Twenty-First Century Fox 2014 Annual Report Download - page 127

TWENTY-FIRST CENTURY FOX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
121
Contingencies
Shareholder Litigation
Delaware
Reference is made to the Amalgamated Bank Litigation, the New Orleans Employees’ Retirement Litigation, the
Mass. Laborers Litigation and the Cohen Litigation which were purported stockholder derivative actions consolidated
in the Delaware Court of Chancery (the “Consolidated Action”) and previously described by the Company in the 2013
Form 10-K. The plaintiffs’ Third Amended Complaint in the Consolidated Action alleged claims against director
defendants for breach of fiduciary duty arising from the Company’s purchase of Shine and from their purported failure
to investigate alleged acts of voicemail interception at The News of the World (the “NoW Matter”) and allegedly
permitting the Company to engage in a cover up related to the NoW Matter. The Third Amended Complaint sought a
declaration that the defendants violated their fiduciary duties, damages, pre- and post-judgment interest, fees and costs.
On June 26, 2013, the Court approved the settlement in principle that the parties reached on April 17, 2013, and
entered a final judgment dismissing the Consolidated Action. Pursuant to the terms of that settlement, the parties agreed
that the director defendants in the Consolidated Action would cause to be paid on their behalf the amount of $139
million to the Company, minus $28 million in attorneys’ fees and expenses awarded by the Court to the plaintiffs’
counsel. No stockholder objected to either the settlement or the proposed fee award. The settlement became effective
on August 16, 2013, because as of that date, the dismissal of the Consolidated Action as well as the dismissals of each
of the Shields Litigation, the Iron Workers Litigation and the Stricklin Litigation (each as described in the 2013 Form
10-K under the heading “Shareholder Litigation—Southern District of New York”) were no longer subject to appeal.
The above amount was paid from an escrow account created for the benefit of the director defendants pursuant to an
agreement reached between the defendants and their directors’ and officers’ liability insurers for the payment of
insurance proceeds, subject to a claims release, and accordingly the Company recorded the net settlement of $111
million in Other, net in the Consolidated Statement of Operations for the fiscal year ended June 30, 2014. In addition to
the payment to the Company, the settlement contemplates that the Company will build on corporate governance and
compliance enhancements which the Company has implemented. These shall remain in effect at least through
December 31, 2016, and will be applicable to both the Company and News Corp.
Southern District of New York
On July 19, 2011, a purported class action lawsuit captioned Wilder v. News Corp., et al. (“Wilder
Litigation”), was filed on behalf of all purchasers of the Company’s common stock between March 3, 2011 and
July 11, 2011, in the United States District Court for the Southern District of New York. The plaintiff brought
claims under Section 10(b) and Section 20(a) of the Securities Exchange Act, alleging that false and misleading
statements were issued regarding the NoW Matter. The suit names as defendants the Company, Rupert Murdoch,
James Murdoch and Rebekah Brooks, and seeks compensatory damages, rescission for damages sustained, and
costs. On June 5, 2012, the court issued an order appointing the Avon Pension Fund (“Avon”) as lead plaintiff and
Robbins Geller Rudman & Dowd as lead counsel. Thereafter, on July 3, 2012, the court issued an order providing
that an amended consolidated complaint shall be filed by July 31, 2012. Avon filed an amended consolidated
complaint on July 31, 2012, which among other things, added as defendants NI Group Limited (now known as News
Corp UK & Ireland Limited) and Les Hinton, and expanded the class period to include February 15, 2011 to July 18,
2011. The defendants filed motions to dismiss the litigation, which were granted by the court on March 31, 2014.
Plaintiffs were allowed to amend their complaint, and on April 30, 2014, plaintiffs filed a second amended
consolidated complaint, which generally repeats the allegations of the amended consolidated complaint and also
expands the class period to July 8, 2009 to July 18, 2011. The Company’s management believes the claims in the
Wilder Litigation are entirely without merit, and intends to vigorously defend those claims.
U.K. Newspaper Matters and Related Investigations and Litigation
U.S. regulators and governmental authorities continue to conduct investigations initiated in 2011 with respect
to the U.K. Newspaper Matters. The Company is cooperating with these investigations. It is not possible at this time
to estimate the liability, if any, of the Company relating to these investigations.