This past week, while most of us were bitching about the heat and humidity, in a poorly air conditioned room, papers were filed that could, take Fox News off the air indefinitely…

Shareholders on Friday amended a prior complaint (PDF) in Delaware Chancery Court against News of the World parent News Corp. to allege “rampant nepotism” and massive failures of corporate governance. Filed by Grant & Eisenhofer and Bernstein Litowitz Berger & Grossmann, the shareholder derivative and class action suit seeks to block media mogul Rupert Murdoch’s daughter, Elisabeth Murdoch, from taking a seat on the board, as well as to stop the family from allegedly treating the company as a family “candy jar.”

Major investors previously had filed this objection over Murdoch spending money to to buy back his daughter’s company put her on the board, all with a price tag of $615 million.

Ignoring the distinction between the business of a public corporation and a family business, the Board has repeatedly permitted Murdoch to: (i) intertwine rampant nepotism in the conduct of Company business; (ii) undertake actions designed to maintain his control over News Corp; (iii) use News Corp resources for his own personal and political objectives; and (iv) reward himself handsomely with excessive compensation.

On July 8, 2011, an additional amendment was added, based on the news emanating from the disclosures that a Murdoch paper had hacked private communications to obtain news….

These new filings provide a very damning character assessment of Murdoch, as well as call into question his financial dealings..

Speaking of character assessment, there are rumblings that these actions in Britain violate the Corrupt Foreign Practices Act over here.

The News of the World was accused of making payoffs to police in exchange for information — a possible violation of the anti-bribery provisions of the act.

By shutting the paper Murdoch may be hoping to prevent any possible U.S. prosecution under the act, and also keep prosecutors from investigating whether the corrupt practices were used at some of Murdoch’s other newspapers.

the scandal could potentially cost News Corp. its broadcasting licenses in the United States, This Week panelists said on the ABC News show.

The Federal Communications Commission has a “character” clause with which broadcasters must comply. One that is so extreme it threatened to derail the Comcast takeover of NBC, because someone said when they had installed cable, Comcast has hurt his building, and didn’t pay him for it… That’s laughable and impacted American business. There is nothing laughable about hacking into a missing 13 year olds phone. That is bad character.

Some of these stations, under the FCC character guidelines, could go off the air…..

WHEREFORE, Plaintiffs pray for judgment as follows:
a. for an order declaring that the Defendants breached their fiduciary duties to the Company;
b. for an order awarding damages, together with pre- and post-judgment interest to the Company;
c. finding that Individual Defendants will breach their fiduciary duties to the Class by agreeing to expand the News Corp. Board of Directors and appoint Elisabeth Murdoch to the created vacancy;
d. for Plaintiffs’ costs and expenses incurred in this action, including, but not limited to, experts’ and attorneys’ fees; and
e. for such other and further relief as may be just and proper.

And Murdoch may be used to getting his way elsewhere… He hasn’t stepped inside a Delaware Chancery Court before…

12. This Court has jurisdiction over this action pursuant to 10 Del. C. § 341.
13. As directors of a Delaware corporation, the Individual Defendants have consented to the jurisdiction of this Court pursuant to 10 Del. C. § 3114.
14. This Court has jurisdiction over News Corp pursuant to 10 Del. C. § 3111.

Murdoch has to show, because under Delaware Law:

“If such defendant corporation does appear (in court when summoned), the action shall proceed as in other cases, and if it fails to appear (in court when summoned), the plaintiff shall have judgment by default, service of the process being first proved