Topline
Fox Corp chairman Rupert Murdoch, his son Lachlan and other members of the company’s board were sued by an individual shareholder on Tuesday who claimed they failed to act against Fox News’ airing of conspiracy theories and misinformation about the 2020 presidential election, as the cable network prepares to face off in a defamation trial centered on its coverage this week.
Rupert Murdoch and Lachlan Murdoch have both been named in the lawsuit.
Key Facts
In a suit filed with the Delaware Court of Chancery, Fox shareholder Robert Schwarz alleges that the board members “knowingly” allowed the network’s hosts to propagate falsehoods about the election being stolen.
The lawsuit accuses the board of being more concerned about the network’s “short-term ratings” while failing to grasp the “long-term damages” caused by the reporting of these falsehoods, Reuters reported.
The suit notes that, because of this, the company now faces two defamation cases brought against it by voting machine makers Dominion Voting Systems and Smartmatic USA, totaling $4 billion.
Schwarz's suit is based on multiple revelations that have emerged from filings linked to Dominion's $1.6 billion defamation lawsuit against the cable news network and its parent Fox Corp.
The investor is seeking damages for the company from the board alongside governance reforms.
What To Watch For
Last month, Bloomberg Law reported that several firms are weighing so-called derivative suits—against Fox Corp’s board on behalf of investors. Schwarz’s suit appears to be the first of such suits filed against the board. While noting that such cases against a company’s board usually face many hurdles, revelations from the ongoing defamation suits against the company may provide an opening.
Tangent
Revelations from the Dominion case filings may also play a role in another defamation lawsuit filed in Australia. Last year, Australian news outlet Crikey was sued by Lachlan Murdoch after the website referred to the Murdoch family as an “unindicted co-conspirator” of the January 6 riots at the U.S. Capitol. In its response filed on Tuesday, Crikey calls Murdoch “morally and ethically culpable for the illegal January 6 attack” because under his control, Fox News “promoted and peddled Trump’s lie of the stolen election.” The filing then calls out Murdoch’s “unethical and reprehensible conduct” for allowing the network to promote something he knew was false.
Key Background
Dominion Voting Systems sued Fox News and Fox Corp. for defamation in 2021, accusing the cable news outlet of pushing false claims about its electronic voting machines and election fraud. Dominion’s suit argues that Fox was aware that these claims were false but decided to push them anyway to boost ratings and profits. Court filings unsealed in the past few months revealed that top Fox News executives and hosts had expressed skepticism about the election fraud narrative in internal communications despite pushing it on air. On Tuesday, the judge overseeing the case expressed concern about Fox News’ “credibility,” for failing to reveal that Rupert Murdoch served in an official role at the cable news network aside from being the director of its parent company’s board. The case is set to go to trial in Delaware starting Monday.
Further Reading
Fox shareholder sues Rupert Murdoch, other directors over 2020 election coverage (Reuters)
Lachlan Murdoch knew Fox News claim of stolen US election was false, Crikey will argue in defamation trial (The Guardian)
