1:30pm PT by Eriq Gardner
Sumner Redstone Filing: Philippe Dauman Lawsuit Amounts to a Plot to Keep Tenuous Job
Sumner Redstone's attorneys on Friday made the latest move in the war over Viacom, asserting that a lawsuit filed in Massachusetts by chief executive Philippe Dauman and board member George Abrams over the duo's ouster from Redstone's Trust is not something that should be expedited nor even treated to resolution by the judge.
"Rather than acting as Trustees and in the best interest of the Trust’s beneficiary, Plaintiffs filed this action as part of an acutely self-interested legal strategy that they began plotting months earlier to secure their tenuous positions with Viacom," states court papers.
Dauman and Abrams sued on May 23 with the allegation that Redstone has been manipulated by his daughter Shari Redstone. The two have convinced a Massachusetts probate court to hold a hearing next Tuesday on their request for fast-track status.
Redstone has filed his own petition in Los Angeles Superior Court to validate the Trust changes, and in his opposition to Dauman's, asserts that because of standing issues — it's argued that only the beneficiaries of the Trust can sue — the lawsuit is improper and any dispute should be heard in California. Redstone's court papers on Friday also argue that he has rightfully removed Dauman and Abrams from the entity that will have control over National Amusements, which has about an 80 percent stake in Viacom. It's further said that at least four of the seven Trustees — a majority — supported the decision to remove Dauman and Abrams. According to the latest filing, "Plaintiffs miscalculated not only Sumner’s resolve, but also the commitment of their fellow Trustees to do the right thing."
An entire section of Redstone's legal papers comes under the banner, "Plaintiffs' Betrayal of Sumner."
According to this part, Dauman has grown increasingly concerned he might be terminated as CEO due to a sinking stock price that wiped out more than $15 billion of Viacom's value as well as weak earnings reports and the decision to sell the "crown jewel" of Paramount Pictures.
"Sumner had removed prior CEOs for far less, and even under the best circumstances, Sumner — then 92 years old — could not protect Dauman forever," states the court papers. "If Dauman controlled the Trust, however, he would effectively be Chairperson, CEO, and controlling shareholder of Viacom and would be accountable to no one."
The Redstone filing continues by claiming that in January, Dauman, Abrams and (Redstone Trustee and CBS board member) David Andelman were talking with lawyers about what to do in the event that Sumner Redstone — then tied up in a healthcare dispute with his ex-companion Manuela Herzer — made a move to fire them. The Dauman camp was supposedly told then that removal could be contested by seeking a declaration of Redstone's incompetence and taking the position that Shari was unduly influencing her father.
"Roadmap in hand, Plaintiffs no longer felt accountable even to Sumner as Viacom’s controlling shareholder," states Redstone's brief, adding that Dauman and Abrams "unceremoniously removed" Redstone as Viacom chairman in February and since then have "ignored his requests for information regarding a potential Paramount transaction, as well as long-term strategic plans (if any) for Viacom as a whole. In short, Plaintiffs treated Sumner as though he was already gone."
Dauman's complaint alleges something different. He maintains he's been cut off from communications with Redstone.
The inclusion of Andelman is particularly notable because he's been considered a "swing vote" on the Redstone Trust. In an exhibit with Friday's filing, Andelman has signed a ratification of the removal of Dauman and Abrams. It is his support that gets a majority of Trustees favoring the ouster of Dauman. If this is any indication that he has switched sides, it marks a pretty important development.
Overall, Redstone's attorneys object to the conclusion of incompetence and nod to a report by psychiatrist James Spar, who recently interviewed Redstone and came to the opinion that decisions related to the Trust “seemed appropriate to me in light of recent events, and seemed to reflect [Sumner’s] own, authentic wishes and preferences, and not the influence of any of the individuals in his environment.”
For now, Redstone opposes expedited status for this lawsuit because of an asserted lack of irreparable harm, but his lawyers also believe that Dauman's suit lacks merit and say they will be filing a forthcoming motion to dismiss. A judge will consider the arguments at a hearing on Tuesday.
Les Fagen, attorney for Dauman and Abrams, responds: "There are many undisclosed facts that will emerge concerning the conduct of Shari and her representatives. Even their own papers filed today reveal that the Trustees as stated in the affidavits have not seen Sumner for as long as 'many years.' We look forward to a full hearing on Tuesday when we will seek expedited discovery and an independent review of the facts in order to resolve this matter as quickly as possible.”