New York City’s pension funds sued the Fox Corporation and its board on Tuesday, accusing the company of neglecting its duty to shareholders by opening itself up to defamation lawsuits from the persistent broadcasting of falsehoods about the 2020 presidential election.
The lawsuit, filed in the Delaware Court of Chancery, is the most significant shareholder action since Fox settled a blockbuster defamation lawsuit brought by Dominion Voting Systems in April for $787.5 million. The city’s five pension funds represent nearly 800,000 current and retired workers and are worth $253 billion.
“We are shareholders at a company that, unfortunately, has a longstanding practice of allowing conspiracy theories that its executives and its board know are false to be repeated over and over and over again, despite the very clear and present risk of defamation lawsuits eroding shareholder value,” said Brad Lander, New York City’s comptroller, who oversees the pension funds. “And there has been no effort to make governance reforms.”
The funds are long-term shareholders of Fox Corporation, the parent company of Fox News, a spokeswoman for the comptroller said. The funds held about 857,000 shares, valued at $28.10 million, as of July 31.
The State of Oregon, representing Oregon’s public employees retirement fund, joined the New York City funds in their lawsuit against Fox.
A Fox Corporation spokesman declined to comment.
The lawsuit accuses Fox of trying to appease its viewers after the results of the 2020 U.S. presidential election by amplifying false claims from former President Donald J. Trump and his allies that voting had been rigged. It said board directors had known there was a risk of defamation litigation from the false narratives, but “consciously disregarded” it and did not undertake good-faith efforts to minimize that risk.
“Defendants chose to invite robust defamation claims, with potentially huge financial liability and potentially larger business repercussions, rather than disappoint viewers of Fox News,” said the complaint, which was filed against Fox Corporation’s board members and other executives. The board includes the media mogul Rupert Murdoch and his son Lachlan Murdoch, who control the company.
Fox has faced numerous legal battles in the wake of its promotion of election conspiracy theories.
The defamation lawsuit brought by Dominion, a voting technology company that Fox had implicated in the conspiracy theories, generated many negative headlines after a trove of communications released in the discovery process revealed that many Fox executives and hosts did not believe the lies they were broadcasting but aired them anyway.
On the day the trial was set to begin in Delaware in April, Fox settled with Dominion for $787.5 million, one of the largest-ever settlements in a defamation case. Fox faces a similar lawsuit from Smartmatic, another election technology company, which has sued the company for $2.7 billion. That case is not expected to go to trial until 2025.
After the settlement, two Fox Corporation shareholders sued board members in April for failing to act on risks of defamation litigation and damaging the company’s reputation — arguments similar to those made by the New York funds.
In June, Fox News paid $12 million to settle with a former producer, Abby Grossberg, who had accused the network of allowing a hostile workplace and of coercing her into providing misleading testimony in the Dominion suit.
In July, Ray Epps, a man whom Fox News accused of being an undercover government agent at the Jan. 6 Capitol attack as part of an unfounded and widespread conspiracy theory, sued the network and its former host Tucker Carlson for defamation, seeking an unspecified amount in damages.
Last month, Fox announced that Viet Dinh, its chief legal officer, who presided over the handling of the Dominion case, would leave his role at the end of the year.
While the complaint from the New York funds does not specify the damages being sought, Mr. Lander said the company’s board needed to “make the shareholders whole.” He said the funds were also seeking governance and ethics reforms at the company.
Mr. Lander said the city’s five retirement funds, which include the funds for police officers and firefighters, had all voted to join the action.
“There are plenty of Fox News watchers among the 750,000 retirees and future retirees,” he said, “but nobody likes losing their money as a result of preventable lawsuits.”