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At a hearing Tuesday in Massachusetts court, Judge George Phelan heard all about leadership issues at Viacom, with attorneys for embattled Viacom chief Philippe Dauman insisting that the court needed to act swiftly, and an attorney for Shari Redstone objecting, “We flat out reject the notion that Mr. [Sumner] Redstone has been brainwashed.”
Ultimately, the judge did not reach a conclusion, telling the parties that he needed time to consider the arguments and suggesting that a ruling would come later this month.
“I grew up in a housing project where I was lucky to have a quarter in my pocket,” said Phalen. “I’m still trying to wrap my head around the concept of billions with a ‘B,’ and it may take me a few days.”
Dauman is arguing that it is crucial to proceed quickly given Sumner Redstone “is vulnerable at any time to mortal disease.” At today’s hearing, his attorney Les Fagen said Dauman hadn’t seen Redstone in months and that Shari “has isolated him … with respect to his businesses.”
Redstone’s lawyers argue that the case is improper and is subordinate to a petition brought in California. They also stated at the hearing that in the six months since Dauman gave a sworn declaration in a prior case that Redstone was “engaged and attentive,” there’s been no diminished mental capacity. According to one of the mogul’s attorneys, Redstone made his move to oust Dauman from the trust partly because of the plan to sell Paramount Pictures, which was referred to as Sumner’s “baby.”
At the hearing, an attorney for Redstone’s granddaughter Keryn also was among the 22 lawyers in attendance, telling the judge that the doctor who visited Sumner Redstone in February diagnosed him with major neurological disorders. The soft-spoken Phalen rarely interjected, and occasionally drew a round of laughs when he did, like when he questioned why there were only two female lawyers among the 22 on hand.
All in all, about a dozen lawyers spoke, most seeking to have the case expedited considering Redstone’s medical condition, which Fagen characterized thus: “Redstone is 93 years old, and he is very sick, holding onto life by a thread.” But a lawyer for Redstone painted a different picture. “Mr. Redstone is better than he has been in the recent past,” the attorney said.
Separately, Redstone’s lawyers filed a new document this morning with the court, a declaration from Dr. Richard Gold, who is Redstone’s primary treating physician. It says: “I have not observed any recent decline, much less any ‘severe’ or ‘rapid’ decline, in Mr. Redstone’s physical capacity in recent recent weeks. … There are no imminent threats to Mr. Redstone’s physical or mental health, and I do not believe any additional testing to be necessary or warranted at this time.”
Dauman and board member George Abrams sued many members of the Redstone family after both men were late last month stripped of their roles as trustees of the Sumner M. Redstone National Amusements Trust and as board members of National Amusements Inc. Both are seeking to be restored as a director and trustee to entities that control about 80 percent of the stock in Viacom Inc. and CBS Corp.
The suit was filed in Norfolk Probate and Family Court in Canton, Mass., because the trust is administered in Massachusetts. National Amusements is headquartered in nearby Norwood, Mass. But the case has far-reaching implications as New York-based Viacom Inc. owns Paramount Pictures as well as MTV, Nickelodeon, Comedy Central and BET. Redstone, himself, is living in Los Angeles, and his lawyers argued forcefully that the case does not belong in Massachusetts. “At very worst, this should be heard in California,” one of Redstone’s lawyers said. “Yes, this is a Massachusetts trust, but the terms of the trust are not in dispute.”
In their lawsuit, Dauman and Abrams allege that Redstone was not mentally competent when he removed them and is being manipulated by his once-estranged daughter, Shari Redstone, to take control of his businesses. Tuesday marked the first hearing in the case that will determine if Redstone is of sound enough mind to make business decisions about his sprawling empire.
In court papers, lawyers for Dauman and Abrams asked the judge to order an immediate medical evaluation of Redstone and argued that Redstone is suffering from “overwhelming physical ailments,” is unable to speak, stand, walk, eat, write or read, and has a progressive neurological disease characterized by dementia.
“In the absence of prompt proceedings, there is grave risk that Sumner Redstone will not be available to provide any evidence in this case,” they argued in court documents Monday.
Last week, Redstone’s attorneys filed court papers saying he has been examined twice recently by a geriatric psychiatrist, who said Redstone is “clearly communicating” his business decisions, which “reflect his own authentic wishes and preferences.” Lawyers for Dauman and Abrams dismissed that evaluation as “one-sided” and “distorted.”
Tuesday’s hearing followed a flurry of legal maneuverings by Shari Redstone. On Monday, the trust that manages Redstone’s controlling interest in Viacom moved to block any sale of Paramount without its unanimous consent. And National Amusements Trust, which also controls CBS, said it has “amended Viacom’s corporate bylaws…in order to protect the long-term interests of all Viacom shareholders.” The amendments took effect immediately.
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