Issues include whether Sumner Redstone has come under 'undue
influence' from daughter
By Joe Flint
When the legal battle surrounding Sumner Redstone had its last
substantive turn in court, the media mogul's longtime companion was
arguing he was mentally incompetent when he evicted her and removed
her as his health-care proxy. A California judge dismissed that
suit.
Now, as a Massachusetts court prepares for a hearing Thursday in
the latest chapter of the saga, the stakes are much higher and the
legal terrain far more complex. At issue now is whether Mr.
Redstone knew what he was doing in recent weeks when he reordered
the power structure atop his media empire, which includes
controlling stakes in Viacom Inc. and CBS Corp.
In addition to his mental competency, the case also will get
into the murky legal question of whether Mr. Redstone came under
"undue influence" from his daughter, Shari Redstone, in making the
changes, and how recent events square with the fine points of
estate plans that the 93-year-old crafted in 2002, when he set up a
trust to oversee his holdings upon his death or incapacitation.
The suit has been brought by Viacom Chairman and Chief Executive
Philippe Dauman and board member George Abrams, who were ousted
from the board of Mr. Redstone's holding company, National
Amusements Inc., as well as the trust. They are seeking
reinstatement.
They say that Mr. Redstone is suffering from a worsening brain
disorder, can't walk or speak and would never have wanted them
removed if he were in command of his faculties. Mr. Redstone's team
has said the mogul knows full well what he is doing. A key question
is whether the Massachusetts court will allow an independent exam
of Mr. Redstone.
Messrs. Dauman and Abrams brought the case in Massachusetts on
the grounds that the trust is administered in the state. The
Redstone camp wants to move the litigation to California, where the
mogul resides.
The Massachusetts case could have major ramifications on a
separate legal fight in Delaware court, where Viacom's lead
independent director, Frederic Salerno, is fighting the attempted
removal of himself and four other Viacom directors by National
Amusements.
Showing undue influence is tricky. "It is one of those things
that is very vague and very difficult to prove," said Dr. Edward
Poa, chief of inpatient services at the Menninger Clinic, a
psychiatric hospital in Houston, and an expert on cases in which a
person's mental ability and vulnerability are in question.
Viacom will have to show that because of Mr. Redstone's
vulnerability, he is "parroting someone else's ideas that have been
planted over and over through repetition and isolation," said Peter
Lichtenberg, director of the Institute of Gerontology at Wayne
State University.
Messrs. Dauman and Abrams claim that is precisely what Ms.
Redstone, 62, who is a vice chairman of CBS and Viacom and
president of National Amusements, has managed to pull off.
"Under her influence, Mr. Redstone has grown increasingly
isolated; his closest friends, advisers and colleagues have reached
out to him and been rebuffed in a manner utterly uncharacteristic
of him," they wrote in a legal filing, adding Ms. Redstone
"controls every facet" of Mr. Redstone's life and he is "entirely
dependent on her for food, care and medicine." This, the duo added,
is part of her effort to "assume control of his businesses, which
he long refused her."
Ms. Redstone, who has had a rocky relationship with her father,
has repeatedly denied these charges. "It is absurd for anyone to
accuse Shari of manipulating her father or controlling what goes on
in his household," her spokeswoman said recently.
Working against Messrs. Dauman and Abrams is Mr. Redstone's
history of replacing top executives.
Mr. Redstone's legal team argues that ultimately neither the
mogul's current health nor Ms. Redstone are relevant to the removal
of the two men. The lawyers argue that only a court or three
doctors can declare Mr. Redstone incompetent, and since that hadn't
happened before the dismissals, the decisions can't be challenged.
As for undue influence, Mr. Redstone's side argues that is not
grounds in the trust for contesting dismissals of trustees.
The lawyers for Messrs. Dauman and Abrams said in filings those
arguments are "nonsensical."
The Redstone end-of-life power struggle has attracted much
attention, given that two giant companies owning brands like MTV,
Comedy Central, CBS and Paramount Pictures are involved. But on a
smaller level, lawsuits over mental capacity and undue influence
are becoming more commonplace as life expectancy grows.
"There is a tidal wave of these cases headed this way,"
according to neuropsychologist Jonathan Canick.
The Massachusetts case has made for strange bedfellows. In the
competency suit brought last November by Manuela Herzer, Mr.
Redstone's longtime companion, Mr. Dauman supported Mr. Redstone,
saying in an affidavit that the mogul was "engaged and attentive"
in a recent meeting.
Now, as Ms. Herzer seeks a rehearing of her case, her lawyer
Pierce O'Donnell and Mr. Dauman are on the same page. In a
declaration filed on behalf of Messrs. Dauman and Abrams, Mr.
O'Donnell compared Mr. Redstone to a "wax figure at Madame
Tussauds."
In the Herzer case, the judge didn't rule on Mr. Redstone's
mental competency -- he simply said there was clear enough evidence
of Mr. Redstone's wishes with regard to Ms. Herzer.
There is "a very different level of functioning" required to
justify the complex business decisions Mr. Redstone has recently
undertaken, said Jean Stewart, a former probate judge on caretaker
rulings.
Write to Joe Flint at joe.flint@wsj.com
(END) Dow Jones Newswires
June 30, 2016 02:50 ET (06:50 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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