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Viacom CEO Fires Back With New Suit Against Sumner Redstone

Philippe Dauman, left, with Sumner Redstone in  2007.  Philippe Dauman, left, with Sumner Redstone in  2007.
Philippe Dauman, left, with Sumner Redstone in 2007. Photograph by Mel Melcon — LA Times via Getty Images

The war for control of Sumner Redstone’s media empire was joined this morning, as Viacom CEO Philippe Dauman filed suit in Massachusetts probate court to block a move by Redstone to oust him from the trust that will eventually control the giant media company, as well as CBS (CBS).

The extraordinary action pits Dauman—long Redstone’s anointed protégé, who he often described as “the wisest man I’ve ever known”—against Redstone and his daughter Shari, both directors of Viacom (VIAB).

On Friday night, Redstone unexpectedly ousted Dauman and an ally, longtime Viacom director George Abrams, from the seven-member trust that will control his $40 billion empire after he dies or is incapacitated. This effectively would hand Sumner’s controlling stake in the companies to his once-estranged daughter, Shari, who serves as vice chair of both Viacom and CBS.

Dauman immediately branded the move “illegal,” saying that Sumner lacked the capacity to make such a decision and that it was actually orchestrated by Shari. This morning’s complaint seeks to reverse Redstone’s action on that basis.

“This is a case in which an ailing 92-year-old man’s multi-billion-dollar businesses have been seized by an estranged daughter who has manipulated her father to achieve her goals,” Dauman asserted in his lawsuit, which names Sumner Redstone, Shari Redstone, her son Tyler Korff, and three other trustees as defendants.

Redstone “is in the grip of a neurological disorder and other serious ailments and is dependant on his daughter for care and sustenance,” the suit asserts. “In reality, Mr. Redstone is being manipulated by his daughter, Shari. After years of estrangement, she has inserted himself into his home, taken over his life, isolated him from contact with others, and purports to speak for him. In doing so, she 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.”

Dauman’s suit asserted the move is “based on exercising undue influence” and “thereby purporting to seize authority from a man not mentally competent to have granted it.”

Redstone’s mental capacity has been in question for more than a year. A recently dismissed lawsuit by a former female companion described him as “a living ghost.” He hasn’t appeared at public compamny events or uttered a word on investor calls for more than a year, and, as Fortune reported, reportedly dozed and drooled at one of the last board meetings he attended in person, in late 2014.

Despite that, Redstone remained as executive chairman of both Viacom and CBS until Feb. 2016, when the companies named Dauman and Moonves, respectively, as chairman, giving Redstone the title of chairman emeritus. Last week, Viacom cut off Redstone’s pay. (He received $24 million combined from the two companies in 2014 and $3.8 million for 2015.) But even then, he remained a director of both companies.

Abrams joined in the 24-page complaint, filed by the Boston office of Wilmer, Cutler, Pickering, Hale & Doerr.

Representatives for Sumner and Shari Redstone could not be immediately reached for comment.

Redstone has had a contentious relationship with his daughter for decades, at times publicly scoffing at the notion that she would take over his media empire. In 2014, Shari Redstone rejected efforts to buy out her 20% stake in the family business for $1 billion and pursued efforts to oust two of Redstone’s female companions, who she regarded as gold diggers. She blamed them for keeping her from seeing her father.

After the two women were pushed out last fall, she has rebuilt her relationship with Redstone. Both Dauman and the ousted companion, Manuela Herzer, now claim Shari Redstone has manipulated her father to further her own position.

Shari has also had a contentious relationship with Dauman, long her father’s designated successor. In February, she cast the lone board vote against his elevation to executive chairman.

Beginning with Friday’s events, the long-simmering battle between the two camps burst into the open. Dauman’s PR team accused Shari of placing Redstone in “lockdown” to assure her influence over him. Viacom’s lead outside director issued a statement supporting Dauman.

Shari Redstone issued statements supporting her father’s action, and denying that she was behind it. Through a spokesperson, she issued a new statement this morning responding to Dauman’s weekend attacks (but before the Viacom CEO announced his lawsuit). Insisting “Sumner makes his own decisions,” she called it “absurd for anyone to accuse Shari of manipulating her father or controlling what goes on in his household.” The statement added: “As to the idea that Shari, an attorney and respected businesswoman, would ‘unlawfully’ use his name, that is utterly ridiculous.”

A spokesman for Redstone and his current legal team pointed out that Dauman—in a sworn declaration six months ago opposing previous efforts to have Redstone declared incapacitated—had described him as “engaged, attentive, and as opinionated as ever.”

This article has been updated.

Correction: An earlier version of this article misstated the name of one of the ousted trust directors.