Viacom CEO Dauman Sues to Block His Removal From Redstone Trust

Tables Keep Turning in Battle for Redstone's Empire

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Sumner Redstone spoke at the Milken Institute Global Conference in Los Angeles in 2010.
Sumner Redstone spoke at the Milken Institute Global Conference in Los Angeles in 2010. Credit: Jonathan Alcorn/Bloomberg

Viacom CEO Philippe Dauman sued to block his removal from the family trust of the company's controlling shareholder, Sumner Redstone, arguing that the move goes against the well-established plans of the 92-year-old billionaire.

Mr. Dauman and George Abrams, another trustee who was removed last week, filed a complaint in state court in Canton, Mass., on Monday challenging changes made to the trust by a lawyer claiming to represent Mr. Redstone. The suit, which accuses Mr. Redstone's daughter Shari of manipulation, asks a judge to block any action to remove them as trustees.

Mr. Redstone fired back, filing a petition in Los Angeles state court seeking to confirm the validity of his actions in removing Mr. Dauman and Mr. Abrams.

"Mr. Redstone is the sole beneficiary of the trust during his lifetime, and, although the trust itself is irrevocable, he has the right to remove or add trustees unless he is 'incapacitated,"' a spokesman for the billionaire said in a statement announcing the filing.

Power struggle
Mr. Redstone's declining health over the past two years has set off a power struggle in the Viacom board room and in his $20 million mansion. The war between Shari Redstone and Mr. Dauman comes as the company struggles to cope with declining cable TV ratings and plummeting stock prices and may impede plans to sell a minority stake in Paramount movie studio to outside investors.

Last year, Mr. Redstone kicked his caretaker, Manuela Herzer, and his then-girlfriend, Sydney Holland, out of his house and his will. Mr. Dauman replaced Mr. Herzer as the director of Redstone's end-of-life healthcare, a duty that was later passed on to Ms. Redstone.

Mr. Herzer sued, asking the court to reinstate her as Redstone's health-care agent. Her case was dismissed earlier this month after a judge said he was persuaded by testimony from Mr. Redstone that he wanted nothing to do with his former housemate.

Mr. Dauman and Mr. Abrams were informed Friday by Michael Tu, a lawyer representing Mr. Redstone, that they were to be relieved of their duties as trustees. Both men touted their long histories with Mr. Redstone with Mr. Dauman serving as the billionaire's confidant for more than three decades. Abrams, a family law attorney from Boston, says he's been friends with the mogul for more than 50 years.

Limited role
In contrast, Ms. Redstone's relationship has been fraught with "conflict and antagonism," driven in large part by her desire to gain influence over her father's companies, Viacom, National Amusements Inc. and CBS, according to the complaint, a copy of which was obtained from the company. In August 2008, Mr. Redstone publicly stated that he wanted his daughter to play only a limited role in the companies. He also said at the time that she wouldn't succeed him as the head of Viacom or National Amusements, according to the filing.

"If these purported actions are not voided, Shari will have effectuated an unlawful corporate takeover and will be able to exercise control of Mr. Redstone's companies, contrary to his longstanding wishes," Mr. Dauman and Mr. Abrams said in the complaint.

Neurological disorder
Mr. Redstone, who suffers from a neurological disorder and can't start or participate in meaningful conversation, is susceptible to undue influence, the men said. The move to remove Mr. Dauman and Mr. Abrams as trustees upends "his decades-long plan of succession and careful estate planning," they said.

Ms. Redstone "is attempting to use his control to dismantle his estate plan to serve her own interests and to assume control of his businesses which he long refused her," the duo said in the filing. "Her attempt to do so, however, is based on exercising undue influence over her ailing father and thereby purporting to seize authority from a man not mentally competent to have granted it."

A spokesman for Mr. Redstone said he has been out visiting family in recent days. He's also preparing to name new trustees to replace Mr. Dauman and Mr. Abrams, said the person close to the family, who asked not to be identified discussing private information.

"It is absurd for anyone to accuse Shari of manipulating her father or controlling what goes on in his household," her spokeswoman said in a statement Monday. "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."

-- Bloomberg News

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