(Reuters) – Fox Corp shareholders are demanding company records that could show whether directors and executives oversaw Fox News’ accurate coverage of former President Donald Trump’s election fraud claims, sources told Reuters, in what could be a prelude to lawsuits seeking to do so. directors liable for costs.
Investors are using provisions of Delaware corporate law to demand internal Fox records to examine how Fox executives acted when their Fox News network aired segments about Mr. Trump’s false claims that he lost the 2020 presidential election due to voter fraud, two sources confirmed.
In moves not previously reported, shareholders are seeking records such as board minutes, emails and texts that may contain evidence that Fox directors and executives were negligent in allowing the network to air the false claims.
Shareholders could use these as well as evidence presented in other lawsuits to build a case for the executives to be held personally liable for costs from two defamation cases by voting machine companies over the Fox coverage.
The sources requested anonymity to discuss the claims, which are not public, and declined to provide further details. It was not clear how many Fox shareholders are pushing the disclosure requirements.
A Fox spokesperson did not respond to a request for comment.
An individual shareholder has already sued Fox Corp. chairman Rupert Murdoch, his son and chief executive Lachlan Murdoch and three other board members, alleging they breached their duties to the company by allowing Fox to perpetuate Trump̵
7;s false claims.Two voting technology companies have sued Fox for defamation over their reports that their machines enabled voter fraud. They are seeking a combined $4.3 billion in damages, and costs related to the lawsuits helped increase Fox’s expenses by $54 million in the second half of 2022.
The media company faces a lawsuit Tuesday in Delaware over Dominion Voting System’s claim that Fox defamed it. Dominion is seeking $1.6 billion in damages. Voting technology company Smartmatic USA filed a similar lawsuit in New York.
Documents made public in the Dominion case show top executives, including Rupert Murdoch, and producers and hosts discussed concerns about the network’s reputation and cast doubt on Mr. Trump’s claims of election fraud.
To win, Dominion must show that Fox knowingly disseminated false information or acted with reckless disregard for the truth — the legal standard for actual malice. Fox has argued that Dominion’s case cannot prove actual malice and that its claim for damages is “free from reality.”
If Dominion wins in the lawsuit, especially if there are large damages, it will help shareholders argue that the board should have implemented procedures to avoid broadcasting defamatory claims that damage Fox’s credibility and finances.
If Fox prevails in the Dominion case, the shareholders’ case would not be as strong, said Ann Lipton, a professor at Tulane University Law School. But investors could still argue that Fox’s leadership failed to prevent an “expensive and embarrassing” episode, she said.
Previous shareholder derivative claims led to a $90 million settlement in 2017 over the Fox board’s handling of sexual harassment at Fox News and a $139 million settlement by the board in 2013 over a phone-hacking scandal at the London tabloids, both funded by insurance.
These settlements also led to additional disclosure requirements.
Lipton said investors suing over the 2020 election coverage could seek to create an independent panel to report to the board on the accuracy of the news.
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