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Why Fox News Shouldn't Sue Over the 'Fox Mole' (Analysis)

Yeah, Fox probably has a claim or two. But here are some reasons why the O'Reilly network should let this one go.

Fox News Logo - H 2011

On Tuesday, Gawker threw the media universe into a tizzy with news that it had hired a Fox News employee to be its new columnist -- someone called "The Fox Mole," who would be providing regular dispatches from inside the organization.

Fox later snooped out the mole and identified him as The O'Reilly Factor associate producer Joe Muto, who confirmed that he had been nailed and suspended indefinitely by Dianne Brandi, executive vp legal and business affairs at the network. On Thursday, it was revealed that Gawker had paid $5,000 to Muto for his contributions -- a pittance for an act that was either incredibly brave, terribly foolish or both.

A spokesperson for Fox News also said that Muto had been fired, adding, "We are continuing to explore legal recourse against Mr. Muto and possibly others."

If Fox does bring a lawsuit, the network might have several causes of action. However, there also are reasons why the network should let this one go.

According to Sharon Gold, an entertainment attorney at TroyGould, Fox likely would be suing Muto for a breach of a confidentiality agreement. "I'm guessing [their] employees are required to sign [one]," she says.

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Gold also raises the possibility of breach of its trade secrets, though Muto only got a couple of days to spill the dirt before he was outed. Do an unseen video of Sean Hannity and Mitt Romney talking about horseback riding or photos of Fox News' bathrooms qualify as trade secrets? We're guessing no.

Many states also have broad laws against unfair competition or laws that impose upon employees basic duties of loyalty, which might require them to use whatever they acquire during the course of employment to be only used for the employer's benefit.

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"It's a problem that this employee is alleged to have done these things, especially handing over footage belonging to Fox while he was still on the Fox payroll," says Michael Novicoff, a partner at Liner Grode Stein. "It doesn't help that he actually described himself as a "weasel, a traitor and a sell-out."

Fox' attorneys have sent a letter to Gawker, reiterating that it reserves the right to pursue remedies in a legal forum, warning the website to not publish information unlawfully obtained, and demanding that Gawker preserve documents.

But Novicoff identifies some reasons why Fox might not wish to get any courtroom revenge against Muto.

"It's always awkward for a news organization to take the position that information or opinions shouldn't be shared," he says. "Also, if Fox decided to sue, they would have to explain how and in what amount they suffered financial harm from this employee's conduct; that's never easy, and it might require Fox to publicly reveal some information about its marketing, viewership and revenues that it might prefer to keep to itself."

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And how about suing Gawker for tortious interference? The popular website, after all, paid to get Muto to breach his oaths to Fox News.

True, says Novicoff. It's always possible that such a claim could be brought. But then there is, ahem, hackergate.

"In light of the recent legal troubles within its own corporate family, Fox may not wish to pursue large damage claims based upon the way that media outlets go after a story," says the lawyer.

E-mail: eriq.gardner@thr.com

Twitter: @eriqgardner