News Corp Wins Dismissal of US Hacking Lawsuit

Rebekah Brooks, former News International chief executive, arrives for the first day of the phone-hacking trial at the Old Bailey in London on October 28, 2013. (Getty Images)

Rebekah Brooks, former News International chief executive, arrives for the first day of the phone-hacking trial at the Old Bailey in London on October 28, 2013. (Getty Images)

Shareholders claimed Rupert Murdoch, Rebekah Brooks defrauded them with false statements about phone hacking

A U.S. District Court judge has dismissed a case against News Corp that alleged the company defrauded shareholders by concealing the massive phone hacking operation at two of its British-based newspapers.

Also read: Three Ex-Murdoch Journalists Plead Guilty to Phone Hacking

In the decision made public on Tuesday, Judge Paul Gardephe said News Corp Chairman Rupert Murdoch, Rebekah Brooks, former editor of the now defunct News of the World, and others could not be held liable for statements made before the period for which shareholders sought to recover alleged losses.

The suit claimed that false statements the executives made about the extent of the hacking scandal constituted fraud to shareholders. News Corp. stock fell 17 percent in July 2011, after investigations revealed phone hacking at News of the World and The Sun was much more widespread than Murdoch and Brooks had initially claimed.

Also read: Rebekah Brooks Pleads Not Guilty to Phone Hacking Charges

Shareholders sued for alleged losses that occurred between Feb. 15 and Jul. 18, 2011.

But in his decision, Gardephe wrote that because “nearly all” of the false statements were made well before then, the defendants cannot be held responsible for losses allegedly incurred during that period.

“Knowingly false or misleading statements made prior to the Class Period are not actionable,” the decision reads.

Also read: News Corp Phone Hacking Scandal: A Timeline Refresher for the Trial

Gardephe’s decision was based on a 2007 ruling that corporations are not bound by an “endless” responsibility to correct false statements for the benefit of future shareholders.

Pamela Chelin contributed to this report.