New Redstone Competency Report Filed in Court -- and Sealedby and
Billionaire’s mental health questioned in Los Angeles lawsuit
Media mogul’s own doctors have said he’s mentally sound
The latest assessment of Sumner Redstone’s mental state is in, but it’s unlikely to resolve questions about his ability to manage his life or finances any time soon.
Redstone, the controlling shareholder of Viacom Inc. and CBS Corp., was examined by a doctor chosen by his ex-girlfriend. She sued last year, alleging the 92-year-old isn’t mentally fit to make decisions. The psychiatrist’s report was filed Thursday in court under seal, and its findings aren’t public.
Investors have been watching the case closely to see how it might affect Viacom and CBS, two of the biggest U.S. media companies. At least one shareholder sued, saying their boards wasted millions paying Redstone when he was unfit to lead. The aging mogul stepped down as chairman of both companies this month. Control of his 80 percent voting stakes in those businesses will pass to a family trust if he becomes incapacitated or dies.
The suit by Manuela Herzer challenges whether Viacom Chief Executive Officer Philippe Dauman should be legally responsible for Redstone’s health-care decisions and seeks to reinstate her in that role. Redstone’s Viacom and CBS holdings are shielded from the litigation -- the family trust that will take control was established too long ago to be in doubt even if he’s declared incompetent.
A probate judge may make that decision, based in part on the latest doctor’s findings, as well as medical reports from Redstone’s physicians, who say he’s fine. Herzer was evicted in October from Redstone’s Los Angeles mansion and his lawyers claim her real goal is to fight being cut out of his will. She had been set to inherit $50 million and the estate before she was kicked out.
Herzer, in a heavily redacted filing Thursday, said Redstone is the victim of duress, fraud and undue influence.
“Totally isolated in a virtual intensive care unit and dependent on others for his well-being, this frail, 92-year-old man is no longer able to make competent decisions about meaningful matters in his life,” according to a copy of her filing. “With this debilitating cognitive impairment, Mr. Redstone is vulnerable to, and has become the victim of, undue influence, fraud, manipulation, and chicanery.”
Representatives of Redstone had no immediate comment on Herzer’s filing. Shari Redstone won’t “dignify today’s baseless and mean-spirited attack on the Redstone family with any comment,” said her spokeswoman, Nancy Sterling.
The media mogul’s own physician, who told the judge he visits the billionaire’s home several times a week, has said in court filings that Redstone was mentally competent. A geriatric psychiatrist who examined Redstone in October when he signed estate planning documents also concluded he wasn’t incapacitated.
Even if Herzer is blocked from pursuing her case, investors are on notice that members of the Redstone family trust will eventually take control of his affairs, gaining a big say over businesses with a combined market value exceeding $35 billion. The trustees include his daughter Shari and grandson Tyler Korff, plus four Boston-area attorneys with longstanding ties to the family. The trust was formed when Redstone divorced his first wife more than a decade ago.
The doctor who examined Redstone in January, Stephen Read, is a geriatric psychiatrist and a medical professor at the University of California at Los Angeles. He had already called Redstone mentally incompetent in October based on information provided by Herzer and others, without doing an in-person exam.
The reports by the three doctors will be key evidence at a hearing set for Feb. 29. California Superior Court Judge David Cowan will decide whether to let Herzer proceed to trial with her allegation that Redstone wasn’t mentally competent when he replaced her with Dauman on his advance health-care directive on Oct. 16.
Herzer may have an uphill battle because the standard for mental competency to appoint a health-care agent is relatively low and the judge will heavily weigh the opinion of Redstone’s longtime physician, said Jessica Babrick, an estate and trust lawyer with Weinstock Manion in Los Angeles who isn’t involved in the case.
“I’m not sure how much Read’s declaration will help her,” Babrick said in a
Redstone’s lawyers have asked Cowan to dismiss Herzer’s petition because under state probate law, it’s “not reasonably necessary for the protection of Mr. Redstone’s interests.” His lawyers also contend Herzer expressed no concern about Redstone’s mental health when he designated her as his health-care agent on Sept. 3.
Herzer, who describes herself as Redstone’s longtime friend, companion and caretaker, had lived with him since April 2013, together with then-girlfriend Sydney Holland. Herzer dated Redstone from 1999 to 2001, according to her petition. After Redstone broke off with Holland in August, he changed his advance health-care directive to make Herzer his sole agent. Holland isn’t involved in the current dispute.
Herzer claims she was evicted in October by Redstone’s estate-planning attorney and removed a few days later from his health-care directive.
According to Redstone’s lawyers, she was cut from his estate plan at the same time. Herzer had stood to inherit $50 million as well as Redstone’s Beverly Park mansion, worth about $20 million, according to his lawyers.
Redstone is ranked No. 311 on Bloomberg’s list of global billionaires, with a net worth of $4.3 billion. Over the years, he’s sold more than $700 million of CBS and Viacom stock and received more than $700 million in dividend income before taxes, according to data compiled by Bloomberg.
A win by Herzer in probate court would likely trigger an appeal or perhaps a new effort to dislodge her as the person responsible for Redstone’s health care. Dauman, who is fighting efforts by Herzer to obtain his deposition in the case, might bring his own challenge to be reinstated.
Shari Redstone said in a court filing that her father’s health has “flourished” since Herzer is no longer involved in his life.
The case is In re Advance Health Care Directive of Sumner M. Redstone, BP168725, Los Angeles County Superior Court.