Five New York City’s pension funds, have joined forces with the state of Oregon to file a shareholder derivative lawsuit against Fox Corporation. This legal action accuses the media conglomerate of failing in its Fiduciary duty to shareholders by repeatedly broadcasting falsehoods regarding the 2020 presidential election. The pension funds represent approximately 572,946 shares of Fox Class A stock and 285,338 shares of Fox Class B stock worth, valued at $27.7 million as of August 31, 2023. These funds represent nearly 800,000 current and retired workers and worth a staggering $253 billion.
Fox's Election Coverage Under Scrutiny: The crux of the lawsuit revolves around allegations that Fox Corporation amplified false claims from former President Donald J. Trump and his allies regarding election rigging in an effort to appease its viewers. The lawsuit contends that the board knowingly exposed the company to defamation claims while disregarding potential financial and business repercussions
Allegations of Negligence: City Comptroller Brad Lander, who oversees New York City’s pension funds, asserts that Fox Corporation has a longstanding practice of allowing conspiracy theories, known by its executives and board to be false, to permeate its broadcasts. These actions, despite a clear risk of defamation lawsuits, have raised concerns about shareholder value. “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,” said New York City Comptroller Brad Lander. “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. Clear governance systems are absolutely necessary for the long-term health of a company. As Fox’s board continues to ignore these red flags, we are holding them accountable as long-term shareholders.”
- Allegation of Fox's Business Model: The complaint alleges that Fox had a business model of prioritizing stories that appealed to their viewers, irrespective of their accuracy, which increased the risk of defamation litigation.
- Board's Conscious Disregard: It is claimed that Fox's board consciously disregarded the risk of defamation lawsuits, despite being aware of the potential legal consequences.
- Accusation of Pursuing Profits through Defamation: The lawsuit asserts that Fox pursued profits by engaging in actionable defamation, meaning they were willing to spread false or damaging information for financial gain.
- Lack of Efforts to Mitigate Defamation Risk: The funds argue that Fox made no good-faith efforts to monitor or mitigate the risk of defamation in their reporting.
- Legal Consequences and FCC Scrutiny: The complaint suggests that Fox's board's failures, including the $787.5 million settlement with Dominion, have not only resulted in legal consequences but have also raised questions about Fox's suitability to hold an FCC broadcast license. The lawsuit aims to recover damages caused by the alleged misconduct.
Legal Action Filed in Delaware: The lawsuit was officially filed in the Delaware Court of Chancery, marking one of the most significant shareholder actions since Fox's $787.5 million settlement with Dominion Voting Systems in April, following a defamation lawsuit. This substantial payout served as a backdrop to the current legal proceedings.
Oregon Joins the Lawsuit: The New York City Funds are partnering in this lawsuit with 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. The state of Oregon, representing its public employees' retirement fund, has thrown its weight behind the lawsuit, alleging that Fox Corporation's actions have harmed investors. Oregon's holdings in the company are valued at approximately $5.2 million.
Which NYC Pension Funds are pursuing the case against Fox News?
The five nyc pension funds who have sued fox news are;
- New York City Employees’ Retirement System (NYCERS)
- Teachers’ Retirement System (TRS)
- New York City Fire Pension Fund (Fire)
- NYC Police Pension Fund (Police)
- Board of Education Retirement System (BERS)
Multiple Legal Battles for Fox: Fox News is no stranger to legal disputes over its reporting and programming. Notable cases include:;
- Dominion Voting Systems Defamation Lawsuit : Fox News was sued by Dominion Voting Systems for defamation, alleging that the network had promoted false claims that Dominion's voting machines were used to rig the 2020 presidential election. Fox News ultimately settled this lawsuit for $787.5 million in April 2023.
- Smartmatic Defamation Lawsuit (Ongoing): In addition to the Dominion lawsuit, Fox News is facing another defamation lawsuit from Smartmatic, another election technology company. Smartmatic is seeking $2.7 billion in damages. This lawsuit is expected to go to trial in 2025.
- Seth Rich Conspiracy Theory: In 2017, Fox News faced a lawsuit over its promotion of a conspiracy theory surrounding the murder of Seth Rich. The Seth Rich controversy involved the tragic murder of Democratic National Committee (DNC) staffer Seth Rich in 2016. Conspiracy theories emerged, falsely suggesting that Rich had leaked DNC emails to WikiLeaks and was subsequently assassinated as a result. These unfounded claims gained traction, especially in some conservative and fringe media circles, despite being debunked by law enforcement and intelligence agencies.
- Allegations of Biased Reporting: Fox News has faced ongoing allegations of biased reporting and promoting conspiracy theories, particularly related to its coverage of political events and the 2020 election.
- Host Controversies: Several Fox News hosts, such as Tucker Carlson and Laura Ingraham, have been involved in controversies over their statements and opinions on various topics, including race, immigration, and the COVID-19 pandemic.
- Host Departures: Some high-profile departures from Fox News have raised questions about the network's editorial direction. For example, the departure of Shepard Smith, who was known for his fact-based reporting, garnered attention.
- COVID-19 Misinformation: Like many news outlets, Fox News has faced criticism for the spread of COVID-19 misinformation, including skepticism about vaccines and public health measures.
- Harassment Allegations: In the past, Fox News has faced allegations of workplace harassment and discrimination, which have resulted in lawsuits and settlements.
The impact of the lawsuit against Fox Corporation transcends mere financial implications. It exposes the ongoing tension between media freedom and journalistic responsibility. If successful, the case could set legal precedents and influence media organizations' reporting standards. Corporate governance and the role of corporate boards in overseeing journalistic integrity may also come under scrutiny.
This lawsuit adds another layer to the evolving discourse surrounding media ethics, media regulation, and the credibility of news outlets. The outcome will be closely monitored, as it may reshape the legal and ethical landscape for media reporting, not only for Fox News but for the broader media industry in the United States.
Header Photo by Sora Shimazaki