Overview
Cohen Milstein is leading a shareholder derivative lawsuit representing New York City’s five pension funds and the State of Oregon, by and through the Oregon State Treasurer and the Oregon Department of Justice, on behalf of the Oregon Investment Council and the Oregon Public Employee Retirement Fund, against various directors and officers of Fox Corporation, the corporate parent of Fox News Network, LLC. Plaintiffs allege that Fox News’ leadership breached its fiduciary duties by adopting a business model that promoted or endorsed defamation by failing to establish systems or practices to minimize defamation risk despite the known risk of liability, including broadcasting false claims about election technology companies Dominion Voting Systems and Smartmatic USA.
Cohen Milstein’s co-counsel include Friedlander & Gorris and Lieff Cabraser.
Important Rulings
- On December 27, 2024, The Honorable J. Travis Laster, Vice Chancellor of the Court of Chancery, denied Defendants’ motion to dismiss, determining that Plaintiffs argued plausible inferences that Fox’s senior officers, including Rupert and Lachlan Murdoch consciously prioritized profits over legal compliance and decided to violate the law by having Fox News defame Dominion and Smartmatic. Vice Chancellor Laster stated that Plaintiffs’ allegations are “sufficient to support a reasonable inference that [Rupert] Murdoch faces a substantial risk of liability for breaching his duty of loyalty by deciding in bad faith to have the Company violate the law.” He opined further that “if anything, the claim against Lachlan is stronger [than the claim against Rupert Murdoch], because Lachlan engaged in more frequent communication with [Suzanne Scott, CEO of Fox News], his direct report, about Fox News and its content, and he regularly texted comments to Scott about Fox News’ coverage. Lachlan attended twice-daily editorial leadership team meetings to discuss topics, segments, guests, and monologues. He also worked closely with the newsroom managers on positioning and messaging.”
In addition, the Court determined that Plaintiffs adequately pled demand futility, ruling that Plaintiffs sufficiently demonstrated that the Fox Board of Directors was too conflicted to independently and disinterestedly consider the alleged claims based on the involvement of Rupert and Lachlan Murdoch, as well as Charles Carey and Jacques Nasser, all of whom, the Court found, lacked independence to consider the claims. This finding allows shareholders’ derivative claims to proceed without requiring a pre-suit demand on the Board.
- On December 29, 2023, the Court appointed the New York City Funds and Oregon to lead the matter. The Court noted that distinguishing factors favored the appointment of their counsel to lead the litigation because they “prepared a stronger complaint”; brought an “intentional, thoughtful, and client-centered” approach to the case; and had superior diversity of skills and experience.
Case Background
The New York City Funds and the State of Oregon seek to hold Fox Corporation’s leadership accountable for the corporate trauma resulting from their breaches of fiduciary duty. The complaint alleges that, at all relevant times, Fox News operated under a business model wherein the network promoted political narratives without regard for whether the underlying factual assertions were true. Rather than follow written standards or practices for what it broadcast, the complaint alleges that Fox News chose to profit from defamation and treat potential tort claims and settlements as unlikely or as a cost of doing business.
The complaint sets forth a pattern of Fox Corporation engaging in defamatory coverage, including broadcasting false claims that election technology companies Dominion Voting Systems and Smartmatic USA illegally switched votes cast for Donald Trump to Joe Biden. On April 18, 2023, Fox settled Dominion’s defamation claim for $787.5 million on the first day of a jury trial. Smartmatic’s case against Fox News is ongoing.
Case name: In re Fox Corporation Derivative Litigation, Case No. 2023-0418, Court of Chancery of the State of Delaware (Del. Ch.)