NEW YORK, Jan 9 (Reuters) - Fox Corp ( FOXA ), the

parent of Fox News Network, failed to convince a New York state

appeals court to dismiss a defamation claim in electronic voting

systems company Smartmatic's $2.7 billion lawsuit over the

network's 2020 post-election coverage.

A five-judge panel of the Appellate Division in Manhattan

ruled on Thursday that Smartmatic sufficiently alleged the Fox

parent was directly liable for on-air statements suggesting

Smartmatic helped rig the 2020 U.S. presidential election to

favor Democrat Joe Biden over Republican Donald Trump.

Claims that the parent directed on-air talent to undertake a

disinformation campaign, and played an active role in coverage,

"sufficiently allege Fox Corporation's ( FOXA ) 'direct liability' for

the challenged defamatory statements," the court said.

The appeals court also said Smartmatic's failure to allege

that the Fox parent "wholly dominated" Fox News Network meant

the parent could not be liable for defamation on that basis.

"We will be ready to defend this case surrounding extremely

newsworthy events when it goes to trial," Fox Corp ( FOXA ) said in a

statement. "Smartmatic's damages claims are implausible,

disconnected from reality, and on their face intended to chill

First Amendment freedoms."

J. Erik Connolly, a lawyer for Smartmatic, in a statement

said the parent company "must now answer for its actions at

trial."

Smartmatic claimed that Fox broadcast lies about its

technology to boost ratings, and keep Trump supporters from

defecting to right-wing networks Newsmax and One America News.

The company has said it provided technology for the 2020

election only to Los Angeles County, which Biden won. Smartmatic

has offices in London and in Boca Raton, Florida.

Other defendants include host Maria Bartiromo and the estate

of late host Lou Dobbs.

In April 2023, Fox reached a $787.5 million settlement in a

similar defamation lawsuit by voting technology company Dominion

Voting Systems, as a trial in Delaware was about to begin.

The case is Smartmatic USA Corp et al v Fox Corp ( FOXA ) et al, New

York State Supreme Court, Appellate Division, 1st Department,

No. 2024-01388.