Roger Ailes, former CEO of Fox News.
At a time when troubling stories about sexual harassment appear in the media almost daily, the plaintiffs law firm Bernstein Litowitz Berger & Grossmann is wielding the threat of investor litigation to ensure that such behavior at public companies becomes unacceptable and that, when it does take place, company directors and officers will pay.
The firm used this tactic with 21st Century Fox Inc., the parent company of Fox News, after a number of women, including television host Gretchen Carlson, leveled harassment claims against former CEO Roger Ailes and, later, TV personality Bill O’Reilly. Armed with the force of a large institutional investor threatening a third-party derivative lawsuit, the firm got 21st Century Fox to agree to a settlement that requires the company to institute specific corporate governance reforms and compels its directors and officers, as well as the Ailes’ estate, to pay $90 million through third-party insurers. The money would go back to the company for the benefit of shareholders.
The settlement, announced in November, could have a lasting impact on the fight against sexual harassment at Fox and elsewhere in corporate America.
Max Berger
“Our view was that … this would form a template for many other companies, public companies or otherwise, that are facing similar issues,” said Max Berger, a founding partner at Bernstein Litowitz who led the negotiations with Fox.
As part of the settlement, which still must be approved in Delaware Chancery Court, Fox established the Fox News Workplace Professionalism and Inclusion Council, which will report to the company’s board for at least five years and can recommend reforms in the realm of human resources training and recruitment of women and minority employees, among other areas.
The council includes the heads of human resources at both 21st Century Fox and Fox News, as well as four outside experts on diversity and workplace inclusion issues, including former Manhattan federal judge Barbara Jones, now a partner at Bracewell focused on corporate monitorships.
Fox is required to post reports from the council to its website and to reference them in its annual reports. Once the five years are up, the company must also publicly explain whether and why it plans to discontinue the council’s work or extend it.
