6:00am PT by Eriq Gardner
CBS Faces Credibility Questions Over Leslie Moonves Investigation
Five days after several women accused CBS chairman and CEO Leslie Moonves of sexual misconduct in a July 27 New Yorker exposé, the company's board of directors issued a near-midnight press release saying it had hired two prestigious New York law firms to lead an internal investigation. The announcement offered the immediate impression that the company is taking seriously the Moonves claims, as well as allegations against 60 Minutes executive producer Jeff Fager of creating a hostile work environment at CBS News. But some corporate governance and employment law experts already are questioning the integrity of the probe — criticisms that have implications for other workplace misconduct investigations currently playing out in entertainment and media.
Legal insiders note the CBS investigation is being handled by two highly respected female attorneys — former SEC chairman Mary Jo White at Debevoise & Plimpton and ex-federal prosecutor Nancy Kestenbaum at Covington & Burling — but both firms have represented CBS Corp. in several important matters while Moonves was in charge. Debevoise & Plimpton advocated for CBS in its copyright case against streamer Aereo (which went to the Supreme Court in 2014), while Covington & Burling has done work for CBS on at least a half-dozen cases, including big appeals over curse words on TV and merger-review disclosures.
Why does this matter? Not all investigations are meant to let the truth determine what happens next. The attorneys might feel pressure to keep a longtime client happy (and keep the firms' six-figure bills paid), which a firm without a history of being partial to the company's interests might not feel. "The law firms conducting these studies are often looking to discern what outcome their clients really want," says John Coffee Jr., the director of Columbia Law School's Center on Corporate Governance. "This may prove to be a tame investigation."
Initial moves have raised some eyebrows. The CBS board, which formed a special committee to oversee the investigation, declined to suspend Moonves, 68, during the probe. There have been instances in the recent past where an executive continued to actively serve during a sexual harassment investigation — former Los Angeles Times CEO Ross Levinsohn, for instance. But from American Apparel founder Dov Charney to The Walking Dead host Chris Hardwick, suspension pending an investigation is more typical. Those who push for suspension say it's not about punishment — it's an issue of loyalty. With Moonves continuing to lead the company, might his subordinates — many of whom have been by his side for decades — become extra-reluctant to be forthright with investigators? "That CBS did not suspend him hints that they want an outcome where he can remain in office," Coffee adds. "You are less likely to make accusations against someone who is still very much in power."
The announcement of the investigation also contained a subtle but important omission. In its statement, CBS made no representation that the attorneys investigating Moonves would be "independent." Instead, CBS signaled that its board was "committed to acting in the best interest of the company and its shareholders." Why this is important requires appreciation of the larger business and legal context.
Moonves has been widely hailed as one of the media industry's most talented executives. He's also one of the most highly compensated. Under the terms of his contract, he's due somewhere between $200 million and $300 million in salary, bonuses and stock rewards over the next four years. But he would lose much of this pay if he's fired "for cause." Should Moonves be denied that money, he could sue CBS for wrongful termination. And thus, the decision to put the probe in the hands of law firms with a history of representing CBS instead of appointing aggressive investigators who could better profess neutrality becomes relevant. "The closer CBS is to the investigation, the more likely Moonves' attorneys could argue the investigation was unfair since CBS, as the investigator, has a vested stake in the outcome," says Michael McCann, the director of the Sports and Entertainment Law Institute at the University of New Hampshire School of Law.
Coming down hard on Moonves could save the company hundreds of millions of dollars in compensation. But the larger concern raised by potentially partial investigators is that CBS would go too easy on Moonves either because the company's lawyers would want to avoid a wrongful termination lawsuit or just to protect a valued executive. Adding to the drama: CBS is headed toward a huge trial with controlling shareholder Shari Redstone. Moonves' absence could hurt the board's resolve in fighting for control, and if the probe clears Moonves and he remains at CBS but Redstone wins control anyway, would she accept the results of the investigation?
A spokesperson for CBS says the board retained Debevoise & Plimpton and Covington & Burling "with full knowledge of the minor past dealings with the company."
Still, why isn't CBS interested in at least the appearance of bias? It's not too far-fetched to analogize the situation to Donald Trump-connected lawyers Michael Cohen and Marc Kasowitz leading the investigation into Russian electoral interference instead of Robert Mueller. Would anyone have faith in the outcome? There were certainly other options for CBS, including a host of specialty law firms who handle high-profile investigations. Or CBS could have gotten creative. For instance, see the announcement from Ohio State University on Aug. 2 that it was convening an "independent board and working group," including two former prosecutors with no connection to the school, to probe how football coach Urban Meyer responded to allegations of domestic violence against a former assistant coach.
One possible explanation why CBS chose to keep the probe as close to the vest as possible is that the company is particularly interested in maintaining secrecy around who its investigators interview and what witnesses say about Moonves. The goal is less press attention, of course, but it's likely that CBS also wants to claim that the fruits of the investigation are privileged as "attorney work product." That means that much of what occurs during the investigation likely would remain confidential even if someone — such as shareholders alleging corporate malfeasance or Moonves accusers claiming retaliation — sues for damages. The risks of disclosures often steer companies away from outside investigators. Some companies (like NBCUniversal when allegations against Today host Matt Lauer surfaced) don't even hire outside firms.
Meanwhile, as the probe gears up, CBS executives and talent increasingly are being drawn into the corporate drama. Moonves was the elephant in the room Aug. 5 and 6 at the presentations by CBS and sister network Showtime during the Television Critics Association tour, with both CBS' Kelly Kahl and Showtime's David Nevins walking an awkward line between saying nothing and showing support for the investigation. Even as rumors persist that New Yorker reporter Ronan Farrow is working on another Moonves story, no other accusers had come forward to allege misconduct in the two weeks after the initial story. And while several current female CBS executives have voiced support for Moonves based on their own experiences, very few industry figures have spoken out about the CBS chief or his accusers, who include Illeana Douglas and Christine Peters.
CBS isn't obligated to share the results of the Moonves probe, and the one being conducted by the Proskauer firm over Charlie Rose and CBS News has been folded into the larger Moonves and Fager inquiries. The Rose claims already are the subject of a lawsuit, suggesting CBS won't want to release much, if anything, about the results. But given the climate in Hollywood right now, many believe CBS will face enormous pressure to at least release the bottom-line results of its Rose findings and, eventually, the Moonves dossier, including his history with women in the workplace. "If they don't release the results, it will look like a whitewash," says Gregory Aldisert, a partner at Kinsella Weitzman in Los Angeles who has litigated corporate governance matters.
But will the investigation — whatever the results may be — end lingering questions about Moonves' conduct? Given the structure of this probe and the unusual microscope it is under, that now appears doubtful. Aldisert says he had assumed the investigation would be a fair one given the sterling reputations of White and Kestenbaum. But when told that CBS isn't insisting its inquiry is meant to be an independent assessment of the allegations, Aldisert pauses and reconsiders. "If it's not clear, then it radically affects the credibility of the investigation," he says. "Are they really just being advocates?"
This story first appeared in the August 8 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.