By Oliver Darcy and Liam Reilly, CNN
(CNN) — New York City’s pension funds and the state of Oregon took legal action on Tuesday against Fox Corporation, alleging in a lawsuit that the Fox News parent company failed shareholders by allowing the right-wing channel to recklessly spread lies about the 2020 election that opened it up to a pair of historic defamation cases.
The lawsuit, which was filed under seal in the Delaware Court of Chancery and named Fox Corporation board members and its executives as defendants, accused the media company of having chosen to “invite robust defamation claims, with potentially huge financial liability and potentially larger business repercussions, rather than disappoint viewers of Fox News,” according to an excerpt of the complaint provided by the state of Oregon.
The lawsuit represents the most serious shareholder legal action taken against Fox since it settled a historic defamation lawsuit brought by election technology company Dominion Voting Systems earlier this year for a record $787.5 million. Fox, which has maintained it is proud of its dishonest 2020 election coverage, still faces an even larger, $2.7 billion lawsuit from election technology company Smartmatic.
“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,” Brad Lander, the New York City comptroller, said in a statement on Tuesday. “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.”
“The board of Fox Corporation took a massive risk in pursuing profits by perpetuating and peddling known falsehoods,” Ellen Rosenblum, attorney general of Oregon, said in a separate statement. “The directors’ choices exposed themselves and the company to liability and exposed their shareholders to significant risks. That is the crux of our lawsuit, and we look forward to making our case in court.”
A spokesperson for Fox Corporation declined to comment on the lawsuit.
The lawsuit did not specify a damages figure. A spokesperson for the New York City Comptroller’s office said the pension funds held 857,000 shares of Fox Corporation stock valued at $28.10 million. The state of Oregon held 226,315 shares of Fox stock valued at $5.2 million.
Legal and corporate governance experts have long warned that Fox Corporation would be subject to shareholder lawsuits for irresponsible management decisions that left the company vulnerable to legal action.
Fox Corporation, led by Rupert and Lachlan Murdoch, has kept the current Fox News leadership team that oversaw the network’s lie-filled 2020 coverage in place. But last month, the company abruptly announced that Viet Dinh, its chief legal officer who oversaw the company’s legal strategy combatting the election lawsuits, would exit his role at the end of the year.
In addition to the two lawsuits brought by Dominion and Smartmatic, Fox News has also been slapped with a cascade of defamation lawsuits from others taking action against the network.
Ray Epps, an Arizona man that conspiracy theorists falsely claim led an FBI plot to orchestrate the January 6 insurrection, filed a defamation lawsuit against Fox News in July.
Earlier this year, Fox News settled a defamation case with a Venezuelan businessman who had filed a lawsuit against the company over its 2020 election coverage. And Fox settled a lawsuit brought by former producer Abby Grossberg, who accused the network of fostering a toxic workplace environment, for $12 million.
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