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New York City’s public pension funds have joined shareholder litigation blaming media mogul Rupert Murdoch for the potentially multibillion-dollar scandal at Fox News over the conservative network’s role in spreading false conspiracy theories about the 2020 election.
The lawsuit—joined by public pension funds for the state of Oregon—is one of four investor complaints in recent months to target the Australian news tycoon, his son Lachlan, former US House Speaker Paul Ryan, and other
It was made public Sept. 15, the same day as another suit brought by a different group of pension and investment funds, including one representing workers in Rhode Island and another run by Sweden. The new complaints came nine days after the first two investor cases were consolidated in Delaware’s Chancery Court.
The shareholder lawsuits assail Fox’s leaders for doing nothing to stop its hosts from airing lies pushed by former President Donald Trump and his allies, who said after the election that it was rigged by voting machine makers. Trump has been indicted twice over claims he sought to overturn the election, efforts that allegedly led to the Jan. 6 storming of the US Capitol by a mob of his supporters.
Fox, meanwhile, averted a blockbuster trial by agreeing to a $787.5 million settlement with Dominion Voting Systems Inc.—the largest ever in a defamation case.
The media giant still faces parallel litigation brought by Smartmatic USA Corp., a voting technology company that also found itself at the center of election conspiracy theories involving the late Venezuelan President Hugo Chavez. “Experts have speculated that the settlement value of the case exceeds $1 billion,” according to the complaint by the New York and Oregon funds.
The suit points the finger squarely at the Murdochs, saying they “surround themselves with loyalists who share their politics and facilitate their rule.” They personally “caused Fox News to promote political narratives without regard for whether the underlying factual assertions were true or based on sources worthy of credit,” according to the 120-page court filing.
Fox declined to comment through a spokesperson Monday.
No Standards or Practices
The lawsuits involve shareholder derivative claims, which are technically brought on a company’s behalf against its leaders. Any damages awarded by a judge or in a settlement would be paid into Fox’s corporate coffers by its directors or their insurers.
According to the investor complaints, the Murdochs and other members of Fox’s leadership were driven to spread election-related lies by a backlash among the network’s regular viewers after it was the first to call Arizona, a closely contested state, for President Joe Biden. Internal records show they were afraid of losing their audience to far-right outlets, the suits say.
But unlike competing websites, Fox doesn’t enjoy legal immunity against defamation claims, and unlike its less established rivals, it’s “an inviting litigation target because of its deep pockets,” according to the complaint by the New York and Oregon funds. Dominion and Smartmatic have both also sued Newsmax Media Inc., another conservative TV network.
The board of a media company “cannot be indifferent to the existential threat of broadcasting or publishing falsehoods,” but “Fox News lacks written standards or practices for what it broadcasts,” one of the lawsuits says. “It is loath to correct factual errors. It chooses to profit from defamation and it treats potential tort claims and settlements as unlikely or as a cost of doing business.”
Fox’s leaders had ample notice they were playing with fire, according to the pension funds. Their suits cite a previous defamation scandal involving a false story the network “manufactured” about the death of Democratic National Committee staffer Seth Rich that the company was forced to settle for millions after an appeals court likened its coverage to “a campaign of emotional torture.”
Other red flags ignored by the Fox board include the defamation scandals that forced Gawker Media and right-wing provocateur Alex Jones into bankruptcy, according to the complaint by the New York and Oregon funds.
And Lachlan Murdoch has allegedly said the network plans to continue its “successful” strategy, which led to another recent settlement with a Venezuelan businessman falsely labeled “a liaison of Hezbollah” by one of its anchors.
Board ‘Chose’ Defamation
At least two members of the board allegedly knew better. Paul Ryan publicly denounced Trump’s lies about the election and—along with another friend of the Murdochs who serves as a Fox director—tried to convince the Murdochs to abandon their strategy of amplifying the conspiracy theories, according to the complaints.
“Their advice following the attack on the Capitol on January 6, 2021, betrays their knowledge that they and the board had allowed Fox News to spread baseless political narratives,” the suit says. “Defendants chose to invite robust defamation claims, with potentially huge financial liability and potentially larger business repercussions, rather than disappoint viewers of Fox News.”
The lawsuit on behalf of Rhode Island and Sweden-based funds, filed to the consolidated court docket, runs to 172 pages.
The pension funds originally filed their complaints under seal Sept. 12. The New York and Oregon funds are represented by Friedlander & Gorris PA, Cohen Milstein Sellers & Toll PLLC, and Lieff Cabraser Heimann & Bernstein LLP.
The other group of pension funds is represented by Bernstein Litowitz Berger & Grossmann LLP, Labaton Sucharow LLP, Robbins Geller Rudman & Dowd LLP, Kessler Topaz Meltzer & Check LLP, and Friedman Oster & Tejtel PLLC.
The investors leading the earlier-filed lawsuits are represented by Heyman Enerio Gattuso & Hirzel LLP, Gardy & Notis LLP, Prickett Jones & Elliott PA, Robbins LLP, Wolf Popper LLP, Hach Rose Schirripa & Cheverie LLP, and Frank DiPrima of Morristown, N.J.
Fox and its board haven’t made a court appearance yet.
The cases are In re Fox. Corp. Deriv. Litig., Del. Ch., No. 2023-0418, complaint unsealed 9/15/23 and N.Y. City Emp. Ret. Sys. v. Murdoch, Del. Ch., No. 2023-0931, complaint unsealed 9/15/23.
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