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UK lawyer to start News Corp action in U.S.

By Avril Ormsby and Grant McCool

LONDON/NEW YORK (Reuters) - The board of News Corp was threatened with legal action in the United States by a British lawyer acting for phone-hacking victims, potentially opening a new legal front against the company.

A U.S. lawsuit against News Corp's directors could be a new embarrassment for the company as it tries to put the News of the World tabloid hacking scandal behind it. Civil claims damages in the United States, where News Corp is based, also tend to be much higher than in Britain.

Mark Lewis, who represents the family in the high-profile British case of murdered schoolgirl Milly Dowler, said on Friday he held talks with lawyers in New York about seeking depositions, potentially against the entire board, which he thought would include Rupert Murdoch and his son James.

He will claim some of what is alleged to have gone on at the now-defunct News of the World broke not only British law but potentially laws in the United States too, even if it was not carried out in that country.

News Corp insiders are worried about the potential for a successful U.S. lawsuit, according to people close to the company who declined to be identified. They are concerned that U.S. litigation could hurt the entire company, rather than only the UK properties, the sources said.

A spokeswoman for News Corp in London declined to comment.

TABLOID SCANDAL

The News of the World is at the center of a scandal in which the tabloid has been accused of hacking individuals' phones, including that of Dowler.

Suggestions in July that a News of the World investigator listened in to, and deleted, messages left on the 13-year-old's cellphone after she went missing, misleading police and giving false hope to her family, caused outrage. It was the tipping point in the hacking scandal, which until then had focused mainly on the claims of politicians and celebrities.

On Monday, it emerged that News International, the British newspaper arm of News Corp, was near to agreeing a 3 million-pound settlement ($5 million) with the Dowlers.

Lewis has asked a New York lawyer, Norman Siegel, to explore legal options in federal and state courts for hacking victims. Siegel represents some relatives of victims of the September 11 attacks who raised concerns over allegations that News Corp might have hacked the phones of victims.

"I can confirm that I have been asked by Mr. Lewis to explore any and all U.S. and New York State legal options that could exist regarding the phone hacking by News Corp and we are doing that," Siegel said.

Siegel said he and another lawyer were "doing the research on the legal options." He said that although he believed it was possible to sue in both federal and state courts under hacking and anti-corruption laws, it was premature to discuss details.

Last month, Siegel and some September 11 victims' relatives met Eric Holder, the U.S. Attorney General. The Department of Justice is investigating an allegation about September 11 hacking.

Separately, a lawyer at U.S. plaintiff's law firm Motley Rice said it would sue News Corp in a federal court in New York or Washington, D.C. on behalf of September 11 victims' families worried their phones were hacked. The case would likely allege News Corp violated a U.S. anti-wiretapping statute, the lawyer, Jodi Flowers, said.

"The investigation is ongoing and we are continuing to investigate people's rights," Flowers said.

News Corp No. 2 Chase Carey has been quick to point out there has been no evidence of the newspaper carrying out phone hacks of September 11 victims. At an investor conference on Wednesday, he said the company was "cooperating fully with all of these" investigations in Britain and the United States.

"There's nothing we've seen that provides any substantiation that -- something like that, on the hacking of 9/11," Carey said in response to an investor question.

LONDON LAWSUIT

Also on Friday, a person familiar with the matter said a lawsuit was filed in London on Thursday by a "Mr A. Coulson" against News International. Andy Coulson was the former editor of the tabloid who went on to become the spokesman for Prime Minister David Cameron, a move that brought the hacking scandal into the political arena.

The company recently decided not to pay any legal fees relating to criminal matters for Coulson that could stem from his time at the paper. He was previously arrested by police investigating the hacking scandal.

Copies of the court papers were not immediately available. News International declined to comment.

Coulson's lawyer, Jo Rickards, of law firm DLA Piper, said in an email to Reuters: "I can confirm that proceedings have been issued."

Rickards provided no details of the proceedings.

$1 = 0.6467 pound

(Reporting by Avril Ormsby and Stephen Addison in London; additional reporting in New York and Washington by Grant McCool, Basil Katz, Yinka Adegoke and Jeremy Pelofsky; editing by Robert Woodward in London and Matthew Lewis in Chicago; editing by Andre Grenon)

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