The lawsuit, filed by Amalgamated Bank and a group of pension funds, accuses News Corp's board of "failing to exercise proper oversight and take sufficient action since news of the hacking first surfaced at its subsidiary nearly six years ago."
The failure of News Corp's board has led to a "piling on of questionable deals, a waste of corporate resources, a starring role in a blockbuster scandal, and a gigantic public relations disaster," said Jay Eisenhofer of Grant & Eisenhofer, the law firm that filed the suit in Delaware.
The legal complaint is an updated version of action that Amalgamated first bought in March, when they accused Mr Murdoch of "rampant nepotism" for paying 415m pounds for Shine, a UK television production company founded by his daughter Elizabeth. News Corp could not immediately be reached for comment.
News Corp's shares plunged more than 6.6pc on opening, as investors digested developments on both sides of the Atlantic.
Rupert Murdoch's biographer had earlier suggested that News Corp could even be mulling a sale of News International in an attempt to calm calls for it to shelve its proposed bid for BSkyB.
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