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• Kevin O’Leary and Fox News face federal defamation claims over accusations linking Utah activists to China.
• The plaintiffs allege the broadcasts caused financial losses, reputational damage and threats to their safety.
• A verdict could reshape guest-vetting practices and media-liability insurance requirements.

By Samuel López | USA Herald

SALT LAKE CITY — “Shark Tank” star Kevin O’Leary and Fox News Network LLC are facing a federal defamation lawsuit over allegations that critics of O’Leary’s massive Utah artificial-intelligence data center project were acting as proxies for the Chinese government.

Alliance for a Better Utah, Elevate Strategies LLC, Gabrielle Finlayson and Joshua Kanter filed the lawsuit July 15 in the U.S. District Court for the District of Utah. The case, Kanter et al. v. O’Leary et al., No. 2:26-cv-00664, asserts claims for defamation and defamation per se and seeks compensatory and punitive damages. The plaintiffs have demanded a jury trial, according to the federal docket.

The complaint alleges that O’Leary launched a weeks-long campaign accusing the organizations and their leaders of operating as “cells” or “proxies for the Chinese government” after they criticized the proposed Stratos Project in Box Elder County.

O’Leary allegedly repeated variations of those accusations during at least 10 media appearances in May and June, including five Fox broadcasts within three weeks. During one appearance, he reportedly claimed that a team of data scientists had established the foreign-influence allegations as irrefutable fact.

The plaintiffs contend Fox amplified the accusations to millions of viewers despite having no supporting evidence, receiving immediate denials and never contacting them for comment. They claim the broadcasts damaged their standing as Utah community advocates and business leaders, caused significant economic losses and emotional distress, and generated continuing threats to their physical safety. They also allege that some disputed video clips remain available on Fox-controlled platforms.

The controversy arose from opposition to the Stratos Project, originally proposed as a roughly 40,000-acre data center and power complex near the Great Salt Lake. The project could eventually support as much as nine gigawatts of computing capacity. Residents and advocacy groups have raised concerns about water consumption, electricity demand, land use, environmental effects and the decision-making process surrounding the development.

On June 25, after receiving a legal demand, O’Leary posted a statement acknowledging that he had “no evidence” that Alliance for a Better Utah, Elevate Strategies, Finlayson, Kanter or Taylor Knuth were funded by China or the Chinese Communist Party. Fox subsequently aired corrections and apologies.

Those corrective statements may become relevant to damages, but they do not automatically eliminate potential liability for earlier broadcasts.

Fox said it “publicly corrected the record on every program” where O’Leary made the challenged comments and vowed to vigorously defend itself. O’Leary’s attorney, Jeffrey Neiman, called the lawsuit a “cash grab,” said the plaintiffs declined an invitation to discuss the project and indicated that O’Leary may bring counterclaims. No court has determined that either defendant acted unlawfully.

A central question will be whether the plaintiffs are private individuals or limited-purpose public figures because of their involvement in the data center controversy. Private plaintiffs generally must establish at least negligence under Utah defamation law. Public figures face the substantially higher burden of proving “actual malice”—that the defendants knew the statements were false or recklessly disregarded whether they were true.

Truth, substantial truth, protected opinion and lack of legally sufficient fault are expected defense issues. The plaintiffs, however, will likely point to the alleged repetition of the accusations after their denials, the absence of verification and O’Leary’s later acknowledgment that he possessed no evidence. Under controlling constitutional principles, presumed or punitive defamation damages generally require proof of actual malice. Utah also requires clear and convincing evidence of willful, malicious or knowingly reckless conduct before punitive damages may be awarded.

If the plaintiffs prevail—particularly through a punitive verdict—the consequences could extend beyond O’Leary and Fox.

Broadcasters may impose stricter procedures for live guests making accusations involving foreign governments, criminal conduct or national security. Networks could require advance documentation, immediate legal review, efforts to contact accused parties and stronger contractual warranties or indemnification provisions from commentators and outside guests.

The case could also affect how technology developers and corporate executives communicate about community opposition. Publicly labeling local critics as foreign agents can transform a land-use dispute into an enterprise-level defamation exposure.

Media-liability and errors-and-omissions policies commonly provide defense coverage for defamation claims and may cover settlements or compensatory judgments. However, coverage for knowing falsehoods, intentional misconduct and punitive damages frequently depends on exclusions, policy language and applicable law. Commercial general-liability policies may offer limited “personal and advertising injury” protection, but media-company and intentional-acts exclusions can create major gaps. No insurance policies have been identified in the court record.

A substantial verdict could prompt insurers to scrutinize guest-vetting procedures, correction policies, social-media reposting and the continued availability of disputed clips. Higher deductibles, reduced limits and more demanding editorial safeguards could follow for companies that permit prominent guests or executives to broadcast serious accusations without documented support.

The lawsuit remains at an early stage, and every allegation must still be proved in court.