MANHATTAN (CN) - Shareholders cannot sue News Corporation and its executives for $655 million for concealing the phone hacking scandal, because the lies they accuse Rupert Murdoch and company of telling predate the class period of their lawsuit, a federal judge ruled.
In the summer of 2011, Iron Workers Mid-South Pension Fund filed one of three separate shareholder derivative actions against a group of News Corp. directors and officers, in response to allegations of illegal newsgathering practices at The Sun and The News of the World.
British authorities had been investigating The News of the World since publication of a November 2005 article about Prince William that contained private information. Roughly two years later, the reporter behind the article and a private investigator hired by the newspaper admitted hacking the phones of the royal family.
The scandal caused Murdoch to shut down the News of the World, and News International to apologize to 20 victims, including the family of a murdered child, British soldiers and victims of London terrorist bombings.
The FBI allegedly had been looking into whether the newspaper also hacked voicemails of people who survived the Sept. 11 terrorist attacks around the time the lawsuit was filed.
Shareholders claimed that News Corp. executives lied to them by failing to disclose liabilities from illicit behavior in public filings and in press statements.
News of the World's former editor Rebekah Brooks and executive chairman Les Hinton, for example, misled Parliament in hearings that took place between March 2007 and September 2009, the shareholders claim.
They also claim that Rupert and James Murdoch released false and misleading statements about News Corp. in press releases, annual shareholder meetings, quarterly conference calls, media interviews, and public speeches around this period.
On Monday, U.S. District Judge Paul Gardephe ruled that this timing scuttled their lawsuit.
"Nearly all of the allegedly false statements cited in the complaint were made by defendants well before the start of the class period (February 15, 2011)," Gardephe wrote in a 17-page opinion dismissing the lawsuit.
The judge allowed the shareholders to amend their complaint.
Attorneys for neither party immediately responded to emails requests for comment.
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