Fox Corp Faces Shareholder Lawsuit Over Election Claims

Fox Corp Faces Shareholder Lawsuit Over Election Claims \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ Shareholders of Fox Corp. are suing current and former executives, including Rupert and Lachlan Murdoch, alleging that they ignored liability risks stemming from Fox News broadcasts about 2020 election fraud and the Seth Rich case. Defense attorneys argue the lawsuit fails procedural and legal standards. The Delaware court is expected to rule on dismissal within 90 days.

Fox Shareholder Lawsuit: Quick Looks

• Lawsuit Filed: Shareholders allege Fox leaders ignored liability risks from false reporting.
• Key Allegations: Claims include bad faith decision-making and ignoring “red flags” about defamation risks.
• Election Reporting Fallout: Fox paid $787 million to settle Dominion’s defamation lawsuit in 2022.
• Defense Arguments: Attorneys argue procedural flaws and lack of evidence of bad faith oversight.
• Pending Ruling: The Delaware judge will decide on dismissal within 90 days.

Deep Look

Fox Shareholders Sue Executives Over Defamation Fallout

A group of institutional shareholders, including public employee pension funds from New York City and Oregon, has filed a lawsuit against Fox Corp., seeking to hold executives personally liable for financial damages stemming from Fox News broadcasts. The suit names high-profile leaders such as former chairman Rupert Murdoch and CEO Lachlan Murdoch, accusing them of ignoring clear risks of liability for false reporting on election fraud and the Seth Rich case.

2020 Election Fraud Allegations and Legal Fallout

The shareholder lawsuit focuses heavily on Fox News’ reports that falsely accused Dominion Voting Systems and Smartmatic USA of facilitating election fraud in 2020. Dominion filed defamation lawsuits against those who promoted the claims, leading to a high-profile settlement in 2022, when Fox Corp. paid Dominion $787 million. Meanwhile, Smartmatic is pursuing a $2.7 billion defamation suit in New York against Fox News.

Shareholders argue that Fox executives, including the Murdochs, knowingly allowed the network to air unsupported election fraud claims to retain pro-Trump viewers. According to the plaintiffs, internal communications showed that company leaders were aware the claims lacked evidence but prioritized profits over accountability.

The Seth Rich Case

The lawsuit also references Fox News’ coverage of the 2016 murder of Democratic National Committee staffer Seth Rich. Fox News suggested Rich was killed because he leaked Democratic emails to Wikileaks—a claim widely debunked and retracted a week after airing. Rich’s parents sued Fox News for defamation, accusing the network of portraying their son as a criminal. Fox settled the case in 2020 for millions of dollars, just before key hosts Lou Dobbs and Sean Hannity were to be deposed.

Shareholders contend that Fox’s failure to act before the Seth Rich story became a public scandal demonstrated a pattern of negligence.

Allegations of Bad Faith

The plaintiffs accuse Fox executives of engaging in “bad-faith decision-making,” claiming that they ignored multiple warnings about potential legal liabilities. Joel Friedlander, representing the shareholders, argued that the Murdochs had opportunities to minimize the company’s exposure but chose not to, instead prioritizing profits and viewer loyalty.

Friedlander alleged that decisions were made “at the highest level” to promote conspiracy theories without adequate editorial oversight.

Defense Arguments for Dismissal

Fox Corp.’s attorneys are seeking to have the case dismissed, primarily on procedural grounds. Under Delaware law, shareholders must first demand action from the company’s board before filing a lawsuit. Defense attorneys argue that the plaintiffs skipped this step and failed to prove that making a demand would have been futile.

They also argue that the allegations do not meet the high standards required to prove bad faith under Delaware law.

• “Red Flags” Dismissed: Defense attorney William Savitt argued that neither the Seth Rich settlement nor the defamatory statements about Dominion and Smartmatic qualify as “red flags” of future liability. According to the defense, a “red flag” must provide actionable warning of potential risks, not simply reflect a liability-causing event that has already occurred.
• No Proof of Bad Faith: Savitt emphasized that no evidence supports claims that Fox executives deliberately ignored their oversight responsibilities or condoned illegal conduct. The defense noted that retracting the Seth Rich story promptly and settling without admitting liability undermines the shareholders’ claims.
• Outcome Not Evidence of Misconduct: Defense attorneys argued that a poor outcome, such as a costly settlement, does not inherently demonstrate bad faith.

Legal and Procedural Standards

The lawsuit hinges on whether the plaintiffs can establish that the Fox board ignored their fiduciary duties to oversee and mitigate legal risks. Under Delaware law, proving bad faith requires demonstrating intentional wrongdoing or a complete failure to implement oversight systems.

Next Steps

Vice Chancellor J. Travis Laster, the presiding judge, is expected to decide within 90 days whether to dismiss the case or allow it to proceed. A dismissal would reinforce Fox’s defense that its executives acted appropriately, while allowing the case to proceed would signal that the court sees merit in the shareholders’ claims.

Broader Implications

The lawsuit is part of a broader reckoning for media companies accused of spreading misinformation. For Fox Corp., it represents another chapter in its ongoing legal and financial fallout from controversial reporting. If the case moves forward, it could set a precedent for holding corporate leaders accountable for editorial decisions made under their oversight.

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