May 1, 2023 - Economy

Exclusive: Dominion Voting Systems tells its Fox News lawsuit story

Photo illustration of the US Capitol, Fox News logos, US flags and Dominion Voting's logo.

Photo illustration: Shoshana Gordon/Axios. Photos: Spencer Platt, Samuel Corum, Brendan Smialowski/AFP, Kent Nishimura/Los Angeles Times via Getty Images

Fox News, one of America's most powerful media companies, earlier this month agreed to pay $787.5 million to settle a $1.6 billion defamation lawsuit brought by Dominion Voting Systems, related to false statements made about Dominion on Fox's air.

Oral history: What follows is an edited transcript of an exclusive interview with three of Dominion's key players, including its CEO, private equity owner and outside attorney on the Fox case.

  • They discuss Dominion from founding to the 2020 election to now, including death threats, loss of customers and the post-settlement firing of Tucker Carlson.

The beginning

John Poulos, CEO of Dominion Voting Systems: We founded the company in 2003. The first check was from my sister for $50,000. We survived and grew in the following years, really relying on friends and family.

By the time we got to 2017, heading into 2018, two things happened: One was the friends and family were looking for an exit. We hadn't distributed anything, not even a dollar to our investors, even though we had grown substantially.

So we hired an investment bank in late 2017. They identified a number of interested parties, one of which was a strategic that wanted to buy 100% of the equity. We weren't interested. As part of that process, I met Hootan.

Hootan Yaghoobzadeh, co-founder of Staple Street Capital: I remember the first dinner we had with John. It became very clear that he had a very clear road map to transform his company and take it to another level.

Poulos: We executed the transaction in mid-2018. Me and my leadership staff kept our same stake in the company, but we replaced our friends and family.

Yaghoobzadeh: Dominion had a phenomenal reputation in the marketplace. We did a survey and Dominion had double the net promoter score of its main competitor.

The company was founded in Toronto, and relocated its headquarters to Denver in 2010 after some acquisitions.

Poulos: One of the goals in 2018 was we wanted to have a U.S. buyer be the control interest of Dominion, which we accomplished with [New York-based] Staple Street.

We had a phenomenal two and a half years, pretty much as soon as that transaction closed. The word of mouth from customers that had switched to Dominion and gone through implementation cycles was providing feedback to other jurisdictions, so not only were we able to refresh our existing customer base but we were also capturing new market share going into November 2020.

Yaghoobzadeh: Management grew the business by 4.5 times. But once the defamation happened, the world collapsed for us.

Dominion machines being tested in Michigan in July 2022.
Dominion machines being tested in July 2022 by Michigan election workers. Photo : Jeff Kowalsky/AFP via Getty Image.

November 2020

Poulos: We had obviously heard a lot of talk about the absentee ballots. But really it was Nov. 8 when we got the first view of, "Wow, they are really unfairly targeting Dominion."

Yaghoobzadeh: It was the Maria Bartiromo show when she had Sidney Powell on. I was in absolute shock.

I'm an immigrant to the country. I came here when I was five from Iran. My parents kind of just fled over a weekend, right around Iranian Revolution, because we were Jewish and fearful of persecution. They saw a revolution happen in that country and they decided to leave.

So my parents showed up on my doorstep after watching Maria's show. They were just real fearful; they saw the first signs of seeds of that happening here, and somehow their son was responsible for it.

They were pleading with me, "How do we get out of this country?" It took some conversations to calm them down, but it was sort of nostalgic and reminiscent of those of those days and I think that really gave us the backbone to stand up ... and make sure the record gets set straight.

Fox host Maria Bartiromo and Trump attorney Sidney Powell.
Maria Bartiromo (left) and Sidney Powell (right).

Poulos: We thought we were prepared and the fact is we were completely unprepared. Never in our wildest dreams did we anticipate this happening.

We had an employee getting a noose thrown on their front lawn. We had very detailed death threats that would be called in with employees' specific addresses.

Most of our employees were helping election officials. In a lot of cases that was in the field. That's a very difficult task in the best of times. In this case, it was just unbelievably difficult.

We did speak with our employees fairly regularly. We did so with video verification Zoom calls to alert them of what we knew and what we didn't know and what we were doing about it. And part of what we were doing was hiring a third-party security company for monitoring active threats. It was very, very scary.

Yaghoobzadeh: We were just in disbelief the entire period of time and it was impossible to anticipate what to expect the next day. The record was being set straight for them, but they continued to double down and triple down, we said OK, they're putting their head in the sand.

There were so many egregious comments that were being made so vacantly, just so wrong that there was just no feasible way that any of this stuff could be true. Crazy claims like Hugo Chavez and computers in Spain.

The lawsuit

Stephen Shackelford, partner at Susman Godfrey LLP: We were involved in numerous different litigations after the election trying to fend off the false claims of fraud from people like Sidney Powell. So we were deep into all this and saw what was happening to Dominion.

We connected a few days before [January 6, 2021] for the first time with John and Hootan and began discussions about coming on board to lead the legal challenge. The main thing we felt was these are really good people and they're going through hell.

Poulos: January 6th didn't really impact [our decision to sue].

Shackelford: At the point we started talking to Dominion, they were already in the process of filing cases. They had more cases they were considering, including the Fox case that ultimately they filed when we came on board in March. We saw it as an opportunity to do something that could be important more broadly, not just for our client, but for the country as a whole.

Protesters storm the Capitol Building on January 6, 2021.
Photo: Eric Lee/Bloomberg via Getty Images.

The business impact

Poulos: It was immediate. I had customers calling in the middle of procurement saying, "Boy, there's no way that I could buy from you." We saw customers that had initiated their renewals prior to the defamation and were in the last stages of the formal approval. After the defamation, as soon as December 2020, they had their funding pulled by their boards.

Shackelford: They had longtime customers that wouldn't talk to them, wouldn't let them send people on site anymore.

The momentum kept building and we've seen it all the way up until the eve of the Fox trial. Dominion has had people canceling contracts early in the contracts, in the middle of contracts, which had never happened before in this way.

Yaghoobzadeh: We really had to worry about, and continue to worry about, employee retention. It's tough to convince someone to come and work in a company that's being accused of treason. The main asset of the company that we bought, its reputation, turned out to be the biggest liability. It was toxic and it was contagious.

Poulos: When a significant portion of the population, regardless of whether they are in a red or blue state, believe what they saw on their trusted media stations, it’s almost impervious to objective truths.

Inside Fox News

Shackelford: There were a lot of smoking gun documents in the case. For instance, the Rupert Murdoch text about when he was watching the Nov. 19 press conference and saying that was terrible stuff. He knew the truth and yet his enormous asset, Fox News, kept broadcasting the lies. The Tucker Carlson texts where it took him no time at all to figure out that the software stuff was absurd.

It was obvious to everybody that this was crazy and we expected to see internal acknowledgment that this was crazy and false. And that's what we ended up seeing in the end.

Rupert and Lachlan Murdoch.
Rupert Murdoch and Fox Corp. CEO Lachlan Murdoch in 2018. Photo: David Paul Morris/Bloomberg via Getty Images.

Yaghoobzadeh: We made sure that all the attorneys understood that settlement was like a curse word. We didn't want to talk about it.

Our strategy was to go to trial, get to a verdict and accomplish three goals, which were to make sure the truth got exposed, kept Fox accountable, and that we were compensated for the damages they inflicted.

Shackelford: We had a court-ordered mediation in December, although I don't want to answer any questions that would put us crossways with the confidentiality of that process.

The best thing they could have done, which they still could do, is to go on to all their shows where they broadcast these lies and, in a believable way that's not like a hostage video, tell their audience the truth. And maybe things might have been somewhat different had they done that at any point, let alone early on.

Settlement talks

On Friday, April 7, the court encouraged one last effort at mediation.

Yaghoobzadeh: Even though we were kind of reluctantly brought to the table as a result of the judge's urging, we took the judge's urging very seriously, and made sure we were always acting in good faith.

Shackelford: I knew a little bit of this about the discussions, but I was not involved and didn't think it was a realistic possibility. My focus was to do the opening statement.

Poulos: I was more working with Shack on the opening. Hootan was really leading the settlement charge on the side. He had asked me early on what our company goals were, and we were 100% aligned. Honestly, that never changed from Day One.

Yaghoobzadeh: It came down to the wire. The ingredients that we were looking for in terms of those three factors that we discussed, sort of lined up.

Shackelford: As a way of proving that I never thought this case was going to settle, I had family in from all over to come watch the opening statement

When I went back in the courtroom at 1:30 on Tuesday, I fully expected that they would bring the jury back in and start opening statements. I was sitting at my desk, council table or pacing around and I had a feeling that there were discussions going on, but I had no idea whether things were close until a couple of hours had passed. At least at that point I knew I wasn't gonna open today.

Dominion attorneys speak to the media after settlement is announced.
Shackelford and other Dominion lawyers talk to reporters after the settlement was announced. Photo: Chip Somodevilla/Getty Images.

Judge Eric Davis stunned the Delaware courtroom by announcing the two sides had reached a settlement. Soon, it was disclosed that Fox would pay Dominion $787.5 million, with Fox publicly acknowledging that the court had found it to have aired false statements. Fox did not make that acknowledgment on its air, nor did it apologize.

Days later, Fox News fired its top-rated prime-time host, Tucker Carlson, many of whose private messages were redacted in pre-trial discovery.

Yaghoobzadeh: I think the consequences of the entire strategy that we pursued are starting to reflect themselves.

Shackelford: Dominion did not insist on them firing Tucker Carlson as part of the settlement. But the very fact that that's what resulted out of all of this, and it's traceable from the work that Dominion and Staple Street set in motion, that's the sort of stuff Hootan is talking about.

Of course I know what’s in the redacted stuff and I can't say anything about it. ... I hope that it all gets un-redacted at some point.

Yaghoobzadeh: These results are much more profound than some disingenuous apology or forced statement that would not have any credibility, or would have been disingenuous from actors that have had a track record for making statements that are disingenuous.

For us to have a meaningful impact, we had to make sure that we got that rock moving. These other things, I guess we fundamentally disagree on what change they would have actually created.

Tucker Carlson at a golf event with former President Trump and Rep.  Marjorie Taylor Greene.
Tucker Carlson at a July 2022 golf event with former President Trump and Rep. Marjorie Taylor Greene (R-Ga.). Photo: Rich Graessle/Icon Sportswire via Getty Images.

Maria Bartiromo continues to host a daily show and weekend show for Fox, often featuring top business executives.

Yaghoobzadeh: I just don't know how informed every Fortune 500 CEO is to the lack of journalistic standards that were used in that initial broadcast. And if they're deciding to go on that show after understanding all that information, I'm not one to judge these things but I certainly wouldn't go on that show.

Look ahead

Dominion has pending defamation lawsuits against One America News, NewsMax, Sidney Powell, Rudy Giuliani, Mike Lindell and Patrick Byrne. None is expected to reach trial before 2024.

Poulos: As we said from the beginning, we're seeking accountability and we're not going to stop until we get it. We have six more cases and we are completely aligned as we have been from the beginning.

Shackelford: [The Fox lawsuit] should send a big signal to the other defendants that we are serious about exposing the truth, and we are serious about accomplishing full compensation and justice for Dominion.

We expected [Fox] to fight tooth and nail and to pull out all the stops, and they did. The scariest part of what they did trying to rewrite First Amendment law just to save Fox's hide in a way that was completely, in my view, disingenuous and dangerous.

Poulos: We've been robbed of our ability to grow on the trajectory that we were on, so we've been focused [on] just trying to keep servicing our customers, making a safe place for employees to continue to work.

Dominion CEO John Poulos speaking to reporters after the settlement.
Dominion CEO John Poulos speaking with reporters after the settlement. Photo: Andrew Caballero-Reynolds/AFP via Getty Images.

There have been questions about if Dominion employees will get a cut of the settlement, in addition to the lawyers, private equity owners and management.

Poulos: I think it's all of the above. Hootan and I have not really had a chance to discuss it, but we've both gone on record as saying this means something to everybody.

We certainly hope that it provides longevity to us to be able to take away some of the short-term worry that our customers have about Dominion and our employees. It's a relief but, as I've said many times there have been a lot of emotions for me, but happy is not one of them.

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