Smartmatic USA Corp. v. Lindell

Background

The plaintiffs—SGO Corporation Limited, Smartmatic International Holding B.V., and Smartmatic USA Corp.—provide election technology, support, and services. They provided those services to Los Angeles County, California, during the 2020 election. The defendants were Michael J. Lindell and My Pillow, Inc. The opinion describes Lindell as a political commentator, Minnesota resident, and My Pillow’s founder and chief executive officer; it describes My Pillow as a Minnesota manufacturing company with its principal place of business in Chaska, Minnesota.

Smartmatic alleged that Lindell promoted claims that the 2020 election was stolen and that voting machines, including Smartmatic technology, had been hacked or rigged for President Joe Biden and Vice President Kamala Harris. It alleged that Lindell made those claims through documentary videos, media appearances, a January 5, 2021 rally, a twenty-city bus tour, and an August 2021 event called the “Cyber Symposium.” Smartmatic also alleged that Lindell promoted My Pillow products and provided promotional codes during some of these activities.

Claims and motions

Count I alleged defamation based on false statements about Smartmatic’s involvement in the 2020 election and alleged election-hacking theories. Count II alleged that the statements were deceptive trade practices under Minnesota Statutes section 325D.44(8), and that Lindell acted as My Pillow’s agent.

Lindell moved to dismiss, arguing that Smartmatic had not adequately pleaded defamation and that the deceptive-trade-practices claim concerned statements made in his personal rather than professional capacity. My Pillow separately moved to dismiss, arguing that the First Amendment shielded it, that it had not made statements about Smartmatic, and that Lindell’s statements could not be attributed to it.

Defamation

The court applied the standard for a motion to dismiss for failure to state a claim. At this stage, the court accepts well-pleaded factual allegations as true and draws reasonable inferences for the plaintiff. The issue was whether Smartmatic had alleged a plausible claim, not whether it had already proved the claim.

The court treated Smartmatic as a public figure under Minnesota law. Because the challenged statements concerned the alleged hacking of a presidential election, the court also treated them as involving a matter of public concern. The court therefore explained that Smartmatic would need to prove actual malice—knowledge that a statement was false or reckless disregard for whether it was false—and actual reputational harm.

The court concluded that Smartmatic adequately alleged falsity. Smartmatic identified statements suggesting that it was widely used in the 2020 election, conspired with other election-technology companies, stole the election, had technology compromised by China, connected its technology to the internet to enable hacking, participated in a criminal enterprise, and designed its technology to steal elections. Smartmatic also cited publicly available election reports, audits, media reports, company websites, statements by election officials and security experts, monitoring organizations’ reports, and an earlier lawsuit as information contradicting Lindell’s statements.

The court concluded that Smartmatic adequately alleged communication to third parties because the statements were allegedly made publicly through media appearances, documentary videos, the January 5 rally, and the Cyber Symposium.

The court also found sufficient allegations of actual malice. Smartmatic alleged that publicly available information contradicted Lindell’s claims, that Lindell continued making the statements after receiving contradictory information, and that he knew of or deliberately avoided information refuting his claims. Smartmatic also alleged that Lindell promoted My Pillow products and used promotional codes while making the statements. The court held that, when the allegations were viewed in Smartmatic’s favor, they were sufficient to suggest that Lindell knew or should have known the statements were false and acted with actual malice.

Finally, the court found sufficient allegations of actual reputational harm. Smartmatic alleged that Lindell’s statements made its name and brand synonymous with election fraud, caused people to distrust its technology, led to threats against its officers and employees, and caused it to spend more than one million dollars on public relations, crisis management, cybersecurity, and employee retention and recruitment. The defendants did not dispute Smartmatic’s claim that the statements caused reputational harm.

My Pillow’s potential vicarious liability

Vicarious liability means that an employer may be held responsible for an employee’s tort—such as defamation—when the employee acted within the course and scope of employment. The court held that Smartmatic plausibly alleged such a claim against My Pillow.

The court relied on allegations that Lindell promoted My Pillow while making the statements, used the My Pillow logo during relevant appearances, provided promotional codes tied to his election claims, and sponsored a bus tour bearing the company’s logo. The court also noted allegations that My Pillow did not distance itself from Lindell’s statements. These allegations were sufficient at the pleading stage to support a claim that Lindell’s conduct was connected to My Pillow’s business and that My Pillow might be vicariously liable.

Minnesota Deceptive Trade Practices Law

The Minnesota Deceptive Trade Practices Law prohibits a person, in the course of business, vocation, or occupation, from disparaging another’s goods, services, or business through false or misleading representations of fact. The court rejected the defendants’ argument that Smartmatic’s statutory claim was impermissibly duplicative of its defamation claim because the statute expressly allows relief in addition to remedies available under common law.

The court also held that Smartmatic adequately alleged that Lindell made the statements while acting as My Pillow’s chief executive officer and spokesperson and, at least in part, to promote My Pillow. The court therefore concluded that the allegations, accepted as true, were actionable under the Minnesota statute.

Disposition

The court denied Michael J. Lindell’s motion to dismiss and denied My Pillow, Inc.’s motion to dismiss. The order allowed Smartmatic’s claims to proceed; it did not make a final determination that the statements were defamatory, that actual malice was ultimately proved, or that My Pillow was ultimately liable.