"Defendants chose to invite robust defamation claims, with potentially huge financial liability and potentially larger business repercussions, rather than disappoint viewers of Fox News," the lawsuit reads in part.
The state of Oregon and New York City's pension funds filed a lawsuit against Fox Corporation Tuesday, arguing that the company allowed its Fox News channel to air falsehoods surrounding the 2020 election that put shareholders' investments at risk.
The lawsuit, which was filed in the Delaware Court of Chancery, is the most important shareholder action against the company since it settled a defamation suit for a record $787.5 million with Dominion Voting Systems in April. It also comes as experts had long warned the corporation it was leaving itself vulnerable to exactly these kinds of lawsuits by spreading lies that could lead to defamation claims, CNN reported.
"The board of Fox Corporation took a massive risk in pursuing profits by perpetuating and peddling known falsehoods," Oregon Attorney General Ellen Rosenblum said in a statement. "The directors' choices exposed themselves and the company to liability and exposed their shareholders to significant risks. That is the crux of our lawsuit, and we look forward to making our case in court."
"Fox's board of directors has blatantly disregarded the need for journalistic standards and failed to put safeguards in place despite having a business model that invites defamation litigation."
In the aftermath of the 2020 presidential election, both guests and hosts on Fox News repeated the false claim that former President Donald Trump had truly won the election and circulated conspiracy theories justifying this view, such as the lie that Dominion voting machines had swapped Trump votes to votes for President Joe Biden. The lawsuit argues that by catering to the desires of pro-Trump viewers, it failed in its duty to shareholders.
"Defendants chose to invite robust defamation claims, with potentially huge financial liability and potentially larger business repercussions, rather than disappoint viewers of Fox News," the lawsuit reads in part, according to The Associated Press.
Both New York City's pension funds and the state of Oregon have significant investments in Fox Corporation. The city pension funds had $28.1 million worth of shares at the end of July, while the state of Oregon had shares worth $5.2 million as of August 31, its Department of Justice said.
Neither plaintiff has specified an amount of damages, but New York City Comptroller and pension fund manager Brad Lander toldThe New York Times the city needed to "make the shareholders whole."
"Fox's board of directors has blatantly disregarded the need for journalistic standards and failed to put safeguards in place despite having a business model that invites defamation litigation," Lander said in a statement reported by CNN. "A lack of journalistic standards and a proper strategy to mitigate defamation has clearly harmed Fox's reputation and threatens their bottom line and long-term profitability."
Fox leadership did not comment to any major outlets on the lawsuit.
In addition to the Dominion suit, Fox has faced several other defamation claims, including an upcoming $2.7 billion lawsuit from election technology company Smartmatic and another from Ray Epps, a man from Arizona at the center of a conspiracy theory alleging he ran an FBI plan to instigate the riots at the Capitol on January 6, 2021.
Some groups argue that Fox News should face consequences beyond lawsuits. On July 3, the Media and Democracy project filed a petition with the Federal Communications Commission (FCC) to not renew the broadcast license for FOX 29 Philadelphia (WTXF-TV).
"As an FCC broadcast licensee FOX is bound to broadcast in the public interest, convenience, and necessity," the petitioners wrote. "Instead, it has repeatedly aired false information about election fraud, sowing discord in the country and contributing to harmful and dangerous acts on January 6, 2021."
Media experts and activists Steve Macek and Mitchell Szczepanczyk argued in a column that appeared at Common Dreams last week that the petition had merit.
"Although stripping an established TV station of its broadcast license may seem like an extreme measure," they said, "the Fox Corporation's record of malfeasance and its repeated betrayal of the public trust justifies the action in this case."