement. However, the Complaint adequately alleges that the defendants purposefully avoided the truth, given the amount of public information regarding the lack of fraud in the election.
Plaintiffs have alleged enough facts in the complaint to survive a motion to dismiss and obtain discovery.
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