Smartmatic USA Corp. et al. v Fox Corporation et al.
Attorneys and Parties
Brief Summary
This is a media-defamation and damages-discovery dispute arising from Smartmatic's claims that Fox falsely reported Smartmatic helped rig the 2020 United States presidential election, while a separate federal criminal case alleged bribery and money-laundering misconduct by Smartmatic and its executives.
The lower court denied defendants' request to partially vacate the Judicial Hearing Officer (JHO) report, denied a stay pending the federal criminal case, and refused to vacate the note of issue except as limited by the JHO's existing discovery rulings.
The Appellate Division modified the order to allow defendants discovery concerning allegations in the federal criminal proceeding related to Los Angeles County, in the same manner discovery had already been allowed as to Venezuela, and vacated the note of issue for the limited purpose of permitting discovery into how the superseding indictment affected plaintiffs' business.
A full stay was unwarranted because the criminal case involved different alleged misconduct and would not decide the defamation issues here. But the superseding indictment adding Smartmatic as a criminal defendant was an unusual and unanticipated circumstance that could substantially prejudice defendants on damages issues, making limited additional discovery proper under Uniform Rules for Trial Courts (22 NYCRR) § 202.21(e) [rule permitting vacatur of a note of issue upon a showing of good cause] and § 202.21(d) [rule governing additional post-note-of-issue discovery].
Background
Smartmatic sued Fox and related defendants for defamation, alleging Fox falsely accused it of vote-rigging in the 2020 election. Separately, federal prosecutors brought a criminal case accusing Smartmatic and certain executives of violating the Foreign Corrupt Practices Act (FCPA) through bribery connected to a 2016 election in the Philippines. During discovery in the civil case, Smartmatic executives repeatedly invoked the Fifth Amendment. A superseding indictment later added Smartmatic itself as a criminal defendant, and the federal government also filed an August 1, 2025 evidentiary notice describing alleged conduct involving Venezuela and Los Angeles County. Fox sought a stay of the civil action and broader discovery into those allegations because of their potential effect on Smartmatic's claimed lost profits and business damages.
Lower Court Decision
The motion court left in place the JHO's approach, which denied a stay, permitted discovery only into the effect of certain criminal allegations on Smartmatic's business, and drew a line between allegations involving Venezuela and those involving Los Angeles County. It also declined to vacate the note of issue more broadly.
Appellate Division Reversal
The Appellate Division agreed that no stay should issue, holding that the traditional stay factors such as inconsistent adjudications, duplication of proof, and waste of resources were not present because the federal criminal case concerned different alleged conduct and would not resolve the civil defamation claims. However, it held that the lower court should not have treated Venezuela differently from Los Angeles County in evaluating discovery related to the federal evidentiary notice. Because the superseding indictment newly named Smartmatic and could materially affect its business and lost-profits claims, the court vacated the note of issue on a limited basis and allowed discovery into the impact of both sets of allegations, while still barring discovery into whether the criminal allegations were actually true.
Legal Significance
The decision reinforces that a parallel criminal case does not automatically justify staying a civil defamation action, even when corporate executives invoke the Fifth Amendment. At the same time, it confirms that when a superseding indictment creates unusual and unanticipated circumstances, limited post-note-of-issue discovery may be ordered if the new criminal allegations are relevant to claimed damages. The ruling also clarifies that discovery may focus on the business impact of criminal allegations without opening the door to litigating the truth of those allegations in the civil action.
Fox did not get a full halt to the Smartmatic defamation case, but it did win targeted extra discovery: defendants may explore how the superseding federal indictment, including allegations tied to Los Angeles County and Venezuela, affected Smartmatic's business and damages claims.