Smartmatic’s defamation lawsuit against Newsmax is headed to trial. What’s at stake?

The 2024 presidential election is approaching, but the legal battle over how the 2020 race was covered by right-wing channel Newsmax isn’t going away quietly.

On Sept. 30, Newsmax will head into a Delaware court to defend itself against a defamation lawsuit filed by Smartmatic, a voting machine technology company. Smartmatic says its reputation was damaged by false statements made on the network regarding voter fraud allegations in the 2020 presidential election.

Smartmatic’s suit says Newsmax provided a platform for its hosts, Donald Trump and the former president’s attorneys and allies to falsely claim that the company’s software was manipulated to deliver the election for President Biden.

Smartmatic’s equipment was used only in Los Angeles County in 2020 and not in any of the swing states that helped decide the election.

The claims were given ample airtime on Newsmax despite a lack of credible evidence of fraud and a complete rejection of Trump’s legal challenges in the courts. Smartmatic says it lost business because of the bogus statements.

“Newsmax’s own people repeatedly and intentionally lied to the public,” Smartmatic attorney Erik Connolly said. “This trial will allow the American judicial process to finally hold Newsmax accountable for knowingly peddling lies about Smartmatic.”

Newsmax countered that Trump’s claims were newsworthy and that its reporting on them was protected by the 1st Amendment. The company also issued an on-air clarification in December 2020 stating that it found no evidence that Smartmatic was involved in voting fraud.

What’s at stake?

Smartmatic is looking for substantial financial damages in the case, which could be a devastating blow to the privately held Boca Raton, Fla.-based Newsmax.

Smartmatic’s lawsuit originally sought $1.7 billion in damages, according to Newsmax attorney Howard Cooper, who said the figure is now between $400 million and $600 million. Smartmatic is limiting the damages to the period between 2021 and 2023 as a current federal investigation of the company is not put into evidence.

A huge award could be fatal to Newsmax. Cooper described the case as “bet the company” litigation at a pretrial hearing Monday.

Fox News settled a similar defamation case with Dominion Voting Systems, agreeing to pay $787 million just before the trial was set to begin in April 2023. But parent company Fox Corp. had billions in cash on hand at the time and sustained only a single quarterly loss due to the payment.

Earlier this year, Newsmax filed for an initial public offering to raise $75 million and a private placement to generate additional capital. The investor presentation said the company expects to take in revenue of $180.5 million in 2024.

The network, launched in 2014, has no blue-chip advertisers, depending largely on direct marketers such as MyPillow.com for ad revenue, and has battled with pay-TV operators to get compensated for its programming.

Year-to-date, Newsmax is averaging 280,000 viewers in prime time compared with more than 2 million for ratings leader Fox News, according to Nielsen data.

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Will Dominion’s settlement with Fox News have any influence?

Smartmatic’s suit will be tried before Judge Eric M. Davis, the jurist who heard Dominion’s case against Fox News. Davis ruled that Fox News aired false statements in its coverage of former President Trump’s claims that the election was rigged to help President Biden. A jury was selected to decide on damages before a settlement was reached.

Davis has ruled that the settlement will not be admissible as evidence in the Smartmatic-Newsmax case.

Davis found that Newsmax aired false statements about Smartmatic’s role in the election. But he did not rule on whether this was done with intent to harm the company. The jury will be asked to answer that question and decide on a financial judgment if Newsmax is found guilty.

How could Smartmatic’s history come into play?

Smartmatic‘s attorneys want to keep the jury from hearing about the federal investigation of its executives for allegedly bribing officials in the Philippines. The company has not been charged but remains under investigation.

Smartmatic President Roger Piñate and two other employees were indicted by the U.S. Department of Justice in August for allegedly making illegal payments to a former Philippines elections commissioner in order to get its voting machines and services used in the country’s 2016 election.

Davis ruled in the pretrial hearing that he will not allow the recent indictments to be presented in court, but there is still a possibility they could come up. (Smartmatic reduced its damages claim to keep the investigation from being presented as evidence.)

Newsmax is expected to cite Smartmatic’s other legal issues as the reason for its losing business, rather than the network’s five weeks of coverage of Trump’s false election fraud claims in 2020.

“The Department of Justice alleged Smartmatic executives engaged in money laundering and allegedly bribed an election official,” a Newsmax representative said in a statement when the indictment was handed down. “Smartmatic can hardly claim that Newsmax’s coverage harmed its reputation. This case is not about the left versus right, but about a free press being allowed to do its job.”

Smartmatic said the federal investigation is unrelated to voter fraud, which is what Newsmax discussed on its air.

What Smartmatic’s suit against Newsmax means to Fox News

Executives and attorneys at Fox News will be watching the proceedings with much interest, as Smartmatic also has a $2.7-billion defamation suit against the Murdoch-controlled network that could go to trial in New York next year. In pretrial hearings, attorneys for Fox News have attacked the size of the damages Smartmatic is seeking.

By settling its case with Dominion, Fox News avoided having Rupert Murdoch and its on-air stars such as Sean Hannity called as witnesses. But with the Smartmatic case moving forward, jurors could see Newsmax personalities such as Greg Kelly on the witness stand.