10:09am PT by Eriq Gardner
Philippe Dauman Settlement to Get Judge's Approval
On Friday, Massachusetts probate Judge George Phelan heard arguments concerning a settlement that will resolve outgoing Viacom chief Philippe Dauman's claim of wrongfully being removed as a trustee on the Sumner Redstone entity that indirectly holds voting control over the fate of Viacom and CBS. At the conclusion of the morning session, the judge told the parties he wasn't quite ready to sign off on a stipulation that would allow Dauman to back out of the case. However, after the parties reconvened after efforts were made to satisfy concerns of Sumner Redstone's granddaughter, the judge signaled he would.
Dauman and George Abrams filed their lawsuit in May and alleged that 93-year-old Redstone lacked the mental capacity necessary to effectuate a removal. After the judge refused to dismiss the case and set up a trial in September, a complicated settlement was crafted involving Viacom, Redstone's National Amusements and others. The deal contemplates Dauman's departure from Viacom. He'll get an exit package estimated to be between $72 million and $95 million and withdraw his claims in the Massachusetts case.
But Redstone's granddaughter Keryn Redstone, who is a beneficiary of the trust and has her own cross-claims in the case, stepped forward to raise objection to the stipulation arrived at by Dauman and the Redstone camp.
"You need to know in approving the settlement why they changed their mind because it's important," stated Pierce O'Donnell at today's hearing. "I suspect if we ask Redstone, he doesn't know about it. ... I submit that an incompetent Sumner Redstone can't bless a settlement."
Judge Phelan asked the attorney representing Dauman and Abrams whether his clients were willing to sign an affidavit attesting to the fact they think that Sumner Redstone is mentally competent. "In light of very strong claims, I'm wondering why the plaintiffs wouldn't make a statement," said the judge.
The plaintiffs' lawyer danced around the suggestion, saying he'd need to check, but wasn't sure he could deliver one way or the other.
At the hearing, an attorney for Shari Redstone also spoke up, arguing that Dauman and Abrams already have resigned from the trust, that they can't be compelled to continue serving, and thus they have no standing to assert claims.
"The notion that [Keryn Redstone's] cross-claims are prejudiced by [Dauman's] claims being withdrawn doesn't make sense because they are no longer serving as trustees," he said. "To the extent that she wants to challenge the actions of the trust, she's still free to do that."
O'Donnell responded to this by acknowledging that Dauman and Abrams can resign, "but it's a breach of fiduciary duty to abandon" claims contesting Sumner Redstone's capacity if they, as trustees, truly believe his will is being usurped.
Sumner Redstone's own attorney, Rob Klieger, has cast aspersions on O'Donnell's motives in the case, arguing in court papers that the attorney is contesting a settlement on one hand, yet pursuing a settlement for his own clients on the other. He also told the judge today that he suspected O'Donnell hoped that Dauman would "carry the water" in terms of the costs in the litigation.
Judge Phelan asked Klieger if the attorney advised Sumner Redstone to talk with Keryn. The elder Redstone has thus far refused, Klieger responded. The judge said he would prefer if the two met face-to-face.
Klieger tried to express some optimism about a resolution, for example by having the trust make clarifications about distributions under the trust and giving Keryn Redstone some assurances that she will be treated fairly. The attorney said that he'd work on Sumner Redstone to arrange a face-to-face and even suggested a mediation. Klieger said, "I don't want my client to be fighting lawsuits as long as the time he has left."
The judge said this would be "reasonable" and might lead to a cooling off. Phelan was especially keen on restoring peace in the family. O'Donnell also liked the idea, but still wanted the judge to push off on approving the stipulation. Dauman's lawyer stood up to urge the judge to dismiss his client from the case. The judge wouldn't give in, hoping for "positive direction," and asked the parties to report to him by the end of the day.
So everyone took a break, and during that time, Klieger presumably got on the phone with his client. This time, Sumner Redstone assented to an in-person meeting with his granddaughter, the judge was told during the afternoon session.
With a breakthrough in hand, the judge appears ready to bless Dauman's deal. He's set a status conference for Sept. 23 to measure progress. If all goes well, not only will Dauman's claims concerning the trust pass, but the lingering claims made by Keryn will be dropped, too.
In a statement to The Hollywood Reporter, Shari Redstone's attorney said, "I am very pleased for the Redstone family. The plaintiffs’ claims filed against Sumner and Shari have been dismissed, the settlement agreement is firmly in place, and Sumner’s decisions have been honored in all respects. This result benefits Viacom, National Amusements and all of the beneficiaries of Sumner’s trust."
Aug. 26, 3:06 p.m. — Updated with statement from Shari Redstone's attorney.