Well, here’s a big shocker: Grant & Eisenhofer and Bernstein Litowitz Berger & Grossmann aren’t the only shareholders’ firms that think Rupert Murdoch’s News Corp is ripe for the picking. It’s been a little more than a week since G&E and Bernstein amended the complaint in their already-underway Delaware Chancery Court shareholder derivative suit against the News Corp board to include allegations from the British phone-hacking and bribe-paying scandal. Turns out that’s plenty of time for other shareholder lawyers to fire up their word processors and lodge their own complaints.
On Friday, a Massachusetts union pension fund represented by Labaton Sucharow filed a Delaware derivative suit. And on Monday, Manhattan federal court docketed a derivative complaint filed by Glancy Binkow & Goldberg on behalf of an individual News Corp shareholder. So now what? Who gets to control the shareholder litigation against Murdoch’s embattled company?
There’s no clear answer to that question, which means we may be in for a tussle between the Delaware and New York plaintiffs firms. As I mentioned in a post yesterday, Chancery Court judges are increasingly irritated that shareholders are filing mergers and acquisition and corporate governance suits in courts outside of Delaware. But there’s no formal framework for determining where cases like this should proceed. (That’s in contrast to federal securities class actions, in which the litigation process is strictly governed by the Private Securities Litigation Reform Act.)
As an initial matter, Labaton Sucharow’s Delaware case will be consolidated with the pending News Corp derivative suit, under the judicial order that first combined Grant & Eisenhofer’s case with Bernstein Litowitz’s back in March. Labaton partner Christine Azar told OTC that the firm won’t oppose consolidation and plans to work with G&E and Bernstein Litowitz. I asked Azar if she filed a separate suit just to get the Massachusetts fund a seat at the table alongside the other plaintiffs firms. “My client very much wanted to get involved in this one, as you might imagine,” she said. “A seat at the table may be putting it mildly.”
The New York case, unlike the Labaton suit, isn’t an exact parallel to the pending Delaware suit. The Glancy firm’s complaint includes a federal law claim that News Corp. failed to disclose the true nature of its internal controls to shareholders in proxy materials, and calls for a new board election.