The state of Oregon joined New York City Pension Funds in filing a stockholder derivative lawsuit on Sept. 12 against the board of Fox Corporation, the corporate parent of Fox News, accusing it of a breach of fiduciary duty by opening it up to defamation lawsuits by “peddling known falsehoods” in its post-2020 election coverage.
The lawsuit was filed under seal in Delaware Chancery Court. In a statement on Sept. 12, Oregon Attorney General Ellen Rosenblum accused Fox Corporation’s board of knowingly exposing the company and its shareholders to significant risks by perpetuating allegedly false narratives about the 2020 elections for profit.
Ms. Rosenblum claimed that Fox Corporation’s board “took a massive risk in pursuing profits by perpetuating and peddling known falsehoods.”
“The directors’ choices exposed themselves and the company to liability and exposed their shareholders to significant risks,” Ms. Rosenblum said. “That is the crux of our lawsuit, and we look forward to making our case in court.”
Media tycoon Rupert Murdoch is the board’s chair, and his son Lachlan Murdoch is the executive chair and CEO of the corporation. The board’s other members are William Burck, Chase Carey, Anne Dias, Roland Hernandez, Jacques Nasser, and Paul Ryan.
The Oregon attorney general is representing the Oregon Public Employee Retirement Fund, an investor in Fox Corporation, which holds 150,146 shares of Class A stock and 76,169 shares of Class B stock, with a total value of about $5.2 million.
The lawsuit stems from a joint investigation carried out by the Oregon Department of Justice and the Oregon Treasurer’s Office earlier this year, the attorney general’s office said. Her office said the joint investigation revealed that Fox Corporation’s management, acting on behalf of the company, allegedly harmed investors, including Oregon’s public employees.
The complaint alleges that Fox Corporation’s board was fully aware that Fox News’ promotion of political narratives, irrespective of the underlying factual accuracy, created substantial exposure to defamation charges.
“Furthermore, by pushing narratives that appealed to their audience regardless of the facts, Fox’s Board should have been especially sensitive to risks of defamation,” the attorney general’s office stated.
“Yet Fox’s business model is to promote false claims.”
The lawsuit, which includes the New York City Pension Funds as a co-plaintiff, further alleges that Fox Corporation made no genuine efforts to monitor or mitigate the risk of defamation, setting it apart from nearly every other major media organization in the country.
New York City Comptroller Brad Lander, who oversees the pension funds, accused the Fox Corporation board of failing to ensure journalistic standards.
“Fox’s board of directors has blatantly disregarded the need for journalistic standards and failed to put safeguards in place despite having a business model that invites defamation litigation,” Mr. Lander said in a statement on Sept. 12. ”A lack of journalistic standards and a proper strategy to mitigate defamation has clearly harmed Fox’s reputation and threatens their bottom line and long-term profitability.”
Treasurer Tobias Read, who is also a member of the Oregon Investment Council, said that safeguarding the retirement investments of Oregon’s public servants is of the “utmost importance.”
“We aim to hold Fox’s board of directors, including Rupert and Lachlan Murdoch, accountable for their decisions,” Mr. Read said. “We believe that this action is necessary in fulfilling our obligation to our beneficiaries.”
Fox Corporation declined to comment.
