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In re Fox Corp. Derivative Litigation

Delaware Chancery Court
2024 WL 5233229 (2024)

Written by Jamie Milne, JD

Facts

Fox Corporation (Fox), the parent company of Fox News, had an eight-person board of directors (defendants) that included Rupert Murdoch, Lachlan Murdoch, Chase Carey, and Jacques Nasser. Rupert Murdoch was the chair of Fox’s board and the executive chair of Fox News. Lachlan was Rupert’s son, and both Carey and Nasser had a long-term business and personal relationship with Rupert. After the 2020 presidential election, Fox News called the election in favor of Joseph Biden despite then-President Donald Trump making allegations of election fraud. Fox News viewership plummeted. In response, Fox News began airing stories sympathetic to Trump’s fraud claims. The stories repeatedly reported that the voting machines provided by Dominion Voting Systems (Dominion) and Smartmatic USA (Smartmatic) illegally switched votes from Trump to Biden. Dominion and Smartmatic instructed Fox News to stop reporting false allegations, and Fox News’s fact-checking department had no evidence to support the allegations. However, Fox News continued its election-fraud stories. Dominion and Smartmatic eventually both sued Fox for defamation. After Fox had settled with Dominion for $787.5 million, and while Smartmatic’s suit against Fox remained pending, Fox shareholders (plaintiffs) sued Fox’s board of directors, arguing that they should be personally liable for Fox’s losses because they caused Fox to violate the law by knowingly having Fox News defame Dominion and Smartmatic. The directors moved to dismiss the suit, arguing that the shareholders lacked standing because any claim against the directors belonged to the corporation itself.

Rule of Law

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Holding and Reasoning (Laster, J.)

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A "yes" or "no" answer to the question framed in the issue section;
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