This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.nytimes.com/2016/05/24/business/viacom-ceo-sumner-redstone-competency-lawsuit-philippe-dauman.html

The article has changed 6 times. There is an RSS feed of changes available.

Version 1 Version 2
Viacom Chief Challenges Sumner Redstone’s Competency in Lawsuit Redstone and Viacom Executives Go to Court Against Each Other
(about 4 hours later)
Philippe P. Dauman, chief executive of Viacom, struck back in court on Monday in the vicious battle over the future of Sumner M. Redstone’s $40 billion media empire. The vicious battle over the future of Sumner M. Redstone’s $40 billion media empire went to court on both coasts Monday.
In a lawsuit filed in Massachusetts, Mr. Dauman and George Abrams, a Viacom director, challenged their unexpected removal on Friday from the trust that will control Mr. Redstone’s media companies after he dies or is declared incompetent. In a lawsuit filed Monday morning in Massachusetts, Philippe P. Dauman, the chief executive of Viacom, and George Abrams, a Viacom director, challenged the mental competency of the 92-year-old mogul and alleged that he had been manipulated by his daughter into removing them from a trust that will control the direction of his companies.
The suit depicts Mr. Redstone, 92, as suffering “profound physical and mental illness” and under the undue influence of his long-estranged daughter, Shari Redstone, with whom he recently reconciled. Hours later, lawyers for Mr. Redstone fired back with a petition in Los Angeles, asking that a court confirm the validity of the changes he made.
The legal action seeks to immediately block the removal of Mr. Dauman and Mr. Abrams from the trust and also invalidate their removal as directors of the theater chain company National Amusements, through which Mr. Redstone controls his media conglomerate. The legal war erupted after Mr. Redstone on Friday unexpectedly ousted Mr. Dauman and Mr. Abrams from the trust, which will gain control of Mr. Redstone’s companies when he dies or is declared incompetent. Mr. Redstone also ejected them from their positions on the board of the theater chain company National Amusements, through which Mr. Redstone controls his companies.
The 24-page suit, filed Monday morning in the Commonwealth of Massachusetts Probate and Family Court in Norfolk, puts a renewed focus on the question of Mr. Redstone’s mental capacity. In November, a former companion of Mr. Redstone filed suit alleging that he was not competent and was under the influence of his daughter when he removed the companion, Manuela Herzer, from a directive that would have given her supervision of his health care. That suit was dismissed two weeks ago, in favor of Mr. Redstone. The dueling legal actions represent a bitter new fissure in Mr. Redstone’s corporate empire, which he built into one of the world’s biggest entertainment conglomerates after wresting control of Viacom in 1987. They also feature a reversal of fortunes for some of the key principals involved. Shari Redstone, long estranged from her father, has reconciled with him, and his actions over the weekend align with her view of how his companies should be managed. Mr. Dauman and Mr. Abrams, longtime confidants of Mr. Redstone, now find themselves pushed out and challenging whether he was capable of making such a decision.
Mr. Dauman testified to Mr. Redstone’s engagement and attentiveness during the course of that legal battle. The trust, intended to benefit Mr. Redstone’s five grandchildren, wields enormous power. The seven voting members could move to dismiss the boards and leadership of Viacom and CBS and also make plans to merge or sell the companies.
Now, after his ouster from the trust and the board of National Amusements, Mr. Dauman is making a similar claim: that Mr. Redstone lacked the capacity to make those decisions and was manipulated by his daughter. In their legal action, filed in the Commonwealth of Massachusetts Probate and Family Court in Norfolk, Mass., Mr. Dauman and Mr. Abrams sought to immediately block their removal from the trust and invalidate their removal as directors of National Amusments. The 24-page suit depicts Mr. Redstone as suffering “profound physical and mental illness” and being subject to the undue influence of his daughter. It also claims that the changes to the trust and the board will allow Ms. Redstone to “illegitimately tip the balance of power to her.”
The suit filed Monday asserts that Mr. Redstone’s physical and mental health has declined precipitously in the past six months and that he is entirely dependent on his daughter for food, care and medicine. In a four-page petition filed in Los Angeles Coutry Superior Court, lawyers for Mr. Redstone asserted that because “there is no evidence” that Mr. Redsone was incapacitated or unable to mange his business affairs, he still had the power to remove or add trustees. The court filing states that Mr. Redstone is the sole beneficiary of the trust during his lifetime and has the right to make changes the trustees unless he is “incapacitated.”
A determination of Mr. Redstone’s incapacity depends on a court ruling or a document signed by three doctors, stating that he lacks the competency to manage his affairs.
“Mr. Redstone has been clear and unequivocal in his desire to remove Philippe Dauman and George Abrams as trustees,” Robert N. Klieger, a lawyer with Hueston Hennigan who is representing Mr. Redstone, said in a statement.
“Mr. Redstone is saddened that Mr. Dauman is trying to make this dispute about his daughter,” Mr. Klieger added in the statement.
The dispute puts a renewed focus on the question of Mr. Redstone’s mental capacity. In November, a former companion of Mr. Redstone filed suit alleging that he was not competent and was under the influence of his daughter when he removed the companion, Manuela Herzer, from a directive that would have given her supervision of his health care. That suit was dismissed two weeks ago, in favor of Mr. Redstone.
After his dismissal from the trust and the board of National Amusements, Mr. Dauman is making a similar claim.
“It is telling that Mr. Dauman is raising the question of mental capacity for the first time after he’s been removed when, just months ago in court documents, he pronounced Mr. Redstone ‘engaged, attentive, and as opinionated as ever,’” Mr. Klieger said in the statement.
While the judge in the Herzer case sided with Mr. Redstone, he did not make a decision on Mr. Redstone’s competency. According to the lawsuit filed by Mr. Dauman and Mr. Abrams, Mr. Redstone’s physical and mental health has diminished significantly since Ms. Herzer’s suit was filed in November.
The suit also says that Mr. Redstone’s physical and mental health have declined precipitously in the last six months and that he is entirely dependent on his daughter for food, care and medicine.
It details how Mr. Redstone, who has not been seen publicly for nearly a year, can no longer stand, walk, read, write or speak coherently. According to the suit, he cannot swallow and requires a feeding tube to eat and drink and the suctioning of phlegm and saliva throughout the day and night to avoid breathing complications.It details how Mr. Redstone, who has not been seen publicly for nearly a year, can no longer stand, walk, read, write or speak coherently. According to the suit, he cannot swallow and requires a feeding tube to eat and drink and the suctioning of phlegm and saliva throughout the day and night to avoid breathing complications.
Mr. Dauman and Mr. Abrams claim in the suit that Mr. Redstone’s ability to “understand and assess the consequences of his actions is limited.” Mr. Dauman and Mr. Abrams claim that Mr. Redstone’s ability to “understand and assess the consequences of his actions is limited.”
The suit also alleges that Ms. Redstone made changes to Mr. Redstone’s last will and testament, including Ms. Redstone’s appointment in April to a directive that would give her supervision of her father’s health care decisions. The suit states that there have been other undisclosed changes to Mr. Redstone’s will in the last week. The suit also alleges that Ms. Redstone made changes to Mr. Redstone’s last will and testament, including Ms. Redstone’s appointment in April to a directive that would give her supervision of her father’s health care decisions.
“After years of estrangement, she has inserted herself into his home, taken over his life and isolated him from anyone not under her control, including longtime business colleagues,” Mr. Dauman said in a statement on Monday. “Shari’s actions amount to an unlawful corporate takeover, and if effectuated, could have far-reaching consequences for thousands of shareholders and employees of Viacom.”“After years of estrangement, she has inserted herself into his home, taken over his life and isolated him from anyone not under her control, including longtime business colleagues,” Mr. Dauman said in a statement on Monday. “Shari’s actions amount to an unlawful corporate takeover, and if effectuated, could have far-reaching consequences for thousands of shareholders and employees of Viacom.”
Representatives for Mr. Redstone and Ms. Redstone could not immediately be reached for comment after the suit was filed. Representatives for Ms. Redstone could not immediately be reached for comment after the suit was filed.
In an statement issued earlier on Monday, Nancy Sterling, a spokeswoman for Ms. Redstone, said it was “absurd for anyone to accuse Shari of manipulating her father.”In an statement issued earlier on Monday, Nancy Sterling, a spokeswoman for Ms. Redstone, said it was “absurd for anyone to accuse Shari of manipulating her father.”
“Sumner makes his own decisions regarding whom he wants to see, both in his home and elsewhere, and he has his own team of independent advisers to counsel him on corporate and other matters.” “Sumner makes his own decisions regarding whom he wants to see, both in his home and elsewhere, and he has his own team of independent advisers to counsel him on corporate and other matters,” Ms. Sterling said.
The declaration of war in the Redstone empire came after a bitter weekend of feuding, ignited on Friday when Mr. Redstone unexpectedly ousted Mr. Dauman and Mr. Abrams from the trust and the board of National Amusements.
Through National Amusements, Mr. Redstone controls about 80 percent of the voting stock in Viacom and CBS, two of the world’s largest entertainment companies.
Mr. Abrams, an ally of Mr. Dauman, had been a representative of Mr. Redstone’s father and has been a friend and representative of Mr. Redstone for 50 years. He also had been a Viacom director for nearly 30 years.
In a statement on Monday, Mr. Abrams said that over the last 25 years, Mr. Redstone had discussed his will and various trusts with him and that he was “instrumental in setting up this trust at the time of his divorce.” Mr. Abrams said the developments over the weekend “would alter his previously and repeatedly expressed wishes” that the trust be managed professionally and that his grandchildren be treated equally despite family conflicts.
The weekend’s developments were considered a major victory for Ms. Redstone in her quest to shape the future of her father’s media companies. Ms. Redstone is a director of National Amusements, a member of the trust, and the vice chairwoman of Viacom and CBS.The weekend’s developments were considered a major victory for Ms. Redstone in her quest to shape the future of her father’s media companies. Ms. Redstone is a director of National Amusements, a member of the trust, and the vice chairwoman of Viacom and CBS.
Ms. Redstone has publicly opposed Mr. Dauman’s leadership of Viacom; she was the sole Viacom director in February to vote against his elevation to chairman when her father ceded the title. Viacom has reported persistently weak earnings, and its stock price has plunged about 40 percent in the last year. Ms. Redstone has publicly opposed Mr. Dauman’s leadership of Viacom; when her father ceded the title in February, she was the sole Viacom director to vote against Mr. Dauman’s elevation to chairman. Viacom has reported persistently weak earnings, and its stock price has plunged about 40 percent in the last year.
The trust, intended to benefit Mr. Redstone’s five grandchildren, wields enormous power. The seven voting members could move to oust the boards and leadership of Viacom and CBS and also make plans to merge or sell the companies. In their suit, Mr. Dauman and Mr. Abrams claimed that the people put forward to replace them on the trust and the board are under the influence and control of Ms. Redstone.
Monday’s lawsuit asserts that the changes to the trust and the board will allow Ms. Redstone to “illegitimately tip the balance of power to her.” It also questions whether Mr. Redstone’s legal representation is legitimate. It states that Michael C. Tu, a partner at the law firm Orrick, Herrington & Sutcliffe, had refused to disclose whether he had ever met Mr. Redstone and asserts that statements that Mr. Tu made to the media related to Viacom business activities were false.
The suit claims that the people put forward to replace them on the trust and the board are under the influence and control of Ms. Redstone. “As counsel for Mr. Redstone, I of course have met with my client on these matters,” Mr. Tu said in an email. “The accusations in today’s filing about false statements are reckless and irresponsible. These accusations and others will be vigorously contested in court.”
It also calls into questions whether Mr. Redstone’s legal representation is legitimate. It states that Michael C. Tu, a partner at the law firm Orrick, Herrington & Sutcliffe, has refused to disclose whether he had ever met Mr. Redstone and asserts that statements that Mr. Tu made to the media related to Viacom business activities were false.
Mr. Tu could not immediately be reached for comment.
In a statement on Sunday, a spokesman for Mr. Redstone said that he was “engaged, attentive, and as opinionated as ever,” pulling the phrase directly from a declaration that Mr. Dauman made six months ago as part of the suit filed by his former companion, Ms. Herzer. The statement made clear that Mr. Redstone’s lawyers will seek to use Mr. Dauman’s own words against him as they assert that Mr. Redstone had the mental capacity to make the decision to remove the Viacom chief.
While the judge sided with Mr. Redstone in the Herzer case, he did not make a decision on Mr. Redstone’s competency.
According to the new lawsuit filed Monday, Mr. Redstone’s physical and mental health has diminished significantly since Ms. Herzer’s suit was filed in November.
Mr. Dauman visited Mr. Redstone during the first week of March, according to the suit. During the visit, Mr. Redstone “appeared almost totally nonresponsive, and could not meaningfully communicate at all.”
Mr. Redstone turns 93 on Friday.