21st Century Fox recently announced that it was agreeing to pay $90 million to resolve a derivative suit against the corporation’s management arising out of sexual harassment allegations.
At a time when the number of high-profile and powerful individuals accused of sexual harassment increases almost every day, the Fox settlement is most notable for creating a majority-independent body of experts that is empowered to tackle sexual harassment issues in a novel way.
In July 2016, former Fox News anchor Gretchen Carlson filed a public sexual harassment lawsuit against Roger Ailes, the longtime CEO of Fox News. The deplorable conduct at the top signaled a deeper problem. The City of Monroe (Michigan) Employees’ Retirement System, represented by Bernstein Litowitz Berger and Grossman (“BLBG”), asserted Monroe’s statutory right to make a demand for books and records to investigate possible wrongdoing by the 21CF Board of Directors (the “Board”) and certain senior executives. The matter became even more significant as the harassment claims expanded to include Bill O’Reilly and others, and broad race discrimination claims also came to light.
After over a year of litigation and complex negotiations, on Monday November 20, the parties made public the terms of a settlement. The settlement includes two key components:
- The creation of the “Fox News Workplace Professionalism and Inclusion Council” (“WPIC”) of experts, a majority of whom are independent of the Murdoch family and outside the Company and Board; and
- One of the largest financial recoveries – $90 million – ever obtained in a pure corporate board oversight dispute (recouped for the company from management).
The WPIC has the power to oversee and recommend policies and procedures and other reforms needed to address and correct the problems at Fox News, including the hiring of outside consultants and conducting of independent investigations. It is composed of the chief human resources officers of the Company and Fox News, as well as four independent appointees, with two nominated by Monroe and two by the Company.
