A group of shareholders will be fighting National Amusements on the same schedule as CBS after a Delaware judge denied NAI’s motion to stay the class action lawsuit and ruled it could be tried with the television company’s.
The decision from the Delaware Court of Chancery is the latest in the saga involving CBS’ desire to issue a special dividend to shareholders that would greatly diminish National Amusements’ voting interest. The shareholders, represented in a class action suit brought by the Westmoreland County Employees’ Retirement System, filed a lawsuit in late May claiming they had a contractual right to the dividend, and that NAI’s move to require a supermajority board vote and nullify the dividend caused them harm.
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Attorneys for the shareholders had requested a consolidation, which would have combined their lawsuit with the CBS suit. Judge Andre Bouchard instead ruled for coordination, syncing the discovery timelines and the trial.
CBS, which is suing NAI to be able to issue the dividend, took no formal position on the argument. But when its lawyers were asked by Bouchard whether they preferred coordination or consolidation, they responded in favor of coordination.
Meredith Kotler, an attorney for Shari Redstone’s National Amusements, said not staying the Westmoreland case would lead to a heavy burden on the law firm and argued coordination would mean dealing with seven law firms instead of four.
“That’s a multi-headed hydra,” she said. “That’s going to be very unworkable and very different.”
Bouchard countered by saying coordination was common, particularly for cases fought by high-powered law firms.
“I’m not crazy about the schedule, but I did work at Skaaden and I have the idea that things get done,” he said. “Firms like yours have the capacity to do it.”
He warned attorneys for Westmoreland County to be “surgical” in the discovery they file and to avoid duplicating any claims and arguments brought by CBS.
“Don’t waste my time,” he said. “You should focus on where it’s really different in the claims and your pleadings or just preserve them for trial.”
Today’s atmosphere was much more subdued than the last time CBS and NAI faced off in the courtroom. Then, in May, dozens of lawyers appeared, filling the entirety of the main courtroom and spilling into an overflow section where they were joined by media. There were just a handful of attorneys for each side for this hearing this morning.
Last month, Bouchard declined to grant a temporary restraining order for CBS against NAI, which has a controlling ownership in the company. The TRO would have prevented NAI from requiring a 90% supermajority vote on the board and allowed CBS to go through with the special dividend that would have diluted NAI’s voting interest from 79% to 17%.
Discovery for the CBS and Westmoreland cases is supposed to end in late August. The trial is scheduled for early October.
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