Fox Investor Litigation Spurs Law Firm Competition in Delaware

Lawyers fighting to take lead in shareholder litigation to hold Rupert Murdoch and other Fox Corp. senior leaders accountable for the fallout from false conspiracy theories broadcast about the 2020 election accused each other Thursday of showboating and pursuing flawed legal theories before a Delaware judge.

The pension funds suing Fox blame its top brass for leaving the conservative news network open to potentially billions of dollars in liability in defamation lawsuits, including a $787.5 million defamation settlement with Dominion Voting Systems Inc. While any damages awarded after a trial or in a settlement in Delaware’s Court of Chancery would be paid into Fox’s corporate coffers by its directors or their insurers, the law firms named lead counsel could take home a substantial payday for their work.

“Our group has the higher absolute number of shares held. This is not a close call as to who has the greater financial stake in this case,” said Chad Johnson of Robbins Geller Rudman & Dowd LLP who represents a group of pension and investment funds, including those representing workers in Sweden.

They’re represented by Bernstein Litowitz Berger & Grossmann LLP, Robbins Geller Rudman & Dowd LLP, and Kessler Topaz Meltzer & Check LLP. Labaton Sucharow LLP and Friedman Oster & Tejtel PLLC are additional counsel.

In briefs, they chastised the rival New York City and Oregon pension group for an “ongoing media campaign” and the New York City comptroller’s “long, adversarial history with Fox itself.”

It’s more important to discuss how Fox dismantled its corporate safeguards, Johnson said.

“We are not here to gin up media attention or to score political points. We’re not here to turn Fox into CBS or MSNBC. We understand the mission here is focused on corporate responsibility,” he said. “The court won’t see us seeking attention.”

The rival group applying for leadership includes public employee pension funds for New York City and Oregon, who argue Fox’s business model invites defamation risk and the network has no controls to prevent it. Their attorneys come from Friedlander & Gorris PA, Cohen Milstein Sellers & Toll PLLC, and Lieff Cabraser Heimann & Bernstein LLP.

Joel Friedlander of Friedlander & Gorris defended Comptroller Brad Lander’s public comments about Fox as “a good summary of our case without legal jargon” that demonstrates the official’s “public advocacy.”

The New York City funds own Fox shares worth about $27 million combined, and the Oregon funds have about $7 million invested in the network, one of their attorneys, Friedlander said during a hearing Thursday.

Prior Work Touted

Both teams touted their prior work protecting shareholder interests.

The New York City and Oregon team shares similar resources to those used to secure recent wins for shareholders in derivative actions against L Brands Inc. and The Boeing Co., Friedlander said.

“We show Fox acted as if it did not care about the cost of defamation or as if Fox was immune from liability for defamation,” he said.

The other funds’ competing complaint “misses the point that Fox is an industry outlier when it comes to fact checking and issuing retractions,” he said.

Johnson noted that his group’s law firms have worked together on a number of recent shareholder wins in Chancery Court, including a $1 billion recovery from Dell Technologies Inc.

“By any fair measure, we’re the team any neutral, institutional investor would want to have representing them in this case,” he said.

Vice Chancellor J. Travis Laster questioned the attorneys about how they came to work with the funds, their compensation arrangements, their internal decision-making process, and what the firms were doing to ensure diversity in backgrounds and experiences on their team that would “contribute to the best decisions being made.”

Laster didn’t make a decision during the hearing in Wilmington, Del. “Both teams here are absolutely capable of doing an excellent job in this case,” he said.

Fox and its board haven’t made a court appearance yet.

The case is In re Fox Corp. Derivative Litig., Del. Ch., No. 2023-0418, hearing 11/9/23.