This new article is here. The Introduction:
In the wake of the mega-million-dollar settlement of U.S. Dominion's defamation action against Fox News over the network's broadcast of false election fraud claims after the 2020 U.S. presidential election, shareholder derivative actions were brought in Delaware against the parent company Fox Corporation's board of directors for breach of fiduciary oversight duties under state corporate law. The shareholder plaintiffs claimed that the Fox Corporation board breached its fiduciary duties by allowing Fox News knowingly to air false programming that put the company at risk of massive defamation liability. The Delaware Chancery Court denied Fox Corp.'s motion to dismiss the action for lack of standing, so the derivative action is currently pending.
But should corporate fiduciary duty law be interpreted to impose liability on the boards of companies that own news outlets for failing to control defamation and other speech tort risks associated with the editorial judgments made by their news subsidiaries? What makes the In re Fox Corporation Derivative Litigation (hereinafter "In re Fox") significant beyond its specific facts is that the plaintiffs' rationales seek to expand and supercharge the traditional oversight requirements of corporate law. If accepted, this turn to strengthening the disciplinary power of corporate governance in the news media context is likely to undermine press functions and the public interest in a free and independent press.
The expansive interpretations of corporate governance principles advanced in In re Fox could attract support on the basis that corporate oversight duties can serve to minimize misinformation in political discourse. Surveys reveal that many Americans see political misinformation as a social threat. If using corporate law to combat misinformation could lead to robust censorship effects on falsity, then many could consider this a significant public benefit. This could incentivize additional lawsuits against the press.
At the same time, such a development is likely to undermine press activity in ways harmful to public discourse. If these kinds of corporate governance claims are successful, they promise to generate a regulatory regime of editorial control by risk-averse corporate boards with much broader business interests than the protection of press freedom. The possibility of multi-million-dollar personal liability for parent company board members—or at least corporate insurers—is likely to generate excessive board-level micromanagement.
It is reasonable to expect that this would lead directly to journalistic self-censorship by news subsidiaries, deter journalism discouraged by a press-hostile government, and worsen journalistic timidity in covering the powerful and litigious. The self-regulatory compliance and oversight systems likely to be implemented in media companies as a response to heightened governance liability will inevitably extend to coverage of matters beyond clearly false information.
