Now re-melded with Viacom, CBS doesn’t really corporately exist anymore, but a federal judge’s order Wednesday on a long-battled shareholder lawsuit will make Shari Redstone and former interim CBS CEO Joe Ianniello pretty happy.
The empress of all things ViacomCBS and the current chairman of CBS Entertainment Group were let go today from the putative securities class action first filed in the dying days of Les Moonves’ reign in 2018. However, Moonves was not so fortunate and will have to face what is left of the legal move by the shareholders.
“CBS and all individual Defendants except Moonves made a joint motion to dismiss, and Moonves made a separate motion to dismiss,” U.S. District Judge Valerie Caproni writes in her opinion and order (read it here). “Both argue that the Amended Complaint fails to state a claim and must be dismissed under Federal Rule of Civil Procedure 12(b)(6),” the NYC-based judge adds. “The Court grants in part and denies in part both motions.
“On November 29, 2017, Moonves stated at an industry event hosted by Variety that ‘[#MeToo] is a watershed moment. . . . It’s important that a company’s culture will not allow for this. And that’s the thing that’s far-reaching. There’s a lot we’re learning. There’s a lot we didn’t know, ” Caproni says, putting the ex-executive’s words against him, as the original complaint of August 2018 did. “The Amended Complaint, read in the light most favorable to Plaintiffs, adequately—though barely—alleges that this was a misleading statement of material fact.”
And then there is the kicker for Moonves, who will have to square off against now-ViacomCBS shareholders the Construction Laborers Pension Trust for Southern California and others.
“The Amended Complaint adequately alleges that Moonves’s statement was misleading,” the judge wrote to put it mildly, with all the allegations that have come out that led to Moonves’ axing from his CBS perch on September 9, 2018. The once near omnipotent TV boss subsequently lost out on his $120 million severance when a CBS probe unveiled an apparent pattern of misconduct and deemed his termination was for cause.
The lawsuit at issue here claims Moonves and other defendants made “materially false and misleading statements regarding the Company’s business, operational and compliance policies.” Those statements may not turn out to be securities violations in the judge’s POV, but Moonves certainly skated over the line, in her opinion.
“Although it is a very close case, it is barely plausible that a reasonable investor would construe his statement as implicitly representing that he was just learning of problems with workplace sexual harassment at CBS,” Caproni notes. “His statement implied that he had not known of these problems previously, even though, in truth, he was at that time actively seeking to conceal his own past sexual misconduct from CBS and the public.”
In the middle of a corporate spinal realignment of sorts, and ex-NBC Entertainment co-chair George Cheeks looking to return to the Redstone fold, CBS unsurprisingly did not respond to request for comment on the order. Neither did representatives for Moonves.
As for the plaintiffs, while their suit is presently sliced up considerably, they have been offered an opportunity by Caproni to make a new motion by January 29 to rebuild their case. It may explain why CBS, Redstone and Ianniello are keeping their celebration powder dry right now.