SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NASSAU

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FOX NEWS NETWORK, L.L.C. and WILLIAM O�REILLY,

Index No. __________

COMPLAINT

ANDREA MACKRIS, BENEDICT P. MORELLI and BENEDICT P. MORELLI & ASSOCIATES P.C.,

Defendants.

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Plaintiffs FOX NEWS NETWORK, L.L.C. (�Fox�) and WILLIAM O�REILLY, by their attorneys, Epstein Becker & Green, P.C., as and for their Complaint against ANDREA MACKRIS, BENEDICT P. MORELLI and BENEDICT P. MORELLI & ASSOCIATES P.C. (�the Morelli Firm�), allege as follows:

NATURE OF THE ACTION

This action responds to Defendants� extortion scheme. Defendants seek to extort Sixty Million Dollars ($60 million) from Plaintiffs in return for not going public with a scandalous and scurrilous claim based on alleged inappropriate comments made to Mackris by O�Reilly. Defendants� outrageous demand cannot be justified by any alleged harm that Mackris claims to have suffered. Rather, Defendants� demand is based on their threat to sully the reputations of a successful cable news network and a nationally renowned television and radio host, columnist and author. Their demand is blackmail, pure and simple.

From April 2000 through January 2004, Fox employed Mackris as an Associate Producer on The O�Reilly Factor, a cable television news show hosted by O�Reilly. O�Reilly and Mackris maintained a good and productive working relationship for the almost four years of her initial employment. She even stayed on after saying in 2002 that she intended to leave Fox for a higher-paying job unless O�Reilly and Fox agreed to increase her compensation, which they did. Then in January 2004, Mackris ultimately decided to leave the show to accept an even higher-paying position with CNN, Fox�s major competitor. A few months after leaving Fox, however, Mackris spoke with O�Reilly and expressed unhappiness with her new job at CNN. She said that her boss at CNN had been terminated for sexual harassment, and asked O�Reilly if she could return to The O�Reilly Factor at the higher salary she then earned at CNN. Mackris returned to Fox in July 2004 as an Associate Producer for The O�Reilly Factor at a salary of $93,200.

Prior to September 29, 2004, Mackris never complained to anyone in authority at Fox about sexual harassment by O�Reilly, despite having received and being well aware of the clearly written harassment prevention policies and procedures of Fox and its ultimate parent, The News Corporation Limited (�News Corp�). Attached as Exhibit A is a copy of Fox�s harassment policy contained in its Employee Handbook, which Mackris received when hired. Attached as Exhibit B is a copy of the �Equal Employment Opportunity And Unlawful Harassment� section of News Corp�s �Standards of Business Conduct,� which Fox reissued to Mackris and its other employees on or about September 8, 2004.

On September 29, 2004, however, Defendant Morelli, Mackris�s attorney, sent a letter to several executives of Fox and News Corp which is attached as Exhibit C. Morelli stated in his letter that he represented a Fox employee who was allegedly being harassed by �one of Fox�s most prominent on-air personalities.� Although he did not identify O�Reilly or Mackris by name in the letter, Morelli wrote that he and the Fox employee were then prepared to sue Plaintiffs, and therefore a settlement discussion would be in Plaintiffs� best interests because the lawsuit �would be extremely damaging to both Fox�s reputation and the reputation of the individual involved.�

Fox and News Corp representatives spoke with and met several times with Morelli and his associate, David S. Ratner. Mackris attended one of the meetings. At those meetings and during telephone conversations, Defendants demanded $60 million in hush money to keep quiet and never once lowered this outrageous, extortionate demand. At one of the meetings, Morelli allowed the Fox and News Corp representatives to read a draft of a harassment complaint (�the draft complaint�) that he threatened to file on Mackris�s behalf. The draft complaint contained several lengthy block quotes of statements that O�Reilly allegedly made to Mackris. The length of the quotes and the specific verbiage used made it appear that Mackris was taping O�Reilly during the conversations. Morelli, though, refused to permit the Fox and News Corp representatives to have a copy of the complete draft complaint, providing them only with an excerpt.

The draft complaint does not assert that either Fox or O�Reilly has caused Mackris to suffer any adverse employment action. Nor does it assert that Mackris complained to anyone in authority at Fox about any unwelcomed or inappropriate conduct by anyone. Moreover, Defendants never claimed otherwise in any of the aforementioned telephone conversations or meetings.

Further underscoring the extortionate nature and intent of Defendants� conduct, Morelli holds himself and his firm out as employment law specialists. He therefore must be presumed to know that given the absence of any adverse employment actions taken by Fox or O�Reilly against Mackris (e.g., termination, demotion, reduction in salary), her failure to complain to Fox�s Human Resources Department about O�Reilly alleged harassment will be fatal to her harassment claims in accordance with the decisions of the U.S. Supreme Court and the courts of New York.

Morelli also knows that there is no possible justification for seeking a $60 million settlement of his client�s claims even if the alleged few conversations occurred. For example, the Morelli Firm�s website boasts of major victories in employment discrimination and harassment cases none higher, though, than �$3.75 million for a woman forced to have sexual relations with her boss� (Exhibit D), which plainly involved conduct far more egregious than that alleged by Mackris. Accordingly, Morelli and presumably Mackris know that their demand that Fox pay $60 million to keep this matter out of the court and out of the media is nothing short of attempted extortion.

The extortive nature of Defendants� demands and the baseless nature of Mackris�s claims are further revealed by the recent September 7, 2004 e-mail that Mackris sent to a friend at CNN who asked, �How are things?� Just three weeks before Morelli�s September 29 letter and years after her claimed tribulations began, Mackris responded:

to answer your question, things are: wonderful, amazing, fun, creative, invigorating, secure, well-managed, challenging, interesting, fun and surrounded by really good, fun people. i�m home and i�ll never leave again.

A copy of Mackris�s September 7, 2004 e-mail is attached as Exhibit E.

It is apparent that Defendants� outrageous monetary demand is motivated by their greed and also by Morelli�s political connections. Morelli, his firm, and his wife, Arlene, are known supporters of and contributors to the Democratic Party, contributing to the campaigns of U.S. Senators John Kerry, John Edwards, Tom Daschle, and Charles Schumer, among others. He perceives Fox and O�Reilly as politically conservative and supporters of the Republican Party. If he does not receive his share of $60 million, he would like nothing more than to embarrass and tarnish the reputations of Fox and O�Reilly.

The extortion attempt is timed to cause the maximum disruption and damage to Fox and O�Reilly. Fox News coverage and O�Reilly�s program in particular have consistently drawn higher ratings during election periods, and the upcoming, tightly-contested Presidential election between Senator John Kerry and President George W. Bush has been drawing record-setting ratings for The O�Reilly Factor and Fox News Channel programming. In fact, Fox News Channel is the most highly rated cable news network in the United States and has continued to increase its lead over CNN in recent years. Its expectation has been that viewership, and thus revenues, will continue to increase, particularly as the electorate becomes even more involved with the presidential race.

By sending the September 29, 2004 demand letter and threatening to bring suit within �five business days� over alleged harassment that allegedly commenced more than two years earlier in May 2002, Mackris and Morelli have sought to extract maximum leverage against Fox and O�Reilly right before the presidential election.

Defendants have not acted in good faith. Instead, they have sought to extort �blood money� by threatening to destroy O�Reilly, his family and his career, and to embarrass and severely injure Fox�s reputation and financial interests. Accordingly, judicial intervention is required.

the parties

Plaintiff Fox is a limited liability company duly organized under the laws of the State of Delaware, and maintains its principal place of business in the City, County and State of New York. Fox is principally engaged in the production of news programming.

Plaintiff O�Reilly is an independent contractor who renders services to Fox in various capacities, most prominently in his role as the host of The O�Reilly Factor. He is an award-winning journalist, author, columnist, news producer and reporter, anchor, and television and radio show host. He resides in Nassau County in the State of New York.

Defendant Mackris is currently employed by Fox as an Associate Producer on The O�Reilly Factor. Upon information and belief, Mackris resides in City, County and State of New York.

Defendant Morelli is an attorney and the head of the Morelli Firm, 950 Third Avenue, New York, New York 10022. Morelli has been retained by Mackris to act as her attorney.

Defendant Morelli Firm is a law firm located at 950 Third Avenue, New York, New York 10022. It has been retained by Mackris as counsel. At all times relevant herein, Morelli has been acting on behalf of the Morelli Firm.

venue

In accordance with Rule 503(a) of the New York Civil Practice Law and Rules, venue is appropriate in this Court.

statement of facts

Background

Fox News Channel, which is owned and operated by Fox, is a 24-hour all news national cable channel that is currently available to more than 85 million cable and Satellite TV households. Launched in 1996, and after the investment of millions of dollars and years of hard work, Fox News Channel has become the highest rated cable news network in the United States.

O�Reilly is one of the most well-recognized on-air journalistic talents in cable. He holds a Master�s Degree in Broadcast Journalism from Boston University and a Master�s Degree in Public Administration from Harvard University�s John F. Kennedy School of Government. His distinguished career has spanned local, network and syndicated television news programs.

In 1996, O�Reilly joined the Fox News Channel where he has worked as the anchor and host of the eponymous show, The O�Reilly Factor. Since 2000, The O�Reilly Factor has been the No. 1 rated cable news program in the United States and an integral part of Fox�s success and profitability. It airs weekdays at 8 p.m. Eastern time and is the �lead in� program for Fox News Channel�s prime time lineup.

O�Reilly is the author of five books, two of which reached No. 1 on The New York Times bestsellers list. He is the host of the nationally syndicated radio show The Radio Factor. He and his wife are the parents of a five-year old daughter and one-year old son.

Fox�s Harassment Prevention Policy and Complaint Procedures

Fox is an equal employment opportunity (�EEO�) employer that is committed to ensuring that its workplace environs are free of all forms of discrimination and harassment. In relevant part, its harassment prevention policy and procedures provide as follows:

It is the policy of Fox News Channel to provide a non-discriminatory work environment free of intimidation and sexual harassment. All employees are expected to cooperate in maintaining this work environment.

Any form of sexual harassment, whether verbal or physical, will not be tolerated by the Company at any level. Sexual harassment includes repeated unwelcome sexual advances, any requests for sexual favors or other verbal or physical conduct of a sexual nature when (1) submission to such conduct is made either explicitly or implicitly a term or condition of an individual�s employment; (2) submission to or rejection of such conduct by an individual is used as the basis of employment decisions affecting such individual; or (3) such conduct has the purpose or effect of substantially interfering with an affected person�s work performance or creating an intimidating, hostile or offensive work environment.

It is the Company�s policy to thoroughly investigate and remedy any incidents of harassment. In order to accomplish this, however, an occasion of harassment must be brought to the attention of management. Accordingly, employees who feel aggrieved because of harassment have an obligation to communicate their problems immediately. If you feel you have been harassed, you should immediately notify any member of management with whom you feel comfortable discussing the situation or a representative of the Human Resources Department. All complaints will be investigated expeditiously. There will be no retaliation against a person who files a complaint or participates in any way in the investigation of a complaint.

Any employee who after an investigation has been found to have sexually harassed another employee will be subject to appropriate sanctions, which depending on the circumstances, may include being terminated from employment. [Exhibit A]

In addition, on or about September 8, 2004, before Morelli and Mackris threatened to file their lawsuit, Mackris and other Fox employees received the reissued News Corp�s policy entitled �Unlawful Harassment,� which states as follows and is equally applicable to them as Fox�s policy:

Any form of unlawful harassment, whether verbal or physical, will not be tolerated by the Company at any level. �

The Company does not wish to interfere with the personal lives of its staff. However, conduct of sexual nature directed toward Company employees that is not welcome and creates a hostile or abusive work environment can be unlawful sexual harassment whether committed by supervisory or non-supervisory personnel.

The Company policy also applies to sexually improper conduct toward the Company�s staff by clients, customers or other non-employees. If an employee informs the Company that he or she has been subject to sexual or other harassment in the workplace by a non-employee, that individual will be informed of the Company�s policy and appropriate corrective action and preventative steps will be taken. [Exhibit B]

News Corp�s anti-harassment policy requires any employee who believes that she has been harassed to report the incident as soon as possible. In this regard, the complaint procedure entitled, �Handling Complaints,� provides as follows:

[E]mployees who believe they have been subjected to unlawful workplace harassment or discrimination of any kind, should report the matter as soon as possible to the Company. Accordingly, employees who feel aggrieved because of harassment or discrimination have an obligation to immediately notify the Head of the Human Resources Department, or any member of management with whom they feel comfortable discussing the situation.

The Company understands that complaints of harassment and discrimination can be extremely sensitive and, as far as practicable, will keep such complaints and all communications concerning them in strict confidence. Complaints may also be made to the Alertline and Alertline Website, as described in Section VIII. �

To make the policy effective, each employee is expected and, indeed obligated, to cooperate fully with the Company in any such investigation. � The Company will investigate all complaints of harassment promptly, fairly, thoroughly and as confidentially as practicable. If the Company determines that harassment has occurred, appropriate corrective action will be taken as warranted by the circumstances. [Exhibit B]

Despite these written policies and procedures, her now claimed severity of the alleged incidents, and the various avenues in place for Mackris to make a complaint � including to any member of management with whom she feels comfortable discussing the situation � Mackris never complained to anyone in authority at Fox about any of the scurrilous allegations she now makes.

Defendants� Letter and Draft Complaint

On or about September 29, 2004, Fox and O�Reilly learned that they were the targets of an apparent scheme to extort millions of dollars based on Mackris�s harassment claim against O�Reilly, which consists solely of alleged inappropriate verbal comments. On that day, Morelli sent a letter addressed to Peter Chernin, the President and Chief Operating Officer of News Corp, Roger Ailes, the President of Fox News Channel, Ian Moore, the Executive Vice President of Human Resources for News Corp, and Arthur Siskind, Group General Counsel of News Corp.

Morelli stated in the letter that the Morelli Firm represents a young woman employee of Fox who has been the victim of constant and relentless harassment by �one of Fox�s most prominent on-air personalities.� (Exhibit C) Morelli then threatened in the letter to commence a lawsuit �if we do not hear from you within five (5) business days,� and he concluded in a tone much more consistent with a blackmail attempt than a settlement demand: �We trust you understand our position.�

Thereafter, Morelli met several times with representatives of Fox and News Corp., and Mackris was present for one of those meetings. Defendants allowed the Fox and News Corp representatives to read �the draft complaint,� but would not allow them to take a complete copy, only an excerpt. Defendants also threatened again that a well-publicized lawsuit would be promptly filed in the event that Fox and O�Reilly failed to meet their demand.

Defendants� Attempt to Extort $60 Million

In the time that Fox and News Corp representatives had to see the draft complaint, they read that Defendants were claiming Six Hundred Million Dollars ($600 Million) in damages. The extraordinary and outrageous $600 million damages claim bore no relationship to the allegations. Mackris even conceded in the draft complaint that she: (a) thanked O�Reilly for dinner after he supposedly made the inappropriate comments to her of which she now complains; (b) had dinner and cocktails with O�Reilly on several occasions thereafter both alone and with others; (c) left Fox to go to its major competitor CNN for more money, a reason unrelated to O�Reilly, and she later sought to return to work with O�Reilly if he would match her salary at CNN. She also admitted in the draft complaint that after leaving Fox and while working for CNN in 2004, she went to dinner with O�Reilly and then alone with him to his hotel room to watch a presidential press conference. She further conceded that nothing untoward occurred in his hotel room.

The claimed damages are also inexplicable given that: (a) Mackris does not allege that O�Reilly ever touched her in any way, much less assaulted her, (b) she does not allege that she suffered any adverse employment action such as a demotion or loss of pay or even threatened with an adverse action, and (c) she does not allege that she complained to Fox�s Human Resources Department about harassment, notwithstanding that Fox and News Corp maintain written harassment prevention policies and complaint procedures. In fact, Mackris did not complain prior to the delivery of the letter, and Mackris acknowledged during the meetings with Morelli and the News Corp and Fox representatives that O�Reilly never touched her in an inappropriate manner.

Lest there be any doubt as to their greed, motivation and intent, at the meeting that Mackris and Morelli held with representatives of News Corp and Fox to discuss their demand, Mackris and Morelli made it abundantly clear that their aim was to extort millions from Fox and O�Reilly by threatening to go public with allegations that would subject O�Reilly to scorn, ridicule and abuse, and that neither Fox nor O�Reilly could afford to defend them.

Indeed, at that meeting, Defendants expressly demanded $60 million to resolve the situation. They have never lowered that astonishing demand. When asked to justify that number, Morelli stated that he considered that amount to be appropriate because it would be less than the revenues that he projected that Fox would lose from the adverse publicity, and that �O�Reilly couldn�t afford to let [the lawsuit] go forward.� Morelli never once tried to justify the demand as being in any way supported by existing law.

Plaintiffs further believe that these scandalous allegations against O�Reilly may also be motivated by Morelli�s political connections to the Democratic Party. The extortion attempt is timed to coincide with upcoming Presidential election, to cause maximum disruption and damage to Plaintiffs, while at the same time benefiting Fox�s major competitor CNN.

In sum, Defendants� outrageous demand leaves Plaintiffs with a Hobson�s choice due to Defendants� perversion, exploitation and abuse of the legal system. Plaintiffs realize that the price of defense itself will likely cause irreparable injury to their reputations and financial interests at a critical time in the pending presidential election, impacting viewership, advertising revenues and careers. Still, Plaintiffs have opted not to abide by Defendants� extortion, for that would only send a signal to those who might seek extortion as a means in the future.

FIRST CAUSE OF ACTION BY ALL PLAINTIFFS

(Attempted Extortion)    

Plaintiffs repeat and reallege each and every allegation set forth in Paragraphs 1 through 36 of this Complaint as if fully set forth at length herein.

Although Mackris was fully aware of Fox�s and News Corp�s harassment prevention policies and complaint procedures, she never complained to Fox�s Human Resources Department or anyone else in authority about alleged harassment by O�Reilly. She first raised the specter of harassment in the September 29, 2004 letter authored by Morelli and later in the draft complaint.

Although never complaining and then conceding that there were no physical or sexual assaults or other unwanted touchings, and not claiming to have suffered any adverse employment action, Defendants demanded $60 million to resolve Mackris�s claims against Fox and O�Reilly. This amount far exceeds any damages that she could have possibly been awarded in court even if her harassment allegations were true.

Defendants made this outrageous and exorbitant demand because they knew that Mackris�s allegations, standing alone and completely unproven, would cause Fox and O�Reilly to suffer ridicule, contempt and embarrassment, and would cause serious injury to their reputations and business interests. Defendants� actions were calculated to instill the fear in Fox and O�Reilly that if the $60 million were not delivered, Defendants would go public with their baseless, scandalous and scurrilous allegations and would file the lawsuit. Defendants accordingly attempted to use the threat of revealing Mackris�s allegations as a means to obtain money to which they are not entitled.

By reason of Defendants� attempted extortion, Plaintiffs are entitled to declaratory and injunctive relief as well as compensatory and punitive damages in an amount to be determined at trial.

SECOND CAUSE OF ACTION BY BOTH PLAINTIFFS

(Tortious Interference With Prospective Business Relations)

Plaintiffs repeat and reallege each and every allegation set forth in Paragraphs 1 through 41 of this Complaint as if fully set forth at length herein.

Plaintiffs maintain substantial business relations with numerous advertisers.

O�Reilly maintains substantial business relations with the publishers of his books and columns.

Defendants have intentionally, maliciously and without justification interfered with Plaintiffs� future business relations with advertisers.

Defendants� allegations, particularly in view of their timing, are intended to and will necessarily interfere with Plaintiffs� relations with their current and prospective advertisers, viewers, subscribers, talent and bookings.

Defendants� interference with Plaintiffs� business relations was undertaken with the sole purpose of harassing Plaintiffs and/or with dishonest, unfair or improper means.

By reason of the foregoing, and as a direct and proximate result of Defendants� conduct, Plaintiffs are entitled to declaratory and injunctive relief as well as compensatory and punitive damages in an amount to be determined at trial.

THIRD CAUSE OF ACTON BY BOTH PLAINTIFFS

   (Prima Facie Tort)    

Plaintiffs repeat and reallege each and every allegation set forth in Paragraphs 1 through 48 of this Complaint as if fully set forth at length herein.

Defendants� conduct that is described in the foregoing paragraphs was completely unjustified and was intended to inflict substantial harm against Plaintiffs.

By reason of the foregoing, Plaintiffs are entitled to declaratory and injunctive relief as well as compensatory and punitive damages in an amount to be determined at trial.

FOURTH CAUSE OF ACTION BY O�REILLY

(Tortious Interference With Prospective Business Relations)

Plaintiff O�Reilly repeats and realleges each and every allegation set forth in Paragraphs 1 through 51 of this Complaint as if fully set forth at length herein.

By showing the draft complaint to News Corp and Fox representatives, Defendants have intentionally, maliciously and without justification interfered with O�Reilly�s future business dealings with Fox by jeopardizing the renewal and/or terms of any future agreement between O�Reilly and Fox.

Defendants� interference with O�Reilly�s business relations was undertaken with the sole purpose of harassing Plaintiffs and/or with dishonest, unfair or improper means.

By reason of the foregoing, and as a direct and proximate result of Defendants� conduct, O�Reilly is entitled to declaratory and injunctive relief as well as compensatory and punitive damages in an amount to be determined at trial.

FIFTH CAUSE OF ACTION BY O�REILLY

(Intentional Infliction of Emotional Distress) 

Plaintiff O�Reilly repeats and realleges each and every allegation set forth in Paragraphs 1 through 55 of this Complaint as if fully set forth at length herein.

Defendants� conduct that is described in the foregoing paragraphs constitutes extreme and outrageous conduct and behavior.

This conduct was perpetrated by Defendants with malice, and with the intent to cause severe emotional distress to O�Reilly and/or in deliberate disregard of the high probability that severe emotional distress to O�Reilly would result.

Defendants have maliciously embarked on a course of conduct intended to cause O�Reilly to suffer mental and emotional distress, tension and anxiety to induce O�Reilly to pay an outrageous monetary settlement to them.

O�Reilly has suffered damage to his personal and business reputation and standing, has been placed under undue strain and burdens, and forced to endure extreme embarrassment. He has suffered and will continue to suffer great mental strain and anguish and severe emotional distress.

By reason of the foregoing and as a direct and proximate result of Defendants� conduct, O�Reilly is entitled to compensatory and punitive damages against Defendants in an amount to be determined at trial.

WHEREFORE, Plaintiffs request that this Court enter a judgment in their favor and against Defendants as follows:

Declaring that the acts and practices complained of herein are in violation of the laws of the State of New York;

Enjoining and permanently restraining these violations;

Directing Defendants to pay compensatory and punitive damages to Plaintiffs in an amount to be proven at trial;

Awarding Plaintiffs costs, disbursements and reasonable attorneys� fees; and

Awarding Plaintiffs such other and further relief that the Court deems just and appropriate.

Dated: New York, New York

October 13, 2004

Respectfully submitted,

EPSTEIN BECKER & GREEN, P.C.

By: __________________________

Ronald M. Green

250 Park Avenue

New York, New York 10177-1211

(212) 351-4500

Attorneys for Plaintiffs