Attorneys for Fox Corp. urged a Delaware judge on Friday to dismiss a shareholder lawsuit that seeks to hold current and former executives personally accountable for financial damages linked to Fox News’ reporting of unfounded election fraud allegations. The suit stems from Fox News’ coverage of vote rigging claims involving Dominion Voting Systems and Smartmatic USA following the 2020 presidential election.
Shareholders Claim Negligence and Profit-Driven Motives
The lawsuit, filed by five New York City public employee pension funds and Oregon’s public employee retirement fund, alleges that former chairman Rupert Murdoch, CEO Lachlan Murdoch, and other executives ignored legal risks tied to broadcasting false claims.
The plaintiffs argue that Fox executives acted in bad faith to maintain audience loyalty and appease former President Donald Trump. Attorney Joel Friedlander claimed, “The Murdochs could have minimized future monetary exposure, but they chose not to. Decisions were made at the highest level to promote pro-Trump conspiracy theories without editorial control.”
The shareholders also pointed to Fox’s previous settlement over its coverage of Seth Rich, a Democratic National Committee staffer. Fox retracted a 2017 report falsely implicating Rich in leaking party emails to WikiLeaks and later settled a defamation lawsuit brought by Rich’s family for millions of dollars.
Defense Argues Lawsuit Is Procedurally and Substantively Deficient
Fox’s legal team argued for dismissal on multiple grounds, including the shareholders’ failure to demand action from the Fox board before filing the lawsuit, as required under Delaware law. Defense attorney William Savitt stated, “A bad outcome is not sufficient to demonstrate bad faith,” emphasizing that no evidence shows executives ignored oversight responsibilities or condoned illegal conduct.
Savitt further argued that prior incidents, such as the Seth Rich settlement, were not “red flags” indicating future liability risks. He maintained that retractions and settlements like these do not constitute failures in corporate governance.
Major Defamation Settlements Under Scrutiny
Fox News has faced significant financial consequences for its coverage of election fraud allegations. In 2023, the network settled a defamation lawsuit with Dominion Voting Systems for $787 million. Smartmatic USA has filed a $2.7 billion defamation lawsuit, which remains ongoing.
Despite these settlements, defense attorneys assert that these cases do not demonstrate a lack of oversight by Fox executives but rather reflect the fallout of unexpected legal risks.
What’s Next?
Vice Chancellor J. Travis Laster, who presided over Friday’s hearing, is expected to rule on the motion to dismiss within 90 days. If the case proceeds, it could have significant implications for corporate governance and shareholder oversight in media companies facing defamation liabilities.