Twenty-First Century Fox 2011 Annual Report Download - page 72

Notes to the Consolidated Financial Statements (continued)
consolidated second amended complaint, which defendants moved to dismiss on February 28, 2008. By order dated July 15, 2008, the court
granted in part and denied in part defendants’ motion to dismiss. The 2003 claims and the claims against the Investment Banks were dismissed
with prejudice. The Section 14(a), Section 20(a) and the breach of fiduciary duty claims related to the FIM Transaction remain against the officer
and director defendants and the VantagePoint defendants. On November 14, 2008, plaintiff filed a motion for class certification to which
defendants filed their opposition on January 14, 2009. On June 22, 2009, the court granted plaintiff’s motion for class certification, certifying a
class of all holders of Intermix common stock from July 18, 2005 through consummation of the FIM Transaction, who were allegedly harmed by
defendants’ improper conduct as set forth in the complaint. The parties have completed fact and expert discovery. On June 17, 2010, the court
granted in part and denied in part defendants’ summary judgment motion filed on October 19, 2009. Specifically, the court denied plaintiff’s
motion for summary adjudication of a factual issue and denied defendants’ motion to exclude plaintiff’s damages expert, which was filed on
November 30, 2009. In the court’s June 17 order, the court found that plaintiff could not proceed on any fiduciary duty claim based upon alleged
violations of the duty of care, but found material issues of fact prohibiting summary judgment on alleged violations of fiduciary duty of loyalty.
On plaintiff’s Section 14(a) claim, the court found material issues of fact that prohibited summary judgment on the entire claim, but granted
defendants’ motion as to certain purported omissions, finding the allegedly omitted information immaterial. Further, the court granted defendants’
motion as to two damage theories for the Section 14(a) claim, finding benefit of the bargain damages not viable and lost opportunity damages too
speculative, and permitting plaintiff to proceed only based upon a theory of out-of-pocket damages. No trial date was set. On October 21, 2010,
the parties agreed to a settlement of the action, which is subject to approval by the court. A formal stipulation of settlement was submitted to the
court for its approval on December 28, 2010. Accordingly, the Company has recognized the terms of this settlement, which was not material to
the Company, in its results of operations. On February 18, 2011, the court granted preliminary approval of the settlement. Plaintiff’s counsel
supervised notice of the settlement to the class. The notice provided class members with an opportunity to object. Two shareholders filed
objections to the settlement with the court in April 2011. Both objectors had counsel appear on their behalf at a hearing on May 16, 2011 where
the court considered plaintiff’s motion for final approval of the settlement and plaintiff’s counsel’s motion for attorneys’ fees, which will come out
of the settlement funds. At the hearing, the court did not rule on the motions and instead ordered that plaintiff, objector Trafelet & Co., and
defendants submit joint briefing with respect to certain of Trafelet’s objections. The joint brief was filed on June 10, 2011. The joint brief
narrowed the objections to allocation of the settlement amount and sufficiency of the notice as it pertains to how the settlement funds will be
allocated. The joint brief contained no objection to the settlement itself.
Shareholder Litigation
On March 16, 2011, a complaint seeking to compel the inspection of the Company’s books and records pursuant to 8 Del. C. § 220,
captioned Central Laborers Pension Fund v. News Corporation, was filed in the Delaware Court of Chancery. The plaintiff requested the
Company’s books and records to investigate alleged possible breaches of fiduciary duty by the directors of the Company in connection with the
Company’s purchase of Shine (the “Shine Transaction”). The Company moved to dismiss the action, and briefing on the Company’s motion to
dismiss has been completed. An oral argument on the Company’s motion to dismiss is scheduled for August 11, 2011.
Also on March 16, 2011, two purported shareholders of the Company filed a derivative action in the Delaware Court of Chancery, captioned
The Amalgamated Bank v. Murdoch, et al. (the “Amalgamated Bank Litigation”). The plaintiffs alleged that both the directors of the Company
and Rupert Murdoch as a “controlling shareholder” breached their fiduciary duties in connection with the Shine Transaction. The suit named as
defendants all directors of the Company, and named the Company as a nominal defendant. Similar claims against the same group of defendants
were filed in the Delaware Court of Chancery by a purported shareholder of the Company, New Orleans Employees’ Retirement System, on
March 25, 2011 (the “New Orleans Employees’ Retirement Litigation”). Both the Amalgamated Bank Litigation and the New Orleans Employees’
Retirement Litigation were consolidated on April 6, 2011 (the “Consolidated Action”), with The Amalgamated Bank’s complaint serving as the
operative complaint. The Consolidated Action was captioned In re News Corp. Shareholder Derivative Litigation. On April 9, 2011, the court
entered a scheduling order governing the filing of an amended complaint and briefing on potential motions to dismiss.
Thereafter, the plaintiffs in the Consolidated Action filed a Verified Consolidated Shareholder Derivative and Class Action Complaint (the
“Consolidated Complaint”) on May 13, 2011, seeking declaratory relief and damages. The Consolidated Complaintlargelyrestatedtheclaimsin
The Amalgamated Bank’s initial complaint and also raised a direct claimonbehalfofapurportedclassofCompanyshareholdersrelatingtothe
possible addition of Elisabeth Murdoch to the Company’s board. The defendants filed opening briefs in support of motions to dismiss the
Consolidated Complaint on June 10, 2011, as contemplated by the court’s scheduling order. On July 8, 2011, the plaintiffs filed a Verified Amended
Consolidated Shareholder Derivative and Class Action Compliant (the “Amended Complaint”). In addition to the claims that were previously raised
in the Consolidated Complaint, the Amended Complaint brought claims relating to the alleged acts of voicemail interception at News of the World
(the “NoW Matter”). Specifically, the plaintiffs claim that the directors of the Company failed in their duty of oversight regarding the NoW Matter.
The Amended Complaint seeks declaratory relief, damages, fees and costs. The court has entered a renewed scheduling order whereby the defendants
are scheduled to move to dismiss the Amended Complaint, and file opening briefs in support of such motions, by September 9, 2011.
On July 15, 2011, another purported stockholder of the Company filed a derivative action captioned Massachusetts Laborers’ Pension &
Annuity Funds v. Murdoch, et al., in the Delaware Court of Chancery (the “Mass. Laborers Litigation”). The complaint names as defendants the
directors of the Company and the Company as a nominal defendant. The plaintiffs’ claims are substantially similar to those raised by the Amended
Complaint in the Consolidated Action. Specifically, the plaintiff alleged that the directors of the Company have breached their fiduciary duties by,
among other things, approving the Shine Transaction and for failing to exercise proper oversight in connection with the NoW Matter. The
plaintiff also brought a breach of fiduciary duty claim against Rupert Murdoch as “controlling shareholder,” and a waste claim against the
directors of the Company. The action seeks as relief damages, injunctive relief, fees and costs. On July 25, 2011, the plaintiffs in the Consolidated
Action requested that the court consolidate the Mass. Laborers Litigation into the Consolidated Action.
70 News Corporation