Explainer: What to expect in the Dominion v. Fox defamation trial

FILE PHOTO: A person walks by Fox News signage posted on the News Corporation building in New York City

By Jack Queen

(Reuters) - One of the most closely watched U.S. media trials in decades kicks off in a Delaware court on Tuesday as Fox Corp and Fox News face a $1.6 billion defamation lawsuit by Dominion Voting Systems over the network's coverage of false claims that the ballot-counter company rigged the 2020 presidential election.

Here is an explanation of the case.

WHAT IS DOMINION CLAIMING?

Dominion in its lawsuit accused Fox of destroying its reputation and business by repeatedly airing false claims that its voting machines were used to rig the election against Republican then-President Donald Trump in favor of the winner, Democrat Joe Biden.

Dominion has said Fox knew the claims were false but continued broadcasting them to appeal to its largely conservative audience and keep viewers from defecting to right-wing media competitors that embraced the conspiracy theory.

The Denver-based company cited numerous internal Fox communications and deposition testimony that it has said proved that Fox personnel - show producers and hosts all the way up to the top executives - knew that guests who appeared on various programs and repeatedly made the false claims on air did not have evidence to back up their allegations.

WHAT IS FOX'S DEFENSE?

Fox has said Dominion cannot prove that the network knowingly spread falsehoods or recklessly disregarded the truth, the legal standard of "actual malice" that plaintiffs in defamation lawsuits must meet.

Fox has argued that Dominion cherry-picked evidence to mischaracterize the network's coverage decisions, which it said were reasonable because election-rigging claims by the president's lawyers were inherently newsworthy. Fox has said it also gave Dominion's side of the story by airing its denials.

The network was dealt a setback in March, when Delaware Superior Court Judge Eric Davis ruled that Fox could not invoke free speech defenses because the statements it aired were false, defamatory and not covered by legal protections for the press under the U.S. Constitution's First Amendment. Fox is now largely limited to arguing that Dominion cannot prove actual malice.

COULD THE TWO SIDES STILL SETTLE?

Yes. Neither side has publicly shown interesting in settling after two years of fierce litigation, but two sources told Reuters that Fox and Dominion were holding last-minute talks after Davis delayed the trial by one day on Monday without giving a reason.

Both sides they are litigating on principal. Dominion has argued that Fox's conduct was damaging to American democracy and that the network must be held accountable for crossing the line between journalism and the heedless pursuit of ratings. Fox has called Dominion's lawsuit an assault on the free press and framed its stance in the case as a defense of journalism and diversity of ideas in the public square.

But Fox faces a potentially enormous judgment because in addition to $1.6 billion, Dominion is also seeking punitive damages in any amount jurors see fit.

Another U.S. voting company, Smartmatic, is seeking $2.7 billion from Fox in a similar lawsuit pending in New York County Supreme Court.

WHAT ABOUT DAMAGES?

Fox has attacked the credibility of Dominion's damages estimate, saying it is based upon unrealistic growth projections and faulty assumptions. The network has said Dominion was worth only $80 million in 2018 and has continued to grow and post strong revenues despite the untrue claims of election-rigging.

Dominion has defended its damages model, which it has said was based on industry standard accounting methods. An expert report commissioned by the company attributed scores of lost contracts to Fox's coverage, though much of the report remains under seal. More of those details are likely to come out when Dominion's expert testifies.

(Reporting by Jack Queen; Editing by Will Dunham and Noeleen Walder)