Written by The Business Journal Staff
(AP) — A Delaware judge on Thursday granted a request by attorneys for Sumner Redstone to halt evidence gathering, including a possible deposition of the ailing media mogul, in a Viacom shareholder lawsuit until he rules on a defense motion to dismiss the complaint.
After hearing arguments from attorneys, Chancellor Andre Bouchard agreed to put the case on hold until he hears arguments in January on the motion to dismiss and issues his ruling.
The shareholder plaintiffs are challenging actions taken by Viacom’s board in re-nominating Redstone as a director earlier this year amid concerns about his health and mental capacity, and efforts by Redstone and his daughter, Shari, to change the company’s bylaws and oust certain directors.
Redstone’s attorneys argued that he has a serious speech impediment, and that subjecting him to a deposition would exacerbate his health problems while providing little if any useful evidence regarding the actions and intentions of other board members.
“It really ends up being nothing more than an assault on this man’s dignity,” said Robert Klieger, an attorney for Redstone.
Eric Zagar, an attorney for the plaintiffs, argued that Redstone’s health is unlikely to improve, and that a deposition would shed light on his capacity to make and communicate decisions as a director and controlling shareholder of Viacom.
“Ultimately, we are challenging his capacity to make any corporate decisions since at least the summer,” Zagar said.
While agreeing to put evidence gathering in the case on hold, Bouchard directed attorneys to talk about a protocol for deposing Redstone, given statements by his attorneys that it could cause him anxiety, likely exacerbating problems with his sleeping and swallowing, while increasing his blood pressure.
“In other circumstances, I might be skeptical about assertions like this … but I believe they should be taken seriously when we are talking about the health risks of a 93-year-old man,” he said.
The judge also suggested that an independent medical examination of Redstone may be more useful than a deposition in addressing questions about his competency.
The lawsuit is one of several legal battles that have played out over the past year involving Redstone and the future of the media empire he controls through National Amusements Inc., a private movie theater company that holds controlling shares in both Viacom and CBS. Redstone stepped down as executive chairman of both companies earlier this year. Viacom owns the Paramount Pictures movie studio and pay TV channels such as MTV, Nickelodeon, Comedy Central and BET.
Earlier this year, longtime Viacom CEO Phillipe Dauman was pushed out following a legal battle with Shari Redstone over control of the company. The fight ended with Shari Redstone as a Viacom director and president of National Amusements.
In May, Sumner Redstone stripped Dauman and George Abrams, another longtime adviser, of key positions as trustees and board members of National Amusements.
The two argued in response that Redstone wasn’t mentally competent and was being manipulated by his daughter.
Similarly, the plaintiffs in the shareholder lawsuit argue that Viacom directors breached their fiduciary duties in continuing to keep Redstone on the board even though, as they claim, he is unfit to serve. They also argue that certain bylaw changes orchestrated by Redstone should be invalidated if it is shown that he was not competent to authorize them.
Klieger acknowledged that his client is dealing with some serious health issues, but he noted that advanced age and physical health problems do not necessarily mean his cognitive abilities are impaired.
“Physical impairments themselves should not be a bar to serving as a corporate director,” he said.