Legal AF by MeidasTouch - New Lawsuit Spells MORE DOOM for Fox after Tucker Firing

Episode Date: April 26, 2023

Michael Popok reports on Fox, Murdochs, & its board being sued in 2 new billion dollar breach of fiduciary duty cases in part because of Tucker Carlson filed in Delaware based on all the evidence developed by Dominion, and whether its enough to put Fox in serious financial jeopardy and remove the Murdochs from aaa ANY further company control and management. PAIRED: Connect with your partner every day using Paired. Download the app at https://www.paired.com/LEGALAF Support the MeidasTouch Network: https://patreon.com/meidastouch Add the MeidasTouch Podcast: https://podcasts.apple.com/us/podcast/the-meidastouch-podcast/id1510240831 Buy MeidasTouch Merch: https://store.meidastouch.com Follow MeidasTouch on Twitter: https://twitter.com/meidastouch Follow MeidasTouch on Facebook: https://facebook.com/meidastouch Follow MeidasTouch on Instagram: https://instagram.com/meidastouch Follow MeidasTouch on TikTok: https://tiktok.com/@meidastouch Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Michael Popok, legal AF, if Fox thought that settling with Dominion for $787 million was going to put an end to their troubles, especially in Delaware, where they are regulated as a Delaware corporation, they were wrong. All of the information that's been revealed in the Dominion case has not only been used, of course, by Smartmatic in New York, relying on discovery information, facts and information, text and emails that were developed in Delaware and filed in that case. But now shareholders, stockholders of Fox Corporation, a Delaware corporation have sued Rupert Murdoch, Locklin Murdoch, the independent directors and the company in two different types of cases,

both pending in Delaware Chancellery Court. The Fox News and Dominion case that we talked about a lot was in the Superior Court, which is across the street and deals with money damages. Things that happen in the Chancellery Court are both money damage case, but also allow the judge, always a judge, to make a decision as to whether the board of directors and the officers and directors of Fox and Fox corporation, meaning the Murdoch's and the independent

board of directors have breached their fiduciary duties, duties of care, duties of loyalty, duties of oversight that are owed by these stewards of the company to the shareholder by the way they handled or mishandled and defamed dominion, smartmatic and others and perpetuated the big lie every night in 2020 on the Fox channels. That's the issue that's up for grabs. So and this is going for hundreds and hundreds of millions of dollars on top of what's already been paid to dominion on top of the 2.7 billion that smart Mattik is seeking in a New York courthouse.

Let's unpack what's going on down in Delaware. Smartmatic is seeking in a New York courthouse. Let's unpack what's going on down in Delaware. The way these Delaware cases start is that the plaintiffs lawyers and the shareholders, actual shareholders, their own stock and Fox corporation will file or actually will serve the Fox Corporation, the corporation, with what's known in Delaware as a 220 demand, the 220 demand under the Delaware code give shareholders, any shareholder the right to look at books and records of the company. So they made a books and records demand. They coupled that with all of the information that came out of the Dominion Summary Judgment filings against Fox, all of those texts, all of those emails,

all of those video clips, they combined the two together, and two different groups have now filed suit. One is a direct action, a class action, and the other a derivative action. I'll cover both now. In the direct action, you're suing the corporation directly for damages that you or your class, a group of people that are similarly situated have suffered. So you claim that there has been a dim munition, a drop in the stock price at the time after the

time that you bought, and or a drop in the enterprise value, the value of the company since you made your investment, since you bought your share. And all you have to do to have standing to bring this kind of suit is to own one share. One share at the time of the stock drop value drop or otherwise, you can bring that case. And so plaintiffs, lawyers that work in and around Delaware find shareholders to bring this type of suit, right? Sometimes it's a suit in search of a shareholder, and they found their shareholders. And they're arguing based on the dominion revelations that are now in the public record, the public domain. in the public record, the public domain, that Fox, it's corporate officers, including

the Murdoch's, their board of directors and the independent members of the board. The ones that are supposed to even have even a heightened duty of independent fiduciary responsibility to shareholders, they breach their duty. They didn't properly provide oversight because they allowed the lies to continue in order to pump up ratings, pump up profits that were improper. And if now their argument would be have now that it's come to light, have hit the bottom line of Fox, it's now worth less after paying Dominion after the smart maddick lawsuit filing. It's worth less than it was before, not just the almost 900 or

800 million dollars paid to Dominion, but the future payments, the past payments, the damage to the brand for future investment, future expansion of the business, that's their argument. That's a direct suit. If they win a direct suit for these types of claims against the board and against the Murdoch's and against the company, then they get a damage award that the judge approves in Delaware, a portion of which of course goes to the lawyers, and the rest goes to the class as distributed to the class.

This could be a billion or billions of dollar direct action against Fox that just got off the ground in April. Now let's think of quick break to talk about our next sponsor, Paired. My wife and I were super competitive people, especially with each other. The other day we were going back and forth about, well, who knew our relationship history better? So we took to Paird.

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A happier relationship starts here. Now let's look at the other suit that's competing for the attention of the Delaware Cancer Record and for the money that Fox has. And that's a derivative action. The difference between a direct and a derivative action is the derivative action, the difference between a direct and a derivative action is the derivative action.

The plaintiff is suing on behalf of the company, suing on behalf of the company to have money returned to it from the officers, from the directors, from the owners, from the fiduciaries, for all of the bad things that Fox did to allow the lies against smart mannequin's dominion to go unabated on on television to pump up ratings and revenue. It's similar to the direct case except in a derivative case. Again, you're bringing it on behalf of the company in the company's name. After you've either made a demand on the independent directors to bring the suit themselves, which of course they often do not do. And if that happens, it's called futility.

If they're not going, if it's unlikely that they're going to bring a suit against themselves, then the plaintiff argues that it is futile to make a demand on them to do so and that you can go directly to court and not wait around to see what Fox is going to do so, and that you can go directly to court and not wait around to see what Fox is going to do next. And that's what's happened in this new derivative case. There the damages are similar, but the where they go are different. In a derivative case, the money goes back to the company to then get redistributed, if you will, to the investors because the enterprise value increases of the company, because more

money has come into the company's treasury. The direct case, as I said, damages go to the plaintiffs, derivative case, the damages or the money goes back to the company's coffers. Where does it come from? It comes from the director and officer liability insurance policies. In both cases, Fox carries hundreds of millions of dollars of stacked insurance with multiple insurance, reinsurance companies that are spreading the risk. And this will be covered by insurance. That's why plaintiffs lawyers go after these kind of cases because they are insured. There's money. There's a pot of money.

Now, this pot of money, whether it's hundreds of millions of dollars, usually, if I had a guess here, I think there's at least 500 to a billion dollars worth of coverage for Fox, given the size of the company and the risk. That is money that would be available to both the class action plaintiffs and their lawyers and the derivative action plaintiffs and their lawyers and the derivative action plaintiffs and their lawyers. And one person that's sort of in the middle of all this, who's named in one suit, but not the other, is former speaker of the House Republican Paul Ryan. Paul Ryan has been on the board of Fox for quite some time.

And I know what they're trying to do here. They're trying to go after Paul Ryan in order to convince him based on his legacy and how he feels about himself. And he's never been a trumper that his deposition will be powerful and he'll put pressure on the board and the company and the insurance companies and policy, the ones that have issued the policy to pay up on these class action and derivative actions. What could it mean? Well, let's do the math.

You have $780, almost million paid to dominion. You've got $2.7 billion in a case pending in New York. Now, that case is probably not gonna go to trial for another couple of years because that's how things move in New York, but there's exposure there. It is a likely loss for Fox. They'll have to disclose that to their shareholders in their public filings that they're likely to lose the smartmatic case the way they just lost the dominion case.

If they pay smartmatic 50 cents on the dollar, that's another billion dollars. Now you're at 1.8 billion dollars. Then you've got these cases for half a billion to a billion dollars a piece. Suddenly the 4.1 billion dollars of cash and warrants that Fox has on hand doesn't seem like it's enough, but then you add in the insurance coverage, which could be another half a billion dollars.

Either way, it is a hit. Tremendous hit. There's no two ways about it. To the balance sheet of Fox, therefore hitting its value as a company and ultimately to its shareholders. And that is the purpose of these lawsuits down in Delaware, suing them, suing the board, suing the ownership for breach of fiduciary duty and breach of a duty of proper oversight to be proper stewards

of the public money, of the shareholder money in due course. So this is what we're going to continue to follow on legal AF, the podcast on Wednesdays and Saturdays that I co-anchor on the Midas Touch Network. I do hot takes like this really interesting and important litigation matters at the intersection of law and politics politically charged litigation matters about every day. If you like what I'm doing here, give me a thumbs up on the video and you can follow me on all things social media at MSPOPOC. This is Michael Popoc, League of Legends reporting. Lock him up. Indytment season is upon us.

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