Judge Denies Motion to Dismiss Viacom CEO's Suit Over Redstone Trust -- Update
July 28 2016 - 2:33PM
Dow Jones News
By Joe Flint
The legal battle for future control over Sumner Redstone's $40
billion media empire appears to be headed to trial.
A Massachusetts judge on Thursday denied a motion to dismiss a
lawsuit brought by Viacom Inc. Chairman and Chief Executive
Philippe Dauman and board member George Abrams that seeks to
reinstate the pair after they were ousted from the board of
National Amusements Inc., the company through which Mr. Redstone
controls Viacom and CBS Corp. They also want to be reinstated to a
trust that was set up to oversee Mr. Redstone's holdings upon his
death or incapacitation.
Messrs. Dauman and Abrams have charged that 93-year-old Mr.
Redstone no longer has the mental capacity to make those decisions
and that he is being manipulated by his daughter Shari Redstone,
who is Viacom's vice chair as well as a member of both the National
Amusements board and the trust. Ms. Redstone has denied those
allegations.
While Messrs. Dauman and Abrams can claim victory in not having
their case dismissed, their request for an immediate medical exam
of Mr. Redstone was denied.
In his 76-page ruling, Judge George Phelan of the Norfolk County
Probate and Family Court said the case should proceed and that a
speedy trial could begin in October. Judge Phelan said he would
review medical records of Mr. Redstone from a previous trial in
California that also challenged his competence and ordered that Mr.
Redstone's medical records dating back to the start of 2015 be
turned over by Aug. 15.
The previous California case, in which Mr. Redstone's former
companion Manuela Herzer sued in an effort to remain his
health-care agent, was dismissed, but the judge specifically didn't
rule on Mr. Redstone's competence. Instead, he only said that Mr.
Redstone was convincing in his desire to have Ms. Herzer out of his
life.
Judge Phelan also determined Thursday that the current case
should be heard in Massachusetts where the trust is based. That is
a blow to Mr. Redstone's camp, which was attempting to have the
legal battle moved to California, where the billionaire
resides.
Mike Lawrence, a spokesman for Mr. Redstone, called the case a
"disingenuous, self-interested effort by Philippe Dauman and George
Abrams to hold on to their power as trustees and National
Amusements directors, in the hope that this would enable them to
preserve their richly compensated positions at Viacom despite their
dismal performance."
Mr. Redstone's legal team has said that ultimately neither the
mogul's current health nor his daughter's alleged influence are
relevant to the removal of the two men. The attorneys have argued
that the ouster of Messrs. Dauman and Abrams will stand,
regardless, because a majority of those slated to be on the
seven-member trust have indicated they would approve the removals
if Mr. Redstone is deemed incapacitated.
"We are grateful that Judge Phelan's thoughtful opinion removes
yet another of defendants' efforts to block an investigation into
the merits and, in particular, an independent determination of Mr.
Redstone's capacity and the question of undue influence," a
representative for Messrs. Dauman and Abrams said in a statement.
"We welcome the opportunity to prove the facts at trial."
The fight for control over the media empire that encompasses
assets like Paramount Pictures, MTV and Nickelodeon has spanned
multiple states, including a separate lawsuit in Delaware. Viacom's
lead independent director Frederic Salerno is fighting an attempt
by National Amusements to remove himself and four other directors,
including Mr. Dauman, from Viacom's board. A hearing in that case
is scheduled for Friday.
Write to Joe Flint at joe.flint@wsj.com
(END) Dow Jones Newswires
July 28, 2016 14:18 ET (18:18 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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