Sumner Redstone won a stirring victory this morning in the suit aimed at declaring him incompetent when he exiled a former companion and excised her from her will. But that victory hardly signals an end to the litigation surrounding the declining 92-year-old billionaire, whose holding company controls 80% of a $40 billion empire consisting of CBS (CBS) and Viacom (VIAB).
For starters, Manuela Herzer, his ousted companion, has vowed to appeal the defeat. Second, today Herzer—who had insisted her previous litigation wasn’t about money— filed a new $210 million lawsuit against Redstone’s daughter Shari, her two adult sons, and a half-dozen members of Redstone’s nursing and household staff. (How far in advance did Herzer plan the suit? One of her lawyers tells Fortune, “I ran downstairs to the filing window when I saw the judge was going to dismiss.”)
In her new filing, Herzer complains of “intentional interference of expected inheritance,” privacy violations, and “breach of contract.” The complaint asserts that Shari Redstone “organized and implemented what would eventually become a successful campaign to turn Sumner against Herzer and strip Herzer not only of her role as his health care agent, but also of her inheritance.” (At the time of her Oct. 2015 eviction, Redstone’s estate included bequests to Herzer of $50 million and his $20 million Beverly Park mansion.) The suit alleges that Shari Redstone’s “insidious plan” involved “espionage, bribery, an illegal eviction by force, and deceit,” carried out by “Shari and her henchmen.” It relied partly on email evidence that shows staff at Redstone’s mansion were secretly informing Shari, then estranged, about developments involving her father.) Shari Redstone issued a statement responding to the new suit, contending that Herzer is continuing a “baseless attack against the Redstone family with a second lawsuit. It is total fiction and continues to speak volumes about Herzer’s motivation and character.”
Then there’s a third new legal action, as of yet unfiled. Redstone’s lawyers previously confirmed to Fortune that they plan to file a civil lawsuit to recover $150 million in gifts the mogul gave to Herzer and Sydney Holland, his 44-year-old former live-in girlfriend. Redstone threw Holland out of his house last August 30 (about five weeks before evicting Herzer), after Holland confessed to an affair with an ex-con living in Arizona. Said Redstone’s lead trial attorney, Robert Klieger, in a statement: “Mr. Redstone is looking forward to liberating the $150 million in ‘gifts’ to Ms. Herzer and her friend [Holland].”
It all suggests that the dramatic day and a half of legal proceedings are but a prelude to even more courtroom theatrics and combat in what has become a sordid, long-standing matter (for the full saga, read the Disturbing Decline of Sumner Redstone) that reflects poorly on countless participants, not least the boards of CBS and Viacom, which took no action to remove Redstone as their executive chairman until Herzer’s case forced their hand.
For now the Herzer camp has plenty to regret. Today’s decision potentially means a $100 million reversal of fortune. Just a month ago, it appeared the case was settled, in a deal that would pay Herzer an additional $30 million ($2.5 million would go to her charity), and include releases protecting her from any attempt to reclaim her previous gifts. The sides disagree as to whether Herzer or the Redstone camp scotched the deal, but Herzer has to be ruing the fact that she didn’t close a settlement.
Then there was her lawyer’s strategy, which ended up backfiring. From the start, Herzer’s lead attorney, Pierce O’Donnell, privately described Sumner Redstone as “Exhibit A” in his case. Getting the ailing 92-year-old billionaire in front of probate judge David Cowan, O’Donnell believed, was pretty much all he needed to show that Redstone was mentally incompetent when he gave his live-in companion the boot from his Beverly Hills mansion, then removed her as his health care agent, and erased his $70 million bequest to her in his will.
As it turned out, 18 minutes of sworn testimony from Redstone, presented in court Friday, was all it took to resolve the case—but not in Herzer’s favor. Under questioning, Redstone was at times unintelligible or unable to respond, and at one point required an adjustment of his dentures. But on the subject of whether he wanted Herzer to be in charge of his health care, Redstone was utterly unambiguous—repeatedly calling her “a fucking bitch.”
“There is no good cause for further judicial involvement where the court has now heard directly from Redstone that he has lost trust in Herzer, does not want her in his life and instead wants his daughter Shari to look after him as necessary,” the judge wrote in an opinion this morning.
O’Donnell had fought doggedly for the right to question Redstone—finally getting the green light from the judge, after repeated rejections, only days before trial. Redstone’s lawyers had fought equally hard to shield the billionaire from questioning, insisting that it was an unfair burden on his health and an invasion of his privacy. At the time, the judge’s ruling seemed like a huge victory for O’Donnell. But the testimony ultimately proved decisive enough to prompt Cowan to cut short the trial, expected to last for more than a week, after less than two days.
Redstone’s daughter (now serving as his health care agent) and lawyers celebrated the victory. “I am grateful to the court for putting an end to this long ordeal,” said Shari Redstone in a statement. “I am so happy for my father that he can now live his life in peace, surrounded by his friends and family.”
“Ms. Herzer bet wrong when she assumed that Mr. Redstone’s difficulty communicating would result in her reinstatement in his life and fortune,” said Klieger, Redstone’s lead trial attorney, in his statement.
Among the remaining mysteries: What action might be taken to alter Redstone’s continuing hold over Viacom and CBS, where he still serves as a director and chairman emeritus? The shares now sit in an irrevocable trust for the benefit of Redstone’s grandchildren, but still under his control. Under its provisions, a group of seven trustees—including Shari Redstone and Viacom CEO Philippe Dauman—will assume stewardship of the shares after Redstone has died or been declared incapacitated.
Today’s ruling does not resolve that issue. The judge ruled that Redstone is competent enough to choose who will make health care decisions for him. That is a far, far cry from suggesting Redstone is competent to make (or weigh in on) complex business decisions. Indeed, the case had expert testimony that Redstone is suffering from at least moderate dementia and his emotional, speech and reasoning challenges were evident. It’s unclear whether this will prompt the trustees to seek to declare him incapacitated.
