News America's tense trouble

July 20, 2011: 5:00 AM ET

Add another headache to News Corp.'s unending list of woes: A lawsuit against a former employee could hinge on a simple bit of wording.

By Betsy Feldman, contributor

FORTUNE -- Bill Clinton once said, "It depends on what the meaning of the word 'is' is." For News America Marketing, the $1.2 billion newspaper-insert subsidiary of News Corp., it may also depend on the tense of a word. In 2007, News Corp. (NWSA) sued Robert Emmel -- an employee alleging anticompetitive behavior who sent documents to Senate investigators the day before signing a nondisclosure agreement -- for breaching the agreement. Although his information appeared in three different lawsuits against News America alleging unfair practices -- all of which were settled, for a total of $654.5 million -- Emmel lost his own case in 2009. On June 8 an appellate court reversed the decision, ruling that because the agreement was written in the future tense, it didn't retroactively apply to past deeds. The lesson, says Mark Nagle, partner at Troutman Sanders, is that language does matter. On the same day, News Corp.'s EVP and general counsel, Lawrence Jacobs, resigned unexpectedly. Published reports linked his resignation to the phone-hacking scandal at News of the World that continues to engulf Rupert Murdoch's media empire. But the Emmel decision may have been the last straw. News Corp. wouldn't comment.

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