The five New York City pension funds filed a shareholder derivative lawsuit today against the board of directors and certain officers of Fox Corporation, the parent company of Fox News Network, for breach of fiduciary duty. The funds are long-term shareholders of Fox Corporation, with 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.
“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.”
The complaint alleges that the Board knew that Fox News’s promotion of political narratives without regard for whether the underlying factual assertions were true created defamation risk, starting with false claims that murdered Democratic National Committee staffer Seth Rich provided hacked emails to WikiLeaks and continuing through false claims that election technology companies U.S. Dominion, Inc. and Smartmatic USA Corp. rigged the 2020 presidential election.
The complaint further alleges that Fox had a business model of broadcasting stories that appealed to their viewers, regardless of the truth or factual basis for those claims, meaning that Fox’s Board needed to be particularly attuned to the risk of defamation litigation. Instead, the complaint alleges that defendants consciously disregarded that risk.
In the suit, the funds highlight Fox’s illegal business model of pursuing profits by committing actionable defamation and allege that the company undertook no good-faith efforts to monitor for or mitigate defamation risk. The funds also allege that the Defendants took no meaningful steps to protect the Company and are liable for the harm to Fox that has resulted from their breaches of fiduciary duty, including Fox’s $787.5 million settlement with Dominion. The Board’s failures have also brought increased scrutiny on Fox’s adequacy to hold an FCC broadcast license.
The lawsuit seeks to recover from Fox’s officers and directors damages that their misconduct has caused to the company, including amounts paid in settlement and legal fees arising out of lawsuits brought by Dominion and Smartmatic.
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. They are represented by the New York City Law Department as well as counsel at Cohen Milstein Sellers & Toll PLLC, Friedlander & Gorris, and Lieff Cabraser Heimann & Bernstein.
In addition to Comptroller Lander, the trustees of the five New York City pension funds are as follows:
New York City Employees’ Retirement System (NYCERS): Mayor Eric Adams’ Appointee Bryan Berge, Director, Mayor’s Office of Pension and Investments; New York City Public Advocate Jumaane Williams; Borough Presidents: Mark Levine (Manhattan), Donovan Richards Jr. (Queens), Vito Fossella (Staten Island), and Vanessa L. Gibson (Bronx); Henry Garrido, Executive Director, District Council 37, AFSCME; Richard Davis, President Transport Workers Union Local 100; and Gregory Floyd, President, International Brotherhood of Teamsters, Local 237.
Teachers’ Retirement System (TRS): Mayor Eric Adams’ Appointee Bryan Berge, Director, Mayor’s Office of Pension and Investments; Chancellor’s Representative, Greg Faulkner, New York City Department of Education Panel for Educational Policy; and Thomas Brown (Chair), Victoria Lee, and David Kazansky, all of the United Federation of Teachers.
New York City Fire Pension Fund (Fire): Mayor Eric Adams’ Representative Bryan Berge, Director, Mayor’s Office of Pension and Investments; New York City Fire Commissioner Laura Kavanagh (Chair); New York City Finance Commissioner Preston Niblack; Andrew Ansbro, President, Robert Eustace, Vice President, Chris Viola, Treasurer, and Eric Bischoff, Staten Island Representative and Chair, Uniformed Firefighters Association of Greater New York; Sean Michael, Chiefs’ Rep., Joe Camastro, Lieutenants’ Rep. and Liam Guilfoyle, (Chair), Uniformed Fire Officers Association; and Peter Devita, Marine Engineers Association.
New York City Police Pension Fund (Police): Mayor Eric Adams’ Representative Bryan Berge, Director, Mayor’s Office of Pension and Investments; New York City Finance Commissioner Preston Niblack; New York City Police Commissioner Edward Caban (Chair); Chris Monahan, Captains Endowment Association; Louis Turco, Lieutenants Benevolent Association; Vincent Vallelong, Sergeants Benevolent Association; Paul DiGiacomo, Detectives Endowment Association; and Patrick Hendry, Daniel Terrelli, Albert Alcierno and Arthur Egner all of the NYC Police Benevolent Association.
Board of Education Retirement System (BERS): Schools Chancellor David C. Banks, Represented by Karine Apollon; Mayoral appointees Lilly Chan, Marjorie Dienstag, Gregory Faulkner, Anita Garcia, Anthony Giordano, Dr. Angela Green, Alan Ong, Phoebe Sade-Arnold, Maisha Sapp, Venus Sze-Tsang, Gladys Ward; CEC appointees Naveed Hasan, Jessamyn Lee, Thomas Sheppard, and Ephraim Zakry; Borough President Appointees Geneal Chacon (Bronx); Tazin Azad (Brooklyn); Kaliris Salas-Ramirez (Manhattan); Sheree Gibson (Queens); Aaron Bogad (Staten Island); and employee members John Maderich of the IUOE Local 891 and Donald Nesbit of District Council 37, Local 372.
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