Smartmatic USA Corp. v. Fox Corp.

Summary

The Appellate Division, First Department, modified an order concerning discovery and a requested stay in Smartmatic's defamation action against Fox-related defendants. The court declined to stay the action pending separate federal criminal proceedings but vacated the note of issue for limited discovery concerning the superseding indictment's impact on plaintiffs' business. It also permitted discovery regarding allegations involving Los Angeles County, to the same extent as discovery concerning allegations involving Venezuela.

Holdings

1. A stay was properly denied because the separate federal criminal proceedings involved unrelated allegations and the traditional factors supporting a stay, including inconsistent adjudications, duplication of proof, and waste of judicial resources, were not present; the executives' Fifth Amendment invocations did not warrant a stay under the circumstances.
2. The note of issue should be vacated for the limited purpose of allowing discovery regarding the impact of the superseding indictment on plaintiffs' business because the indictment constituted unusual and unanticipated circumstances and defendants would suffer substantial prejudice if the discovery were disallowed.
3. Defendants were entitled to discovery concerning the impact on Smartmatic's business of the new substantive allegations involving both Venezuela and Los Angeles County; the lower courts improperly distinguished between those jurisdictions for discovery purposes.

Questions Presented

1. Whether the action should be stayed pending resolution of separate federal criminal proceedings against Smartmatic and its executives.
2. Whether the note of issue should be vacated for the limited purpose of permitting discovery concerning the impact of the superseding indictment on plaintiffs' business.
3. Whether defendants were entitled to discovery concerning the impact on Smartmatic's business of allegations involving Los Angeles County to the same extent as allegations involving Venezuela.

Disposition

other