Bloomberg News

News Corp. Pushes Phone-Hacking Settlements as Trial Nears

January 09, 2012

(Updates with lawyer’s comment in 11th paragraph.)

Jan. 6 (Bloomberg) -- News Corp.’s British newspaper unit is close to settling at least 10 lawsuits by politicians, athletes and other prominent victims of phone hacking before the first civil trial over the scandal starts next month.

Labour party lawmaker Chris Bryant and celebrity lawyer Graham Shear, whose voice mails were hacked to get stories for News Corp.’s News of the World tabloid, are among those near settlements, according to a document obtained by Bloomberg News. Their lawsuits were joined with four other “test cases” for a three-week trial scheduled to start Feb. 13 in London.

“Some of the criticism of News Corp.’s conduct to date has been about their use of confidential settlements in the past to prevent facts coming into the public domain, so when it comes to settling any of these test cases, they should tread carefully,” said Mark Watts, a data-privacy lawyer at Bristows in London.

If settlements are reached, about two dozen backup cases are available, though several of those are also close to settling, including suits filed by ex-lawmaker George Galloway and former U.K. Deputy Prime Minister John Prescott, according to the document.

The trial is intended to give guidance on damages for 70 current cases, as well as future lawsuits and out-of-court settlements. The Metropolitan Police Service has said about 800 people may have been targeted by the tabloid.

Judge Geoffrey Vos created the test-case procedure in May, two months before News Corp. closed the 168-year-old News of the World and dropped its 7.8 billion-pound ($12.1 billion) bid for full control of British Sky Broadcasting Group Plc to contain outrage over the five-year-old scandal.

‘Dangerous Precedent’

“They’re trying to avoid the judge making awards that will set a dangerous precedent,” Niri Shan, a media lawyer at Taylor Wessing LLP in London, said of the settlement talks. “They’re buying off the risk of that, and it’s not unheard of for cases to settle at the last minute -- even at the door of the court.”

Victims who want to go to trial may be discouraged from doing so by a U.K. law that could force them to pay News International’s court costs if they decline a settlement offer and then fail to beat that amount in a verdict, Shan said.

The highest profile victims in the trial are actor Jude Law and sports agent Sky Andrew, who aren’t close to settling, according to the document, which shows the status of the test cases and was given to Vos at a hearing last month. Andrew was one of the first victims to sue the News Corp. unit and seek a court order forcing police to turn over evidence for his case.

Daisy Dunlop, a spokeswoman for News International, declined to comment on the settlement talks.

17th Arrest

London police, who failed to uncover the extent of the scandal in 2006, today arrested a 17th person as part of a probe opened last year. Former News of the World editor Andy Coulson and ex-News International Chief Executive Officer Rebekah Brooks were arrested in July and are free on bail.

Tamsin Allen, the lawyer for Bryant and Prescott, confirmed that settlement talks are under way. She said the trial is still important because it “could set a tariff for compensation payments which settlements do not, as they are just voluntary.”

Shear, the celebrity lawyer, didn’t return a call for comment. Law’s lawyer, Hugh Tomlinson, Galloway’s attorney, Farooq Bajwa, and Andrew’s lawyer, Charlotte Harris, didn’t immediately return calls seeking comment.

36 Victims

Out of 36 victims who agreed to be in the trial or act as backups, half have settled or are near deals, according to the document. Privacy experts expect the case to clarify rules for privacy damages that are now contradictory or unclear, said Mark Stephens, a lawyer for singer Dannii Minogue, a phone-hacking victim and another backup case.

“Even if there are just a few cases left, the legal principles need to be clarified in this trial -- there is such a degree of uncertainty in the law,” said Stephens, who represents Bloomberg News in some media cases. “Privacy is an emerging tort in this country and there have only been a few cases that have gone to a full judgment.”

News Corp.’s settlements with victims have varied widely until now, from 20,000 pounds for sports commentator Andy Gray to 3 million pounds for the family of murdered schoolgirl Milly Dowler, whose phone was hacked in 2002, when she was still missing, to get stories about her disappearance.

Lawyers for News International told Vos at a hearing last month it reached seven new settlements with victims, even as the judge was making final rulings in preparation for the trial. Those settlements involved at least three test cases, including one by former lawmaker Mark Oaten.

7/7 Bombing Victim

Sheila Henry, the mother of a victim of the July 7, 2005, terrorist attack in London, whose phone was hacked to get stories about the bombing, is also in the trial.

The trial will help calculate what damages should be awarded for different types of privacy violations and how the personal information was used in stories. It will also help News International’s out-of-court-settlement procedure, begun in November, which is overseen by a former judge, Vos has said.

With the trial weeks away, News Corp. is still turning over thousands of e-mails that may relate to phone-hacking, at the request of the victims’ lawyers. The trial date was pushed pack by several weeks to give the company time to do so.

--Editors: Peter Chapman, Peter Blumberg

To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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