CBS Transcript

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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN RE CBS CORPORATION : CONSOLIDATED

LITIGATION : C.A. No. 2018-0342-AGB
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Chancery Courtroom No. 12A

Leonard L. Williams Justice Center
500 North King Street
Wilmington, Delaware
Wednesday, August 8, 2018
10:02 a.m.
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BEFORE: HON. ANDRE G. BOUCHARD, Chancellor
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ORAL ARGUMENT ON THE CBS PARTIES' MOTION TO COMPEL

REVISED INTERROGATORY RESPONSES, TO STRIKE
VERIFICATION, AND IN LIMINE TO PRECLUDE TRIAL
TESTIMONY, OR, IN THE ALTERNATIVE, TO COMPEL
DEPOSITION, THE CBS PARTIES' MOTION TO COMPEL
PRODUCTION OF DOCUMENTS CONCERNING THE CONTROL OF NAI,
AND THE CBS PARTIES' MOTION TO COMPEL PRODUCTION OF
DOCUMENTS REGARDING NAI'S CONSENT ACTIONS AGAINST
VIACOM and RULINGS OF THE COURT
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CHANCERY COURT REPORTERS
Leonard L. Williams Justice Center
500 North King Street - Suite 11400
Wilmington, Delaware 19801
(302) 255-0522

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1 APPEARANCES:
2 BRADLEY R. ARONSTAM, ESQ.

GARRETT B. MORITZ, ESQ.
3 ROGER S. STRONACH, ESQ.
Ross Aronstam & Moritz, LLP
4 for CBS Corp., Gary L. Countryman,
Charles K. Gifford, Bruce S. Gordon,
5 Linda M. Griego, Martha L. Minow,
Leslie Moonves, Joseph A. Califano, Jr.,
6 William S. Cohen, Leonard Goldberg,
Arnold Kopelson, and Doug Morris
7 -and-
THEODORE N. MIRVIS, ESQ.
8 CECILIA A. GLASS, ESQ.
BRADLEY R. WILSON, ESQ.
9 of the New York Bar
Wachtell, Lipton, Rosen & Katz LLP
10 for CBS Corp. and Leslie Moonves
-and-
11 GREG A. DANILOW, ESQ.
JOSEPH S. ALLERHAND, ESQ.
12 STACY NETTLETON, ESQ.
of the New York Bar
13 Weil, Gotshal & Manges, LLP
for Gary L. Countryman, Charles K. Gifford,
14 Bruce S. Gordon, Linda M. Griego,
Martha L. Minow, Joseph A. Califano, Jr.,
15 William S. Cohen, Leonard Goldberg,
Arnold Kopelson, and Doug Morris,
16 -and-
CHAD GOLDER, ESQ.
17 Munger Tolles & Olson, LLP
for Leslie Moonves
18 -and-
BENJAMIN BRITZ, ESQ.
19 of the District of Columbia Bar
Hughes Hubbard & Reed LLP
20 for Joseph Ianniello
21
22
23 (Continued) ...
24

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1 APPEARANCES: (Continued)
2 MATTHEW E. FISCHER, ESQ.

J. MATTHEW BELGER, ESQ.
3 JACQUELINE A. ROGERS, ESQ.
CALLAN R. JACKSON, ESQ.
4 Potter, Anderson & Corroon LLP
-and-
5 MEREDITH KOTLER, ESQ.
VICTOR L. HOU, ESQ.
6 of the New York Bar
Cleary, Gottlieb, Steen & Hamilton LLP
7 for National Amusements, Inc., Shari Redstone,
Sumner M. Redstone, NAI Entertainment Holdings
8 LLC, Sumner M. Redstone National Amusements
Trust, Finsbury LLC, and Robert N. Klieger
9
CORINNE ELISE AMATO, ESQ.
10 Prickett, Jones & Elliott, P.A.
-and-
11 MICHAEL C. WAGNER, ESQ.
of the Pennsylvania Bar
12 Kessler Topaz Meltzer & Check, LLP
for Westmoreland County Employees' Retirement
13 System and Benjamin Lifshitz
14
15
16 - - -
17
18
19
20
21
22
23
24

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1 THE COURT: Good morning, Counsel.
2 MR. MORITZ: Good morning, Your Honor.
3 THE COURT: Just give me one second
4 here.
5 All right. Mr. Moritz.
6 MR. MORITZ: Good morning, Your Honor.
7 Following the Court's comments at the last hearing,
8 I'll dispense with introductions, with one exception.
9 And that is that I'm pleased to introduce Benjamin
10 Britz of Hughes Hubbard, who is appearing on behalf of
11 Joseph Ianniello, who has been newly added as a party
12 to the case in a recent pleading. And Mr. Britz has
13 been admitted pro hac vice.
14 THE COURT: All right. Welcome.
15 MR. MORITZ: Before the argument,
16 Mr. Belger and I conferred about the order of motions
17 and how we'll present them. If it's acceptable to the
18 Court, we agreed that we would proceed with presenting
19 argument on what I'll just -- not to read the whole
20 title -- refer to as the Sumner motion and our motion
21 to compel documents concerning control of NAI, those
22 two motions first combined. So the CBS parties will
23 argue, the NAI parties will respond, there will be a
24 reply, and then we move on to the next motion after

5
1 that, which would be the CBS parties' motion to compel
2 regarding NAI's consent actions against Viacom. So if
3 acceptable to the Court, that's the order that the
4 parties have discussed proceeding in.
5 THE COURT: All right. That's fine.
6 MR. MORITZ: Thank you, Your Honor.
7 With that, I'll hand off to Mr. Allerhand for the
8 first set of motions.
9 THE COURT: Very well.
10 MR. MORITZ: Thank you, Your Honor.
11 MR. ALLERHAND: Good morning, Your
12 Honor. May it please the Court, for the CBS directors
13 in the case.
14 I'm going to try something a little
15 different this morning, which is to proceed somewhat
16 deliberatively, a little carefully, and for a bunch of
17 reasons that the Court is aware of. So bear with me
18 if I'm not my usual animated going 110 miles an hour.
19 I want to be careful here.
20 I think we should start with two
21 questions which will help the Court deal with some
22 very thorny issues which arise in the context of a
23 discovery motion, but really have so much more impact
24 than just the discovery ruling. And thank you, Your

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1 Honor, for making time to hear us.
2 So what I would like to do by way of
3 introduction is first telescope for the Court what do
4 we think on our side of the V is the state of play on
5 who is the controller of NAI and, therefore, the
6 controller of CBS. I would then like to explain by
7 way of introduction why we think that matters in this
8 case, and where does it leave us once we answer those
9 two questions. And I think the Court does have a
10 number of options here in how to address this issue
11 consistent with all due regard for sensitivities as to
12 age and medical conditions.
13 So here's our bottom line. And I'm
14 going to work back to the facts later, because I think
15 it's important. Two years ago, Your Honor, in this
16 very same courtroom, many of these issues were
17 addressed in the context of the Viacom coup d'etat.
18 And Your Honor posed some very pointed questions which
19 I don't believe were ever answered, which are now back
20 two years later, and I'm going to explain why.
21 So what's the bottom line as to who we
22 think is in control? As we understand it, based on
23 the papers submitted by NAI, their answers, the
24 amended answers, Sumner Redstone is the controller of

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1 NAI through his ability to vote those shares while he
2 is alive and competent under the terms of his trust,
3 his sole and exclusive power. He is the controller of
4 NAI.
5 Number two, based on the record as we
6 understand it, Mr. Redstone is involved, or capable of
7 being involved, according to the other side, in NAI
8 board meetings and participating and voting, including
9 in the meeting that took place the morning of the TRO
10 hearing where the 90 percent bylaw was approved by the
11 NAI board, and the minutes reflect that Mr. Redstone
12 participated by phone and voted.
13 We also know that Mr. Klieger obtained
14 an answer to more than 50 interrogatories from
15 Mr. Redstone and that Mr. Redstone submitted a sworn
16 verification with respect to those interrogatories.
17 But at the same time, we are told that
18 Mr. Redstone is medically unable to testify, that it
19 would be life-threatening in terms of a deposition.
20 And at the same time, Ms. Redstone and others on the
21 NAI side do intend to offer testimony, and will
22 testify, as to the intentions of NAI with respect to
23 the core issues in this case, the attempt to merge
24 Viacom and CBS, plans for the management of the

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1 company, views on the board of directors of the
2 company, et cetera.
3 Now, my friends on the other side
4 would say, why does any of this really matter? Why
5 does it matter? NAI is the record holder of the CBS
6 shares. NAI has a board. NAI acts. In fact, the
7 bylaw was -- the 90 percent bylaw was approved through
8 a unanimous vote of the NAI board. That's all you
9 need to know.
10 Well, we think it does matter, and we
11 think it matters a lot under Delaware law as to who
12 the controller is. And when you've identified the
13 controller, the ability of a party alleging abuse to
14 be able to get testimony from that controller,
15 assuming that's medically possible.
16 THE COURT: Can I just ask you a
17 narrow factual question before you go further.
18 MR. ALLERHAND: Sure.
19 THE COURT: Because you're using the
20 term NAI --
21 MR. ALLERHAND: Yes.
22 THE COURT: -- and it seems what you
23 are collapsing into that are both of the two NAI
24 entities: NAI Holdings, the LLC, as well as National

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1 Amusements, Inc. Is that right?
2 MR. ALLERHAND: Yes, Your Honor. It
3 came up two years ago, and the facts, luckily, on that
4 score are easy. NAI is a corporation. It has a board
5 of directors. It's the member of the NAI LLC. My
6 understanding is that the members and the directors
7 are the same, and that together they own the --
8 80 percent, approximately, of the voting shares of
9 CBS. So I do collapse them as the NAI parties.
10 THE COURT: Right. And National
11 Amusement, Inc. owns 100 percent of the LLC. Right?
12 MR. ALLERHAND: Correct, Your Honor.
13 THE COURT: Is it the case, do you
14 know one way or another, that that is the same voting
15 structure that exists on the Viacom side of the house?
16 MR. ALLERHAND: I believe so, but I am
17 not 100 percent sure.
18 THE COURT: Ms. Kotler.
19 MS. KOTLER: It is the same, Your
20 Honor.
21 THE COURT: I thought so. I was
22 trying to reconstruct it, but I couldn't find my notes
23 from last year, or two years ago.
24 MR. ALLERHAND: Two years ago.

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1 THE COURT: Okay.
2 MR. ALLERHAND: So I think, for ease
3 of reference, I am going to refer to the NAI parties,
4 because I think there is no practical difference
5 between control over the NAI corporate entity or
6 control over the NAI limited liability company.
7 So just by way of introduction, why do
8 we think it matters? Well, as we understand Delaware
9 law, the issue of who is the ultimate human controller
10 is really the appropriate inquiry, whether it's under
11 Feeley, EZCORP, or USACafes. You can't get to hide
12 behind a corporation and say it's the corporate acts
13 when there is an ultimate human controller.
14 Take the obvious example, Your Honor.
15 We have a public company, and a private equity firm
16 owns 60 percent of the public company. And the public
17 company's directors are accused of doing acts which
18 are in breach of fiduciary duties. I don't think
19 anyone would argue that unless the private equity
20 60 percent holder had disclaimed or abdicated any
21 involvement or any exercise of control, that they
22 would be an important witness in a case like that.
23 And I don't think anyone really argues here that
24 Mr. Redstone wouldn't be and is an important witness

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1 if he's able to testify.
2 Now, NAI recognizes that the Redstone
3 trust, which I'm shorthanding the name of the trust as
4 Sumner Redstone trust, same trust Your Honor dealt
5 with two years ago in Viacom --
6 THE COURT: Just there, just
7 factually, the Sumner trust owns 80 percent of NAI
8 Inc. Right?
9 MR. ALLERHAND: Right.
10 THE COURT: Is the other 20 percent
11 the Shari trust?
13 THE COURT: Okay. All right.
14 MR. ALLERHAND: So NAI itself
15 recognizes -- this is paragraph 19 of their opposition
16 papers -- after they go through a long litany that NAI
17 is a corporate entity, NAI has passed a bylaw, which
18 I'm going to come back and talk about, which was a
19 direct result, I believe, of Your Honor's questions at
20 the Viacom hearings in the summer of 2016. What are
21 you worried about? There's a corporate structure.
22 There's bylaws. Ms. Redstone is authorized to act.
23 Mr. Redstone can act. And that's all you need to
24 know.

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1 Well, the problem with that is
2 paragraph 19 of their own opposition papers admits,
3 and as we've seen in this case on the morning of the
4 TRO, the controller, assuming he's competent, he or
5 she is competent, can change the bylaws at a blink of
6 an eye. The controller can remove directors of NAI at
7 a blink of an eye if that controller is competent and
8 able to act.
9 Now, at the beginning of this case, we
10 had a very clear allegation that control had migrated
11 from Mr. Redstone to Ms. Redstone. And we had alleged
12 that control effectively was in the hands of
13 Ms. Redstone. Now we're told that that's not the
14 case. And that brings us back to the conundrum of
15 where we are on the discovery point.
16 And one other word by way of
17 introduction. And I want to be very careful here. An
18 additional layer of the puzzle of why we need the
19 controller's deposition or, in the absence of that,
20 relief from the situation that has been thrusted upon
21 us that we weren't looking for -- I mean, remember,
22 Your Honor, we came into this case saying she's the
23 controller. If they had come back and said she is the
24 effective controller, as they had originally done, and

13
1 stipulated to that, this motion is moot.
2 It's almost exactly like, if you
3 remember, Your Honor, during the Viacom argument two
4 years ago, Mr. Klieger was standing in front of you,
5 and you said to him, "If you stipulate for purposes of
6 this fight about the validity of the consents that
7 Mr. Redstone is incapacitated, then all we need to do
8 then is look at the board action at the NAI, the
9 so-called ratification. We'll avoid the whole fight."
10 That stipulation was not proffered.
11 Today, if they would stipulate, as
12 they had actually alleged in this case, that
13 Ms. Redstone is the effective controller, we would not
14 need to have this motion. But they won't do it. I'll
15 come back to why. But they won't do it.
16 Now, the other layer of complexity
17 that's here today that Your Honor didn't have two
18 years ago -- and I want to be very careful here -- is
19 the issue of the Sumner Redstone trust, which I'll
20 short form, just call the trust. Your Honor and a
21 select group of 11, the gang of 11, which does not
22 include the general counsel of CBS or anyone who works
23 at CBS, only 11 outside counsel, have seen the full
24 terms of the trust. As we have said in our briefs, we

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1 believe there are terms in the trust which I think are
2 fairly described as bombshells, if the public knew
3 about them.
4 Very interesting. In a footnote in
5 response to that -- and the footnote is redacted, so I
6 want to be careful. I think Your Honor knows what
7 footnote I'm referring to -- the other side actually
8 says, "You know what? You may be right. You may be
9 reading this provision correctly," which is a huge
10 admission and a huge consequence to investors of this
11 company. "But don't worry about it, because there's a
12 mechanism," which I don't want to get into," under the
13 trust to deal with it."
14 Well, if the settlor of this trust was
15 able to testify, he would be the single-most important
16 person to ask whether or not his most explicit
17 instructions and wishes with respect to the only asset
18 of this trust, which was the Viacom stock and then
19 split into Viacom and CBS, could be dealt with after
20 his death and incapacitation in the way that's
21 suggested. I don't want to get into the specifics.
22 The implications of this actually, if
23 you step back, if we're interpreting this correctly --
24 and my friend, Mr. Mirvis, will address why we can't

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1 live with these restrictions on these trust provisions
2 anymore -- we have to let CBS's general counsel and
3 other people have access to this. These aren't
4 personal family issues. These are issues that go to
5 what happens to the CBS stock. People have to know
6 this. But if we're right about how we're reading
7 this -- and I think we had an implicit concession we
8 are -- I think it's Article G, Section 21, if we're
9 right about that, and if their supposed fix is not
10 doable, which we have pretty strong views on, then we
11 may have come across actually the most compelling
12 reason for the special dividend that could ever be
13 articulated. I don't want to get into the details of
14 that, but I think Your Honor will follow my drift if
15 our interpretation of what occurs after Mr. Redstone's
16 death or incapacitation is correct.
17 THE COURT: I want to --
18 MR. ALLERHAND: Have I been too --
19 THE COURT: No, no, no. I mean, I
20 just have a couple of factual questions. Hopefully
21 they're narrow enough that they won't become
22 problematic. But the date of the provision in the
23 trust to which you are referring dates back to when?
24 MR. ALLERHAND: It's the original. We

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1 have it here. It's in the original trust. 2002.
2 THE COURT: 2002. Okay. And remind
3 me, the Viacom/CBS split is when?
4 MR. ALLERHAND: 2005, around.
5 THE COURT: All right. I was
6 inferring that from what you said. I just wanted to
7 make sure I understood.
8 MR. ALLERHAND: Right. So every time
9 you see -- and I don't think we have a dispute with my
10 friends at Cleary and Potter. Any time you see the
11 word Viacom in the trust, read that as a reference to
12 Viacom and CBS, because the definition --
13 THE COURT: Well, that's why I asked,
14 because it just, it wasn't clear to me. Okay. All
15 right.
16 MR. ALLERHAND: Your Honor, to remind
17 the Court again about the -- you know, the Viacom
18 situation two years ago, remember, Your Honor, that
19 there was initially consents executed by Mr. Redstone
20 and, ultimately, after that, an attempt to ratify the
21 consents through board action.
22 Your Honor had two hearings on that
23 matter before the case was settled. They were both
24 extraordinary. And I would encourage the Court to go

17
1 back and take a look at the transcripts which were
2 provided.
3 First, it was probably, I think
4 Mr. Wolfe said, the most well-attended scheduling
5 conference in the history of Delaware when the case
6 first broke. And if you remember, the protagonists in
7 the case were the directors of Viacom had been removed
8 by way of Mr. Redstone's consent, and they were
9 arguing that Mr. Redstone's consent either had been
10 obtained through undue influence from Ms. Redstone or
11 that he lacked the mental capacity to execute the
12 consents knowingly and, therefore, the consents were
13 no good. I think Mr. Wolfe's colorful language was,
14 the other side's position is my client had to be
15 crazy, they had to be crazy to execute these consents
16 and remove his long-time friends.
17 During that hearing, Your Honor
18 directly asked Mr. Klieger, how does Mr. Redstone vote
19 the NAI shares or the Viacom shares? How does it all
20 work? And Mr. Klieger said, Mr. Redstone personally
21 votes the shares.
22 THE COURT: To be clear, you're
23 talking about the Viacom shares?
24 MR. ALLERHAND: Yes, at that time.

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1 And if you may remember, there was a back and forth,
2 it was a pretty good question: Well, does he do that
3 through a corporate authorization? Is there a
4 corporate resolution at NAI which gives Mr. Redstone,
5 as the CEO, the power to kind of do what he wants with
6 respect to the Viacom shares? And there was a whole
7 commotion in the courtroom. It never got produced at
8 the time. And then there was the motion to dismiss
9 that Potter Anderson filed, basically saying this is
10 too much for a 225 action. Your Honor can't get
11 behind the issue of the consents. They're validly
12 executed. That's all you need to know. It doesn't
13 matter whether or not -- the issue of mental capacity
14 or undue influence.
15 And at that hearing, at the very
16 beginning, if you may remember, you said to
17 Mr. Klieger, "I got bad information from you the last
18 time, because the power under the trust of
19 Mr. Redstone is to vote the NAI shares. The trust
20 controls the NAI shares. How does the voting occur
21 with respect to the underlying Viacom block that's
22 owned by NAI?"
23 And Mr. Klieger said, "Well, when I
24 said -- I meant personally, and he votes them

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1 personally as the CEO, essentially as the corporate
2 representative of NAI."
3 Many of these questions, by the way,
4 are floating around two years later in our motion.
5 How is control exercised? Who was making the
6 decisions? And what is Mr. Redstone's status?
7 Now, very interesting, Your Honor.
8 After the case was settled in September of 2016 -- and
9 I'm sure you're going to hear a lot about this -- NAI
10 passes a new bylaw. And the parties have attached the
11 bylaw to our motions. I believe it's one of the early
12 exhibits. I'll give Your Honor the number. And it's
13 a bylaw that impacts both the NAI corporate level and
14 at the limited liability company.
15 This bylaw is an extraordinary
16 corporate document which, if we had a witness in
17 Mr. Redstone who could testify, we would love to get
18 his testimony on this. And let me tell you why. I
19 have never seen a bylaw like this. Because what it
20 says is that Ms. Redstone singularly, quote,
21 singularly, can wake up tomorrow morning and say, I am
22 going to sell all of the CBS stock owned by NAI. I
23 could transfer all of the stock owned by NAI. I can
24 vote all of the stock owned by NAI singularly.

20
1 Now, I think it's pretty obvious that
2 that bylaw, if we were able to get discovery and talk
3 to Mr. Redstone, was probably put in in order to avoid
4 ever having to be back before this Court on the issue
5 of Mr. Redstone's competency and his ability to be or
6 act as a controller. Because now the argument --
7 remember, the last time in Viacom, Your Honor said,
8 "Well, if there was a different set of facts, if,
9 instead of Mr. Redstone executing the consent
10 initially, we had had a corporate action, well, that
11 would be a different ball game." So now we have a
12 bylaw that purports to allow that to happen, and it's
13 exactly what we're being told in court. You don't
14 need any of this discovery, whether it's documents or
15 Mr. Redstone, if he's capable, because you have a duly
16 authorized bylaw. Which, by the way, interestingly,
17 why didn't they act under the bylaw? Why didn't
18 Ms. Redstone, if that bylaw is effective, why didn't
19 she act? Why did the full NAI board pass the
20 90 percent bylaw?
21 But more importantly -- and again, all
22 roads lead back to the trust -- it would be our
23 position, after talking with trust and estates
24 experts, who are prepared to testify, that there is no

21
1 way that that bylaw read the way it's written can be
2 made consistent with the wishes of the settlor,
3 assuming he's alive and competent, under the terms of
4 the trust.
5 The notion that Ms. Redstone could
6 wake up tomorrow morning and actually sell the CBS
7 stocks under that bylaw, given the provisions of the
8 trust that Your Honor has, which set forth the
9 settlor's intent with respect to the stock, is
10 completely at odds with one another. And one of the
11 basic principles of trusts and estates, with respect
12 to a trust, is you can't undo willy-nilly the wishes
13 of the settlor of the trust.
14 Now, maybe they'll say, well,
15 Mr. Redstone wanted it that way. He agreed to the
16 bylaw. Really? Well, that goes back to the issue of
17 whether or not, in September 2016, he had the ability
18 to do that. I didn't see any changes in the trust,
19 which has very specific provisions.
20 So let's turn to -- and I will try to
21 bring this all together and not just simply dump on
22 Your Honor a series of facts and history and hope for
23 the best. Let me show Your Honor a chart we did,
24 which I think is helpful in terms of fast-forwarding

22
1 from Viacom now to the proceedings before the Court
2 two years later.
3 I'm going to hand it up. It's Exhibit
4 4 to our reply affidavit. May I hand it up, Your
5 Honor?
6 THE COURT: You may.
7 MR. ALLERHAND: So let's fast-forward
8 to the present and where we were kind of in May 2018.
9 The first thing we put on the chart
10 was a February disclosure from the CBS 10-K. And
11 these disclosures, Your Honor, I will represent, were
12 reviewed and approved by NAI. They're sent in advance
13 to NAI to look at because they reference NAI's
14 position in the company. Want to make sure the
15 disclosures are accurate.
16 And this disclosure is the same
17 disclosure that had appeared for years and had been
18 reviewed and approved by NAI. Essentially, "NAI is
19 controlled by Mr. Redstone through the ... Trust ...
20 which owns 80% of the voting interest of NAI, and such
21 voting interest of NAI held by the ... Trust is voted
22 solely by Mr. Redstone until his incapacity or death."
23 I mean, I think that's out there in
24 the public, and I think that's accurate.

23
1 Now, paragraph 9 of NAI's complaint,
2 dated May 29th, is the paragraph that states that
3 "... the exercise of such stockholder's control has
4 migrated from Sumner Redstone to his daughter,
5 Ms. Redstone." I don't think that's a confusing
6 sentence. I think it's pretty clear. And frankly,
7 it's what our committee thought when they were dealing
8 over the many months with the Viacom merger. We did
9 believe that Ms. Redstone effectively now controlled
10 NAI.
11 Now, in the answer to the NAI -- the
12 NAI's parties' answer, they again say, at paragraph
13 18, Ms. Redstone -- we allege Ms. Redstone effectively
14 controls NAI. And now we start to get a shifting
15 position. It says, "Defendants deny the allegations
16 of the fifth sentence ...." The fifth sentence is
17 that NAI -- is that Ms. Redstone controls NAI.
18 One other point, Your Honor. On the
19 May 29th NAI parties' complaint, we cited to you
20 paragraph 9, which is the one that has the migration
21 of control. Take a look, when you have a chance, Your
22 Honor, at paragraph 37. It's extraordinary.
23 Paragraph 37 in the May 29 complaint says, "... NAI
24 has never used its voting control to interfere with

24
1 CBS's management. That was true of Sumner Redstone,
2 and ... is equally true of Ms. Redstone."
3 What is the implication of that
4 sentence? The implication of that sentence is
5 completely consistent with the allegation in paragraph
6 9 that before Mr. Redstone was in control of NAI, and
7 now Ms. Redstone is in control. I don't know any
8 other way to read paragraph 9 and paragraph 37 in the
9 English language other than that interpretation.
10 Now we move to the second page of
11 Exhibit 4, the June 15th NAI parties' amended
12 complaint. They amend the complaint to change one
13 word to paragraph 9 to say that the issue of migration
14 of control was only Mr. Moonves' perception and not
15 reality. So now we're back -- we're back to a place
16 where I started my argument, that the NAI parties'
17 position is that Mr. Redstone, as had been disclosed
18 for years, remains the controller.
19 And then most recently, we were trying
20 to get the language in our 10-Q filed with the SEC
21 cleared with NAI and we received from their lawyer,
22 Mr. Andelman, he struck language that appeared for
23 years in our disclosure. All of a sudden, he struck
24 the language NAI is controlled by Mr. Redstone through

25
1 the trust.
2 Well, I've got to tell you, if he's
3 not controlling the trust, I haven't the faintest
4 idea, then, who controls this trust, which actually
5 controls NAI, which controls CBS. And that's a pretty
6 scary position for a public company of $20 billion or
7 more making disclosure.
8 THE COURT: The last reference here to
9 the proposed change to the 10-Q --
11 THE COURT: -- is that reflected in an
12 actually filed 10-Q, or what's the status of that?
13 MR. ALLERHAND: The Q has been filed,
14 and we will hand it up.
15 THE COURT: And it reflects this
16 change?
17 Ms. Kotler.
18 MS. KOTLER: Your Honor, I'll address
19 -- I don't mean to speak too quickly, but I will
20 actually -- the CBS parties did not include a later
21 part of this email exchange. This was not a proposed
22 change to the disclosure.
23 What Mr. Andelman was doing was simply
24 saying, I'm going to only confirm for you facts.

26
1 Because the CBS parties are making all sorts of
2 assertions about control in the context of the
3 litigation, I want to do that in an email exchange.
4 And he was right to do that because of exactly what is
5 happening. And I will hand that up to Your Honor.
6 THE COURT: I will obviously listen to
7 your argument in a minute. Let me just sort of finish
8 with Mr. Allerhand on this point.
9 I guess what I want to know, just a
10 simple question is --
12 THE COURT: -- the 10-Q now, is the
13 10-Q for -- what is this, for the second quarter?
14 MR. ALLERHAND: The 10-Q for the
15 quarter ending June 30, 2018, has now been filed with
16 the SEC.
17 THE COURT: In the manner that it's
18 filed with the SEC now, does it reflect the change
19 that you're showing me?
20 MR. ALLERHAND: It says as follows:
21 "Although the Company has previously disclosed, after
22 receiving confirmation from NAI, that NAI is
23 controlled by Mr. Redstone through the Sumner ...
24 Redstone National Amusement Trust ..., in connection

27
1 with this report, NAI declined the Company's requests
2 to confirm that NAI is currently controlled by
3 Mr. Redstone through the [Sumner] -- through the SMR
4 Trust."
5 I can hand that up, Your Honor. So we
6 essentially couldn't say what we had previously said,
7 and we disclosed to our shareholders what the current
8 state is.
9 May I hand this Q up?
10 THE COURT: You may. It's just a
11 publicly filed paper?
13 THE COURT: You can hand it up.
14 MR. ALLERHAND: Now, throughout the
15 NAI complaint that Your Honor will have to address,
16 and that we're responding to -- this is the complaint
17 when they sued -- essentially countersued all of the
18 directors -- there were repeated allegations in the
19 complaint: NAI and Ms. Redstone intend to do X, Y, and
20 Z. NAI and Ms. Redstone never intended to do X, Y,
21 and Z. Paragraphs 11, 44 to 46, paragraph 53, 60, 62,
22 65 to 66, 68, 75 to 76, 83, 88, 90, 94 to 95, 102 to
23 113, repeated statements about NAI and/or
24 Ms. Redstone's intentions. Mr. Redstone's name

28
1 nowhere appears with respect to those allegations.
2 Again, it would seem to lead us to the conclusion that
3 she's calling the shots here.
4 Now, given NAI's position that
5 Mr. Redstone apparently is in control of the trust,
6 therefore, of NAI and of CBS, you know, there seems to
7 me to be -- that he is the ultimate human control.
8 There's only two options here for who controls the
9 trust, actually. It's either Mr. Redstone or, upon
10 his death or incapacitation, control passes to a new
11 group of trustees who actually have real power and
12 real responsibilities.
13 So one may ask themself, why is -- and
14 we call this a tragic game that's being played with
15 respect to Mr. Redstone's mental and physical
16 condition. We stand by that statement. So one may
17 ask themself, why is this going on? And you know
18 what's interesting? You remember the doctor report
19 that's been provided to Your Honor. I want to be
20 careful how deep I get into it.
21 THE COURT: Yes. So that is under
22 seal. Right?
23 MR. ALLERHAND: Yes. So I want to be
24 careful. But this is a doctor who sees him twice a

29
1 week. When you read the report, take a look at the
2 paragraphs from the reports that deal with the ability
3 to communicate, and you'll notice a change in the last
4 report. You'll notice in the operative paragraph
5 something left out that appears in the prior
6 paragraphs in terms of the ability to provide answers,
7 yes or no.
8 And the other thing that's striking
9 when you read these doctor reports, you know, and we
10 obviously take it at face value -- they're very
11 serious illnesses that Mr. Redstone, unfortunately, is
12 dealing with -- what it -- what do you never see in
13 the doctor's report? There is never one word about
14 his cognitive abilities. Not a word. Talks about his
15 ability to communicate. The illnesses he has. The
16 impact of stress. But there's never a word about his
17 cognitive abilities, and abilities to
18 understand information -- process and understand
19 information never appears.
20 By the way, the last time we were
21 here --
22 THE COURT: Let's go back a paragraph
23 or so.

30
1 THE COURT: So what I heard you say a
2 little while ago was, upon Mr. Redstone's death, that
3 control of the trust doesn't go to Shari, it goes to a
4 new, what is it, set of trustees that govern the
5 trust?
6 MR. ALLERHAND: Yes. Because during
7 his lifetime -- and I think this has been publicly
8 disclosed. So I'm not treading on anything that isn't
9 public. During his lifetime, he has the sole and
10 exclusive power to control the vote of the NAI shares
11 held by the trust. Therefore, he's the controller of
12 NAI and ultimately the controller of CBS.
13 Upon his passing, or if he's mentally
14 incapacitated, then control passes to trustees. I
15 believe Ms. Redstone is one of the trustees. But
16 those trustees will have heavy fiduciary
17 responsibilities with respect to the assets of the
18 trust, with respect to the beneficiaries of the trust.
19 And I would suggest that those fiduciary duties and
20 responsibilities will be very different than the
21 freedom of maneuver that apparently Ms. Redstone
22 believes she has under the September 2016 bylaw,
23 which, according to my friends on the other side,
24 allows her even to sell the CBS stock notwithstanding

31
1 paragraph 21 of Article G, which I don't want to get
2 into.
3 I mean, talk about all the issues in
4 this case and all the reasons that my clients acted to
5 try to remove control and issue the dividend. One of
6 the issues that we spotted and raised was the ability
7 of CBS to access a once-in-a-lifetime M&A market,
8 once-in-a-lifetime M&A market for media companies.
9 Their allegation is, "Well, if you did the Viacom deal
10 first, we would then be willing to relinquish control
11 in a second larger transaction." Question whether
12 that's actually possible today. It depends. I don't
13 want to get into the specifics, but it depends.
14 I mean, that goes directly to the
15 heart of one of the core factual issues in this case.
16 Who better to ask than the settlor whether he really
17 intended that after his death or incapacitation his
18 wishes with respect to the CBS stock could just be
19 undone? I don't even think that's right as a matter
20 of trust and estates law, but I would be very
21 surprised to hear any settlor say that that's what he
22 expected would happen upon his death or
23 incapacitation.
24 So let me conclude, Your Honor, with

32
1 just a series of questions that I would hope get
2 answered today, if possible. And we couldn't provide
3 the answers because we just don't have the
4 information. Perhaps my colleagues on the other side
5 will.
6 What is the current state of
7 Mr. Redstone's cognitive abilities? The Dr. Gold
8 affidavit does not address it, even though he sees him
9 twice a week.
10 Two, what is the current state of
11 Mr. Redstone's ability to communicate? How does he do
12 so?
13 Three, in light of the Gold
14 affidavits, how did Mr. Klieger read and obtain
15 informative responses that he could translate into a
16 verification with respect to over 50 interrogatories?
17 Four, if the Klieger method is one
18 that doesn't jeopardize the health and safety of
19 Mr. Redstone, can it be used under Rule 31? And we
20 would allow Mr. Klieger to ask the questions as long
21 as it's videotaped. And Rule 31 is clearly a
22 mechanism which could be used.
23 THE COURT: How does that actually
24 work?

33
1 MR. ALLERHAND: So, again, it's funny,
2 I read -- I was looking for --
3 THE COURT: I'm not sure I've ever
4 actually seen it happen.
5 MR. ALLERHAND: I was looking for
6 articles. I found some old Jerry Solovy article from,
7 like, 2002. And it's funny. He says the reason you
8 should use it, because you could save a lot of money.
9 Like if you have a witness in Hawaii and you have a
10 couple questions you need to ask, you have to
11 literally write the questions out in advance, you give
12 them to your adversary. They have a right to ask
13 their questions. You then have a court officer or
14 court reporter swear in the witness. In our case, the
15 video would roll. We have no objection to Mr. Klieger
16 being the questioner. And he would just read the
17 questions. And you get the answers, and there is no
18 cross-examination. That's how it would work.
19 We would write up questions. The
20 other side would write up questions. Mr. Klieger can
21 ask them under videotape. Excuse me, with the video,
22 so we have a record of what's actually occurred.
23 Now, if that can't be done --
24 THE COURT: Just so I'm clear --

34
1 MR. ALLERHAND: Let me stop.
2 THE COURT: I may have drifted in the
3 middle of your explanation, so I just want to be
4 clear. This isn't like an interrogatory, where your
5 lawyer typically drafts something and then you verify
6 it?
7 MR. ALLERHAND: No.
8 THE COURT: You're saying you get a
9 verbatim response from the witness?
10 MR. ALLERHAND: Yes. That's how
11 Rule 31 works. Yep. If the witness is capable.
12 THE COURT: Right.
13 MR. ALLERHAND: And remember, I want
14 to be very clear, we didn't come in saying do that,
15 because, frankly, we really don't believe it can be
16 done. But then we saw the interrogatory response, and
17 Mr. Klieger apparently has an ability to communicate
18 on the most sophisticated issues, including the bylaw
19 amendment, et cetera. So if he can do that, why can't
20 he read 10 or 15 questions? And maybe we can get to
21 the bottom of Article G, paragraph 21. Maybe we can
22 get to the bottom of who is actually controlling the
23 company.
24 Now, the motion, as we see it, can be

35
1 resolved. The motion to compel the deposition under
2 Rule 31 or, in the alternative, to preclude testimony
3 by others about NAI's intention, we think it can be
4 resolved in essentially three ways. We only see three
5 paths. Perhaps the Court will find another path.
6 If NAI concedes that Ms. Redstone is
7 effectively in control, as they had initially alleged,
8 we believe our motion would be moot and we could
9 proceed in the litigation knowing that she is the
10 effective controller, and that would be the end of it,
11 I believe.
12 Two, if they won't make that
13 concession and walk back their current position, and
14 if it's safe, then we would ask that Mr. Klieger use
15 the same method he employed to review the
16 interrogatories and ask written questions under oath
17 under video under Rule 31.
18 THE COURT: The questions you haven't
19 propounded yet. Right?
20 MR. ALLERHAND: Right. And we would
21 agree to do it in multiple sessions, whatever would be
22 consistent with the witness's medical health.
23 Three, if Mr. Redstone cannot be
24 deposed, even using the Klieger method and Rule 31,

36
1 then we do believe the NAI parties must be precluded
2 from having anyone else testify about the intentions
3 and plans of NAI, because we just can't be put in this
4 box. I mean, if you think about it, they say
5 Ms. Redstone is going to testify at the very end of
6 discovery. I get it. Most important witness will go
7 at the end. Same thing, I think, for Mr. Moonves.
8 That's pretty fair game in litigation.
9 But we can't be in a position where
10 others can testify as to what NAI's intentions and
11 plans are while they're still maintaining that the
12 person who actually has control of NAI is off limits.
13 And even worse, they're going to offer testimony about
14 what Mr. Redstone's actual views and plans were.
15 THE COURT: Well, on that issue, isn't
16 this rather premature? People ask questions, elicit
17 hearsay all the time in discovery. I have no context.
18 And you can bring a motion in limine if you think some
19 of that's improper. And, of course, there's always a
20 weighing that goes on, my assessment of the
21 credibility or the weight any of those kind of
22 comments would carry at the end of the day.
23 Because if Mr. Redstone, indeed, can't
24 testify, oh, it's so convenient for a witness to then

37
1 be able to say A, B, C, or D. I'm not oblivious to
2 reality here. Why isn't that part of your motion just
3 something that sort of works itself out as we go
4 through things?
5 MR. ALLERHAND: Again, Your Honor, we
6 knew you would ask that question, and it's a fair one,
7 and it's very similar to the question Your Honor posed
8 to us in the privilege dispute when we were here a few
9 weeks ago and the Court was saying it's difficult to
10 set these ground rules kind of in the abstract without
11 seeing the documents and without dealing with the
12 reality of it.
13 But here, the issue is so central to
14 this case as to who the controller is. I mean, we
15 need to get to the bottom of that. I haven't talked
16 about the document side of our motion, which I think
17 should be easy. The second motion that's on at the
18 moment is just give us the documents that we've asked
19 for, which will shed light on who actually exercises
20 control.
21 THE COURT: Just put that aside for a
22 second, because let me broaden it.
23 MR. ALLERHAND: Sure.
24 THE COURT: I'm going to call this the

38
1 Sumner motion, all right, as opposed to the NAI
2 control motion. I had understood the Sumner motion to
3 be seeking, number one, you wanted them to -- I'm
4 trying to reconstitute how I had sort of broken this
5 down. You wanted them to revise their interrogatory
6 responses to strike Sumner as a person with knowledge.
7 Two, you wanted to strike his
8 verification to the interrogatory responses.
9 Three, you wanted what we just
10 discussed, this prohibition on what witnesses could
11 testify concerning any comments Mr. Redstone may have
12 made in the past concerning his or NAI's intention.
13 Then fourth, alternatively, you wanted
14 this deposition on written question.
15 Isn't that how your motion was framed?
16 MR. ALLERHAND: That's how it was
17 framed. And I would say on our reply we have kind of
18 refocused a little bit, because, remember, we didn't
19 have the information going in as to how the
20 interrogatory responses were prepared. We were only
21 told after we filed our motion that, in fact,
22 Mr. Klieger is able to sit and communicate with
23 Mr. Redstone and obtain information.
24 THE COURT: And Dr. Gold doesn't speak

39
1 to whether that methodology would be --
3 THE COURT: -- feasible?
4 MR. ALLERHAND: Right. The question,
5 it's one --
6 THE COURT: I will let you have your
7 turn in a minute, Ms. Kotler.
8 Okay. Anything else, Mr. Allerhand?
9 MR. ALLERHAND: I think on that
10 motion, no.
11 And I would just very briefly, on the
12 document side, because it's really the flip, I think
13 it's the -- in a sense, it's the flip side of what we
14 have been arguing -- I don't think there's any issue
15 about the relevance of who the controller is -- and
16 what we've been met with in response to our document
17 requests, where we would like to see emails and other
18 documents relating to how control from the trust is
19 exercised to NAI and ultimately from NAI.
20 Now, the paragraphs in particular in
21 Exhibit A of our document requests that are at issue,
22 so the Court doesn't have to hunt and peck for this,
23 is 41, 42, 47, and 48.
24 THE COURT: Those are the

40
1 interrogatories. Right?
3 THE COURT: You want the documents
4 responsive to those?
5 MR. ALLERHAND: Yes. Those are
6 document requests, paragraphs 41, 42, 47, 48. And
7 it's Exhibit A to the transmittal affidavit of our
8 motion to compel the control documents.
9 THE COURT: Okay. Sorry.
10 MR. ALLERHAND: That's okay. And
11 basically what we're being told is, one, you don't
12 need it because you have the organizational documents
13 of the company. You have the bylaw. You have the
14 certificate. And a group of 11 people have the trust.
15 Two, you will get documents if they
16 mention the word CBS. If it's directly related to
17 CBS, we'll give it to you.
18 And three, otherwise, you're just not
19 entitled to it. We just don't understand why this is
20 not akin to, although not exactly the same as Your
21 Honor's ruling on the Finsbury documents, it's really
22 a form of self-selection. I mean, this is discovery.
23 I don't think anyone could say that how the trust
24 exercises control over NAI and NAI control over either

41
1 Viacom or CBS is not at least relevant to the issues
2 that are going to be presented to this Court.
3 I mean, what if there was an email
4 from Ms. Redstone to Mr. Andelman or Mr. Klieger
5 saying, "You know what? This bylaw amendment is a
6 pretty good gig. Let's operate under the bylaw
7 amendment because we have a lot of flexibility."
8 Never says the word "CBS." You know, I think we would
9 like to see that and understand this.
10 I mean, at the bottom, this is a case
11 about a controller. They're playing hide the
12 controller. They have shifted their position. And we
13 think we're entitled to see any documents that relate
14 to the issue of control from the trust to NAI.
15 Thank you, Your Honor.
16 THE COURT: Ms. Kotler.
17 MS. KOTLER: Thank you. Good morning.
18 May it please the Court, Meredith Kotler from Cleary.
19 Thank you, Your Honor, for your
20 patience and your time. I know it's already been a
21 while. I have a lot to say, and I will do my best to
22 answer different questions, clear things up. I am
23 intending to address the actual discovery requests
24 that were heard, and you hear a lot about that this

42
1 morning.
2 But I do want to start by unpacking a
3 number of incorrect statements that were just made by
4 my friend, Mr. Allerhand, and then turn to the
5 specific discovery requests that were asked. And I
6 understood them in the way that Your Honor laid them
7 out.
8 It is just simply not true -- and we
9 keep saying this. There's just ships passing in the
10 night or people aren't listening, but we don't know
11 what else to do. It is simply not true that the NAI
12 parties have said that Mr. Redstone is NAI and NAI is
13 Mr. Redstone, or only Mr. Redstone can speak for NAI
14 or its intentions, or that only Mr. Redstone can make
15 decisions regarding CBS. We have repeatedly stated
16 the following. Hopefully I can get through it all,
17 but if Your Honor has questions, please stop me.
18 It is true that Mr. Redstone's trust
19 owns 80 percent of the NAI stock. But it is also true
20 that NAI -- and I will use NAI, if it's okay, in the
21 same way Your Honor noted NAI and Holdings. They own
22 and hold the stock. That's admitted. They admit it
23 in their reply papers on the control docs motion,
24 paragraph 4.

43
1 And it is true that there is an NAI
2 board, that they don't challenge it is properly
3 constituted, and it is fully authorized to vote the
4 stock that NAI holds, whether CBS or Viacom. The NAI
5 board is authorized to do that. And it has always had
6 that inherent authority.
7 We heard a lot about the hearing two
8 years ago. I don't remember everybody in the room now
9 who was there, but I was there, Your Honor. And Your
10 Honor may recall that I made a little cameo
11 appearance, and I stood up and I said that the board
12 has -- at the time, while there was no written bylaw
13 or written operating agreement that we could point to
14 to show that the board always had that authority, of
15 course the board always had that authority. And I
16 said that, and that's in the transcript. For some
17 reason, it's not attached or referenced in their
18 motion. But we made that very clear.
19 And while Mr. Klieger was focused
20 primarily on the fact or the issues with respect to
21 Mr. Sumner's authority to act as CEO of NAI at the
22 time, he was also saying to Your Honor, as you
23 remember, that the board had also taken ratifying
24 actions. But it was an entirely different procedural

44
1 matter, because in the Viacom case it was Mr. Redstone
2 who had executed the written consents to do the
3 actions at issue, and then the board had ratified
4 them.
5 This is entirely different, and
6 there's no dispute about that. It wasn't Mr. Redstone
7 as the CEO who acted. And frankly, it wasn't
8 Ms. Redstone as the president, although she also
9 expressly had that authority, who took the action.
10 And fully consistent with the fact, as we keep saying,
11 and the reason we're denying it is because it's not
12 true, she doesn't effectively control NAI. It was the
13 full board that took the action here. Mr. Redstone
14 was part of that board. He was one of seven board
15 members. But it was the full board members, the full
16 board that did it.
17 And frankly, Your Honor, we have two
18 board members who are going to be deposed next week.
19 We have the president who is going to be deposed in
20 about three weeks. The president who, by the way,
21 could have taken that action on her own, but she
22 didn't. The full board did it. So why it is that we
23 need testimony from all seven board members when,
24 let's ask ourselves, what is the act that the board,

45
1 the NAI board took here that's remotely relevant to
2 this case?
3 One might forget what lawsuit we're
4 here on. The lawsuit we are here on is the lawsuit my
5 friends on the left brought. It is a lawsuit about
6 the validity of a dilutive dividend that they proposed
7 and passed. And it's a lawsuit about their reasons
8 for acting, their justifications for acting, the
9 proportionality of their actions.
10 THE COURT: There are claims in this
11 case of breach of fiduciary duty against the
12 controller, aren't there?
13 MS. KOTLER: Well, the claims are --
14 THE COURT: Are there or aren't there?
15 MS. KOTLER: There are claims, yes,
16 that are based on threats and interference. Your
17 Honor --
18 THE COURT: Just to be clear, though,
19 my understanding -- and I know we have, like, three
20 different pleadings floating around here -- but there
21 is a pleading that asserts breach of fiduciary duty
22 claims against, I guess, the NAI entities, or whoever
23 is controlling CBS. Right?
24 MS. KOTLER: That's correct.

46
1 THE COURT: Okay.
2 MS. KOTLER: There is. And the
3 allegations specific are that there was interference
4 and there was threats. There is not a single
5 allegation in any of those pleadings that it was
6 Mr. Redstone who played any role, or Mr. Redstone's
7 trust that played any role in that interference or
8 those threats. In fact, the reason, as Mr. Allerhand
9 noted --
10 THE COURT: I haven't surmised why
11 that might be the case. Are you suggesting it's
12 something other than what may be obvious?
13 MS. KOTLER: I'm sorry?
14 THE COURT: Which is that he didn't
15 have the capacity to play that role?
16 MS. KOTLER: No, Your Honor.
17 THE COURT: So what's the reason?
18 Here's the problem I'm having. There is a real "we
19 want it both ways" quality to everything that I'm
20 hearing from your side of the case. It's sort of
21 like, "Oh, he's in control, you know, but then he
22 can't be deposed because, you know, you can't get any
23 information from him, but he's really the guy
24 that's in control."

47
1 MS. KOTLER: I want to clarify that.
2 We're not saying that. We're not saying he's the guy
3 who is really in control. The CBS stock is owned and
4 held by NAI, and the only actions that NAI has taken,
5 the only actions that have been taken with respect to
6 CBS here, have been taken by the full board.
7 Mr. Redstone has not taken, other than being one of
8 seven board members to vote on the bylaw amendment,
9 which was only done in response, he hasn't taken
10 action.
11 THE COURT: But forget about the bylaw
12 amendment for a second and how that actually went
13 down, which obviously will be the subject of
14 discovery. How about who can just make decisions now
15 on what to do with CBS stock?
16 MS. KOTLER: That's answered, Your
17 Honor. CBS Exhibit 2, and we put --
18 THE COURT: Let me shorten my
19 question. Wouldn't it be very reflective of who can
20 do that to see who has done it in the past?
21 Practically speaking, who really is calling the shots.
22 Did they go through the board on past occasions when
23 somebody took action on behalf of CBS stock or, for
24 that matter, for Viacom stock? Why isn't it relevant

48
1 to know who really called the shots when the consents
2 were executed in 2016?
3 MS. KOTLER: Because -- respectfully,
4 Your Honor, because it has nothing to do with the
5 question of the dilutive dividend and the actions that
6 were taken.
7 By the way, there is no claim in their
8 complaint that their justification for taking that
9 action had anything whatsoever to do with the trust or
10 Mr. Redstone or who is really in control of NAI. That
11 was never said as a rationale for passing the dilutive
12 dividend. There were essentially two rationales for
13 passing the dilutive dividend: threats that the board
14 was going to be fired and interference.
16 MS. KOTLER: And in context, Your
17 Honor --
18 THE COURT: Which would be future
19 events, threats of those future events.
20 MS. KOTLER: No, Your Honor. It was a
21 threat that, specifically for them, Ms. Redstone was
22 threatening to fire the CBS board in order to force a
23 deal. And that was the threat. That was the threat
24 articulated.

49
1 Just so Your Honor knows --
2 THE COURT: Right. But isn't that a
3 continuing threat?
4 MS. KOTLER: So Your Honor knows, when
5 we pressed that in discovery and we said, what is
6 the -- what was the basis for this supposed
7 justification --
8 THE COURT: Right.
9 MS. KOTLER: -- the threats were
10 supposedly in the press. We said, "Well, where were
11 these threats written?"
12 And they said, "Yes, there were
13 threats sourced to Ms. Redstone or those close to
14 her."
15 And we said, "Which ones? Where were
16 they?"
17 It took us a month, meet and confers,
18 letters, we sent them an interrogatory, which they
19 refused to answer. "Where are the articles? Just
20 show them to us."
21 They finally gave us a nonexhaustive
22 list of 19 articles. Well, we read those articles.
23 Not a single one has that threat in it sourced to
24 Ms. Redstone or people close to her.

50
1 But my point is, and then this motion
2 comes. It's completely predictable. We are looking
3 into what is the justification, as they put it, in
4 their own complaint to start out. They started this,
5 they filed a complaint, they said what their actions
6 were based on.
7 And by the way, they didn't say a
8 word, other than in the caption, about Mr. Redstone or
9 the trust or anything about the worries about who has
10 control at the stockholder level or anything. It was
11 about Ms. Redstone is threatening to fire us and
12 Ms. Redstone is threatening to interfere in certain
13 ways.
14 And just for a little color, Your
15 Honor, one of the other things that we heard up at the
16 TRO hearing was, "Ms. Redstone is out interviewing CEO
17 replacement candidates." If you remember, I said to
18 Your Honor, "Where? How? When?" We also said to
19 them, for weeks before this motion was filed, "Which
20 candidates? Who? When?" We sent interrogatories.
21 They didn't answer. Meet and confers, letters. None.
22 Can't say a single one.
23 But it's all divorced from
24 Mr. Redstone and the trust. This is all a diversion

51
1 tactic and, from our perspective, Your Honor,
2 respectfully, it's really an awful one to try to bring
3 in questions of health. Now we're hearing physical.
4 Now we're hearing mental competency questions.
5 And to be clear, he has not ever been
6 found to be incompetent, mentally incompetent. He is
7 competent. He participates in board meetings. He --
8 as CBS knows, but --
9 THE COURT: You're making some pretty
10 strong representations there.
11 MS. KOTLER: Well, the representation
12 I am making, Your Honor, is that under the provisions
13 of the trust, which Your Honor has said, there are
14 certain ways that he would be found to be mentally
15 incompetent. Those provisions -- he has not been
16 found to be mentally incompetent under those
17 provisions. That is what I'm saying. They have never
18 once alleged in their complaint that he's mentally
19 incompetent.
20 And the fact of the matter is, this
21 has nothing to do with why we are here. What were the
22 justifications for the dilutive dividend? What were
23 they worried about? What did they say at the time?
24 What was the basis? What were the threats? None of

52
1 them had anything whatsoever to do with Mr. Redstone
2 or the trust.
3 And the mere fact that Mr. Redstone
4 owns 80 percent of NAI and, therefore, has the power
5 to vote and control the vote when there is a matter
6 that requires stockholder approval doesn't change
7 anything. What does that mean? Corporations 101: if
8 you're going to replace directors, you need a
9 stockholder vote. If you're going to have some type
10 of change-of-control action at the NAI level, you need
11 a stockholder vote. There is no issue of a
12 change-of-control transaction involving NAI here.
13 So, yes, Mr. Redstone could
14 theoretically change the directors of NAI. But there
15 is no claim, nor could there be, that other than with
16 respect to what happened in 2016, totally unrelated,
17 having nothing to do with CBS, that he has ever
18 thought about or is going to or that folks were
19 worried that he was going to replace the directors of
20 NAI.
21 So the fact that he has voting control
22 with respect to the NAI stock does not in any way
23 vitiate or change what Your Honor has right in front
24 of you. CBS Exhibit 2, opposition Exhibit 8. The

53
1 board of NAI, which is the entities that own the
2 stock, of course they have the authority and the
3 ability, and now it's express, to vote the stock that
4 they own.
5 And, in fact, Your Honor, although
6 this was not mentioned, when you look at that, the
7 board's power, the CEO and the president, which also
8 have that power, cannot, quote, limit or exclude the
9 power and authority of the company's board to vote the
10 stock. And if the board votes the stock, quote, such
11 action shall be valid and effective action of the
12 company and may not be reversed or limited by action
13 of the CEO or president.
14 It's really remarkable that we're
15 sitting here with valid corporate documents of a
16 Maryland corporation and a Delaware limited liability
17 company duly constituted -- there's no challenge to
18 that. We know who the board members are -- duly
19 authorized to vote the stock. And, indeed, there's no
20 question here, other than, unlike what happened two
21 years ago, it was this full board that voted that
22 stock. And they will have full opportunity to ask all
23 the questions they want about that voting of the
24 stock, which by the way, as Your Honor noted, was an

54
1 issue that took place within just a two-day period and
2 only after the dilutive dividend came down. Right?
3 This wasn't an action that anybody was planning to
4 amend the bylaws, the CBS bylaws. It was done only to
5 protect NAI's control in response to the dilutive
6 dividend that my friends on the left passed.
7 And there is no hide the controller
8 here, Your Honor. The controlling stockholder of CBS
9 is NAI and NAIEH. We've been saying that from day
10 one. And we certainly intend --
11 THE COURT: Can he be deposed on
12 written questions?
13 MS. KOTLER: I'm sorry?
14 THE COURT: Can he be deposed on
15 written questions?
16 MS. KOTLER: No, he cannot. So let me
17 turn to that, Your Honor. And I'll explain why.
18 And let me maybe -- to answer that,
19 let me back up and explain this Klieger method or the
20 questions. As Your Honor noted, when a client
21 verifies interrogatories, the way it's done is the
22 lawyer drafts them up, the lawyer goes over them with
23 the client, and if the client has any changes or has
24 any problems, it notes it; or if there are none, the

55
1 client verifies it. That's exactly what we described
2 in our opposition. And if there were any question
3 about what -- how this granularly worked out, we
4 didn't think it was necessary to clog the record with
5 granular details.
6 But one can imagine, Mr. Klieger says,
7 "Mr. Redstone, I'm going to read you these
8 interrogatory responses right now. Stop me if
9 anything is wrong or inaccurate." And then he reads a
10 few, stops. "Is there any problem?" The person can
11 either indicate yes or no. Reads a few more, stops.
12 "Any problem?" Reads a few more, stops. "Any
13 problem?" Continues on to the end. And at the end
14 says, "Is all of this accurate?" Mr. Redstone can
15 indicate yes or no.
16 This is not complicated. You can call
17 it the Klieger method, but it's exactly what, as Your
18 Honor indicated, one always does. But it's also
19 entirely different from what has been proposed, which
20 is forcing someone, compelling someone to answer
21 questions, open-ended questions that would require the
22 formulation of words, which if you look, Your Honor,
23 in both declarations --
24 THE COURT: Can he type?

56
1 MS. KOTLER: No, he cannot. What he
2 has is an iPad, where he can indicate, as the
3 declaration says, yes or no.
4 Just so we can be clear, both Gold
5 declarations already say, paragraphs 14, he cannot
6 clear him for a deposition, regardless of length or
7 other conditions.
8 And to be certain, I went back to
9 Dr. Gold, once the reply was filed, and I described
10 what they were asking for. Multiple time-limited
11 sessions of a deposition. Could he do that? And
12 Dr. Gold said no. As I've already explained, no
13 conditions. And for three reasons that I'll try to
14 sort of oversimplify because I'm not a doctor.
15 But sitting and listening to questions
16 and then indicating -- excuse me. Sitting and
17 listening to prepared responses to interrogatories and
18 then not indicating a problem or saying yes, accurate,
19 is entirely different from having to sit in a room
20 under the force and pressure of having to answer
21 questions, the stress of that, in an adversarial
22 context and being videotaped for others to see him,
23 which adds to the stress, and having to articulate the
24 words, because these are not yes-or-no questions. All

57
1 three of those reasons is exactly what is the problem.
2 And frankly, I was surprised, given the statements
3 that were in their own motion and their concern for
4 his health, that they're really pressing for this.
5 My surmise is that the main reason
6 this motion has been made is for precisely the other
7 type of relief that they're seeking and which Your
8 Honor noted is entirely premature, which is to
9 basically not hide the controller, but gag the
10 controller. To say to Your Honor, there is a duly
11 constituted, duly authorized board that -- of an
12 entity that owns and holds these shares that took the
13 action, and that they can't put on testimony from any
14 witness to describe their views, their conduct, their
15 intentions. That is a remarkable request, Your Honor.
16 The sheer breadth of it is astounding.
17 And again, there is no allegation
18 about Mr. Redstone or the trust or any act that he
19 took as the controlling stockholder of NAI. The only
20 action he took here, which they don't even note in
21 their complaint, was as one of seven directors of the
22 NAI board to vote on the bylaw amendment. That's it.
23 And so why this deposition is so critical doesn't make
24 any sense. We're not trying to play a game of hiding

58
1 or not.
2 And I know it's -- I haven't gone on
3 as long as Mr. Allerhand, but I know it's been a long
4 morning. I did want to walk you through their chart.
5 THE COURT: Sure.
6 MS. KOTLER: Because none of this,
7 none of these positions are inaccurate. They're, in
8 fact, all consistent with what we've been saying.
9 THE COURT: I must say, I think I
10 actually relied, in one of my letter decisions, on the
11 proposition that Ms. Redstone effectively controlled
12 CBS. I think I actually recited it in one of my
13 letter decisions based on some papers you had
14 previously submitted to me. So I was very surprised
15 to see you amend this pleading.
16 MS. KOTLER: So I apologize, Your
17 Honor. I don't recall what you might have in mind.
18 But I don't recall --
19 THE COURT: I issued two letter
20 decisions recently. One concerned the whole
21 90 percent bylaw issue.
22 MS. KOTLER: Right.
23 THE COURT: And the other -- now it's
24 escaping me. What the heck was it about? It was

59
1 discovery related.
2 MS. KOTLER: Yes.
3 THE COURT: And in the background
4 section, I think I recited she effectively controls.
5 Maybe I'm misremembering it, but I was sort of relying
6 on your own papers, so I was a little surprised to see
7 this change.
8 MS. KOTLER: I don't recall us ever
9 saying that, and we have denied it, and the reason is
10 because she is the president, she has the powers that
11 the president has, which, by the way, are coextensive
12 with the powers that the CEO has. But the board also
13 has those powers.
14 So the point of the 10-K, all this
15 line that they have highlighted, is to say, NAI --
16 Mr. Redstone has -- he owns the 80 percent voting
17 interest. So in an SEC context, is that control in
18 the sense that he has the voting interest? If there
19 are actions that require stockholder consent, he does
20 have the power to control that particular vote. But
21 we are not talking about any action here that required
22 NAI stockholder consent. There is no claim that he
23 was replacing NAI directors here.
24 That's what makes this case so

60
1 different from the Viacom situation, when, indeed,
2 there was a change at the trust level, and
3 Mr. Redstone did that through his trust. There was a
4 change at the NAI director level. Mr. Redstone did
5 that through his work at the trust. And then there
6 was a change at the Viacom board level. And again,
7 Mr. Redstone, as CEO of NAI, did that.
8 That's not -- none of that happened
9 here. The only action -- and by the way, I should
10 say, even though that was happening --
11 THE COURT: Right. But when you say
12 none of that happened here, you're focusing
13 specifically on the adoption of the 90 percent bylaw.
14 Right?
15 MS. KOTLER: Correct. But, Your
16 Honor --
17 THE COURT: Just hold on. But that's
18 not the only thing that's at issue. If the perceived
19 threat is offing board members, the threat looms. So
20 I'm not sure I understand, just because that's the way
21 things, you are representing to me, and I'll accept it
22 as true, went down for the approval of the 90 percent
23 bylaw, that negates the relevance of how control may
24 otherwise be exercised. And looking at how it's been

61
1 handled in the past could be very relevant to that.
2 MS. KOTLER: But you don't have to
3 look further than their own pleading. They don't
4 claim that Mr. Redstone was interfering. They don't
5 claim that the trust was interfering.
6 THE COURT: I think they were claiming
7 Ms. Redstone was. And they viewed it as a conceded
8 fact she had that type of control, which you're now
9 saying that's not the case.
10 MS. KOTLER: But what does it matter
11 if they viewed it as a conceded fact that she had the
12 control? They're saying as a factual matter --
13 THE COURT: Then we know what the
14 target is. Right? Then we know, if there's
15 controller liability, who's ultimately responsible or
16 not. Then we know actually what the narrative of this
17 case is or not. That's why it matters.
18 MS. KOTLER: With all due respect,
19 Your Honor, I think that is not what their pleading
20 is. The directors took action, the directors of CBS
21 took action based on what they claimed were perceived
22 threats as of the date that they voted on the
23 dividend.
24 THE COURT: I understand.

62
1 MS. KOTLER: They did not in any
2 way --
3 THE COURT: What was that threat?
4 MS. KOTLER: And they have identified
5 --
6 THE COURT: No; what was the threat?
7 That board members would be removed. Right?
8 MS. KOTLER: No. That's right, that
9 CBS board members would be removed.
10 THE COURT: Exactly.
11 MS. KOTLER: By Ms. Redstone. That
12 was the claim, by Ms. Redstone. So my point is, in
13 saying, so why are we looking at Mr. Redstone?
14 THE COURT: Because you're contending
15 now, all of a sudden, that she didn't have that
16 ability. So who does?
17 MS. KOTLER: That's also -- with all
18 due respect, Your Honor, we're not saying that she
19 didn't have that authority. We're saying she is not
20 the only controller of NAI. She is the president, and
21 she's authorized to do --
22 THE COURT: This is a discovery
23 motion. We are in discovery. So why can't somebody
24 inquire into these facts?

63
1 MS. KOTLER: Your Honor, we're not
2 saying that they can't. And she's going to be
3 deposed, and they can ask all those questions.
4 What I thought you and I were talking
5 about is this separate request they have today in the
6 guise of a discovery motion to seek to preclude us
7 from putting on testimony from any witnesses about
8 NAI.
9 THE COURT: Look, I have the
10 extraordinary nature of that request. Believe me, I
11 understand that. But obviously, I'm looking at the
12 bigger picture.
13 MS. KOTLER: Then I apologize, Your
14 Honor. I don't mean to be disagreeing with you. My
15 view is we expect that they're going to ask those
16 questions. We expect that they're going to ask
17 questions of her. We expect that they're going to ask
18 questions of the other directors.
19 THE COURT: The real rub is, by any
20 measure, somebody who, if we were five years ago,
21 would be the absolute most crucial witness, probably
22 in the entire case, will be unavailable, essentially.
23 That's a reality we're in. Right? You would agree
24 with me, if this happened, let's say, 10 years ago, so

64
1 we're in a totally safe comfort zone, Mr. Redstone
2 would be the single-most important witness probably in
3 this case? Wouldn't you agree with me on that?
4 MS. KOTLER: Your Honor, I would. And
5 if we could put him on, we wouldn't be here today.
6 Let's be clear. So we wish that that were the case,
7 too. But it's not.
8 THE COURT: Exactly. So we are sort
9 of where we are, where maybe he is the most important
10 person in the room, but nobody can ask him questions
11 about it.
12 MS. KOTLER: So with all due respect,
13 I can't necessarily agree to that. We don't agree
14 with that characterization that on these facts, with
15 respect to the dilutive dividend, he is the most
16 important person in the room.
17 Our point is only, given the actions
18 that have taken place, his deposition -- and given the
19 medical evidence, which is uncontroverted, and I don't
20 think they dispute it, they don't dispute it in any
21 way, and what you have, he can't be deposed. But the
22 response is, then, to not say NAI, with a duly
23 constituted, duly authorized board that can vote the
24 stock, now can't put on any witness to talk about its

65
1 intentions or its actions. But I won't retread sort
2 of the extraordinary nature of that.
3 THE COURT: I have that point. I
4 mean, in terms of the motion that was actually
5 presented to me, there is a request to strike his
6 verification.
7 Why should I have any confidence in
8 this Klieger method, given the state of the record in
9 front of me?
10 MS. KOTLER: Your Honor, again, I
11 think the verification was with respect to the
12 responses that simply say he's somebody who has the
13 information.
14 THE COURT: How many interrogatories
15 did he verify again? There's, like, 60 or something?
16 How many was it?
17 MS. KOTLER: With respect to him,
18 there were only two, by the way, that said he had
19 discoverable information.
20 THE COURT: How many did Mr. Klieger
21 review with him?
22 MS. KOTLER: He went over all of them.
23 He did read all of them.
24 THE COURT: How many are there?

66
1 MS. KOTLER: Sorry, Your Honor.
2 That's exhibit -- let me give you the exact number.
3 THE COURT: Right. Do you know the
4 length of time Mr. Klieger took to go through this
5 process?
6 MS. KOTLER: So the -- 46
7 interrogatories.
8 THE COURT: 46. And how long did it
9 take Mr. Klieger to do this?
10 MS. KOTLER: I don't know the answer
11 to that, Your Honor. But, again, I have explained --
12 THE COURT: Nobody has inquired as to
13 that question?
14 MS. KOTLER: That particular question
15 I did not inquire. I could find out if Your Honor
16 found it meaningful. But again, I have explained the
17 process, which is really no different --
18 THE COURT: I got the process. How
19 many breaks did he take when he did it?
20 MS. KOTLER: I didn't ask that
21 question either, Your Honor. Again, if you would like
22 me to, I would be happy to ask.
23 But he sat, he read them. In a way,
24 it's no different than a lawyer sitting down with a

67
1 client and going over the interrogatory responses, and
2 all that was -- you know, do you have questions? Is
3 there anything problematic? And continue on --
4 continuing on, which is entirely different from, for
5 the reasons I said, having to answer questions.
6 So back to your question, Your Honor,
7 about the verification. What he verified was he's
8 somebody with knowledge. That's not in dispute. He
9 is somebody with knowledge. And if Your Honor reads
10 them -- and I would encourage Your Honor, if you
11 wanted to read through it, if you look at the
12 interrogatories, most of the requests were simply
13 asked who had -- who are witnesses with information.
14 And we identify, in some cases, a hundred people, in
15 some cases fewer, although he was always identified
16 along with all of the other board members. And he
17 verified that those were accurate. And by the way, he
18 had to verify that because he is a party and he
19 received -- the interrogatories were served on him.
20 Just backing up, though, the first
21 request was to strike the two interrogatory responses,
22 as I read it, the two that say -- on the grounds that
23 they were somehow inaccurate because we listed
24 Mr. Redstone as somebody who had discoverable

68
1 information.
2 We did that, Your Honor, because we
3 thought we had to. If we didn't list him, we would
4 have faced a very different motion. Frankly, you
5 didn't even hear anything about that from
6 Mr. Allerhand, so I don't think that's something that
7 they're seriously pursuing. The verification he had
8 to sign. We went through a procedure to get him to do
9 it that shouldn't be particularly surprising to
10 anybody, and he verified that he is somebody who has
11 information.
12 The third piece of it was the
13 deposition, which I think you and I have now
14 discussed. And then we discussed briefly the issue
15 with respect to this sweeping request at this
16 premature phase to preclude information, which I -- if
17 Your Honor has questions about that, I'm happy to go
18 into it, but I think it is entirely premature either
19 to make rulings preventing NAI from putting on
20 testimony about its corporate acts through other
21 directors and the president of NAI, or, if you want,
22 I'm happy to talk about the rules of hearsay and what
23 past statements of Mr. Redstone would be, indeed,
24 admissible.

69
1 THE COURT: Maybe.
2 MS. KOTLER: We can brief it for Your
3 Honor. But I have to say, there's a reason they want
4 --
5 THE COURT: I know you're going to say
6 state of mind, state of mind, state of mind until the
7 cows come home about what people can say about what
8 Mr. Redstone may have communicated to them. Maybe.
9 MS. KOTLER: But we agree, Your Honor,
10 it's for another day. And it's state of mind with
11 respect to both those that heard it -- so, for
12 instance, Mr. Moonves and how that motivated him -- or
13 with respect to Mr. Redstone's state of mind when --
14 THE COURT: Those are the issues that
15 will be interesting to sort out. I haven't thought
16 through them very deeply.
17 MS. KOTLER: Sure. No problem, Your
18 Honor. Under 803(3). But as we have said, Your
19 Honor, it's entirely premature to do that now.
20 The last thing I would want to say,
21 Your Honor, a bit out of order, but you've heard some
22 things about the trust. And again, I think you get
23 our -- it's all tied into our notion that the trust --
24 there are no allegations regarding the trust. There's

70
1 no allegation that the trust interfered in some way or
2 was the basis for the perceived threats. You can look
3 through their complaints. There's not a single
4 mention of the trust. The trust is literally a
5 document. It holds NAI stock. It does nothing else.
6 Mr. Redstone has never taken action through the trust
7 with respect to CBS. That's not disputed.
8 Undisputed.
9 THE COURT: I'm sorry, was that Mr. or
10 Ms.?
11 MS. KOTLER: Mr. Redstone. But
12 neither of them have ever taken action through their
13 trust with respect to CBS. Nothing has been done at
14 the trust -- Your Honor, it's true, nothing has been
15 done at the trust level with respect to CBS.
16 THE COURT: No; but if I go back to
17 Viacom, it all happened through the NAI board. Right?
18 MS. KOTLER: That is true with respect
19 to a dispute that had to do with removing Mr. Dauman
20 and Mr. Abrams from the trust and the NAI board.
21 THE COURT: Wasn't it, like, five
22 directors of Viacom?
23 MS. KOTLER: At the trust level on the
24 NAI board, it was just the two of them. And then at

71
1 the Viacom board level, it was more of them.
2 But, again, that had absolutely
3 nothing to do with CBS. In fact, after that -- CBS
4 was not involved in that dispute in any way, except
5 that afterward --
6 THE COURT: I'm trying to remember. I
7 know there was this whole issue about Paramount back
8 then. But was there no discussion in that 2016 period
9 about a combination between Viacom and CBS?
10 MS. KOTLER: No, none. The
11 combination wasn't even proposed until months later,
12 after the settlement of the litigation. In fact, the
13 only connection that CBS had in connection with the
14 dispute was that Mr. Moonves issued a statement
15 afterwards in support of Ms. Redstone and what had
16 happened. But it did not at all have to do with CBS,
17 and the trust has never -- Mr. Redstone through the
18 trust has never taken action with respect to the CBS
19 stock that is owned and held by NAI. There's no
20 dispute of that. There couldn't genuinely be a
21 dispute about that.
22 I will say that there was a request
23 from Mr. Allerhand that the document be opened up for
24 further -- circulated more broadly. With all due

72
1 respect, Your Honor --
2 THE COURT: I don't really have that
3 in front of me. You're talking about the trust
4 document?
5 MS. KOTLER: Oh, the trust document?
6 THE COURT: Which document are you
7 referring to?
8 MS. KOTLER: The trust.
9 THE COURT: That's what I thought. I
10 don't think I have a motion in front of me to do that,
11 so I'm not going to rule on that.
12 MS. KOTLER: That's where I was going
13 to go. That was put in a footnote.
14 The other thing I would say is we did
15 not admit something or drop some bombshell in a
16 footnote of our opposition brief. All we said was,
17 after all this emphasis and focus on the trust, what
18 have they really come up with about it?
19 There were two things. One, the false
20 assertion that it, quote, seemingly gives Mr. Redstone
21 the sole and exclusive authority to vote CBS stock.
22 That's just plainly not true, Your Honor. You can
23 look in the trust. The sole and exclusive authority
24 for voting stock is with respect to the NAI stock.

73
1 That's what the trust says. That's Article G-21 and
2 Article A-4(c). It does not in any way talk about his
3 sole and exclusive authority to vote CBS stock, or it
4 would be called Viacom stock. The "sole and exclusive
5 authority" language is with respect to voting "the
6 stock," which is expressly defined as NAI stock. So
7 that's just a false statement that they made for that.
8 And then they've come up with this
9 other provision that they noted for Your Honor. It
10 was they that mentioned it in paragraph 19 of their
11 moving papers. And what we said in our footnote is
12 that's actually wrong. If they think that that
13 provision would preclude the trustees after
14 Mr. Redstone's lifetime from doing something, they're
15 wrong about that, because the trustees can amend it.
16 That's all we said. And that's on the face of -- it's
17 on the face of the trust. It's Article H, paragraph
18 7. There's no bombshell, nothing big, nothing
19 special. We weren't even going to raise it, but they
20 had raised to you this question: does the trust allow
21 this? And how important this is. And all we said is,
22 no, it doesn't preclude it. No bombshell.
23 By the way, you heard this morning
24 that that would be the most compelling reason for the

74
1 dilutive dividend. I don't need to say anything more
2 other than it wasn't the reason for the dividend. The
3 dividend needs to be addressed based upon what the
4 directors were talking about and thought and believed
5 at the time. There wasn't a single mention of the
6 trust or any particular provision of the trust.
7 I will just quickly -- I hadn't
8 finished this -- No. 4. Look, on the migration-of-
9 control point, I don't know how to -- we tried to make
10 this very clear. Maybe hindsight is 20/20 and you
11 wish that you had phrased your language a little
12 differently. But we had always intended this sentence
13 to mean from Mr. Moonves' perception. And, in fact,
14 we wrote it from his perception, because we were
15 saying the only cogent, but improper, explanation for
16 their conduct is that Mr. Moonves has tired of dealing
17 with NAI's -- with having a controlling stockholder of
18 CBS, meaning NAI. And then we continued on with the
19 wording. And we thought that made clear that this was
20 all in his view; that in his view, there was a
21 migration. And what we have been saying over and over
22 again was there was no migration.
23 NAI's control over CBS, its ability to
24 vote the CBS stock has always been, one small note,

75
1 the same thing. The board has always had that power.
2 The CEO has always had that power. And since
3 September of 2016, the president has had that power.
4 Long before any of the issues or facts at issue in
5 this case that they claim led to the dividend. And
6 that's all that that sentence was. And we only
7 amended it because we kept telling them that's what
8 that sentence means. They kept mischaracterizing it.
9 They put their mischaracterization in a public filing.
10 THE COURT: You're referring to the
11 CEO and the president of NAI. Right?
12 MS. KOTLER: The CEO and president of
13 NAI, that's correct.
14 THE COURT: And identify for me, just
15 so it's super clear for the record, who those people
16 are.
17 MS. KOTLER: Mr. Redstone is the CEO,
18 and Ms. Redstone is the president. And then, again,
19 there's the express authority of the board.
20 We've talked about the denial with
21 respect to Ms. Redstone's effective control.
22 And the last thing I will say is this
23 last piece, where they describe this as a proposed --
24 the NAI's proposed change to the related-party

76
1 disclosure. This wasn't a proposed change to the
2 disclosure. What had happened was CBS sent the
3 footnote, asked us to -- asked Mr. Andelman to confirm
4 it. What Mr. Andelman said ultimately was, "Look,
5 this is your disclosure. And given all the broad
6 statements and assertions that you're making about
7 control, we don't feel comfortable in this email
8 context of doing anything other than confirming the
9 facts. And so here are the facts in this paragraph,
10 and those are all the facts that I'm confirming."
11 So the only thing that was struck out,
12 not because we were asking them to change the
13 disclosure, but was just to say these are the facts,
14 other than what's struck out are not facts, and I'm
15 confirming all those.
16 And, in fact, that email was sent.
17 Your Honor, I would be happy to hand it up, if you
18 would allow me to.
20 MS. KOTLER: Thank you. What he says
21 is this, given the broad assertions that CBS has been
22 making regarding "control," this email exchange is not
23 the appropriate forum in which to resolve the debate.
24 "I can confirm that the revised draft I sent you on

77
1 Friday," which is what appears in the appendix, "...
2 is a correct statement of the facts." Meaning that's
3 what he's confirming in response to their request.
4 He's only going -- we were going to confirm facts
5 because we didn't want to be caught in some kind of
6 admission or statement. And frankly, we were right to
7 be concerned about that because, lo and behold, a part
8 of the email exchange showed up as exhibits to the
9 motion, but not this email.
10 THE COURT: Is Mr. Andelman one of the
11 trustees? I'm doing this from memory.
12 MS. KOTLER: He is both an NAI
13 director, and will be deposed next week, and also a
14 trustee.
15 THE COURT: And does he serve in a
16 legal capacity for the trust or NAI?
17 MS. KOTLER: He is also -- yes, he is
18 also counsel to Mr. Redstone and has been -- has
19 provided legal advice to NAI as well. But CBS -- and
20 CBS went to him and asked him to confirm facts, and
21 all he said was, "I'm only going to confirm the facts
22 because I don't want to make some kind of admission.
23 We're not going to make some kind of admission that
24 you're going to use against us. So here are the facts

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1 that we can confirm for you."
2 There's no statement that this is now,
3 as this chart seems to imply, this is the disclosure
4 that you need to put in your Q.
5 I think I've covered everything,
6 unless Your Honor has questions, on the Sumner motion.
7 I want to quickly, just very quickly, talk about the
8 control docs.
9 THE COURT: All right.
10 MS. KOTLER: Putting aside, Your
11 Honor, that we have produced all the governance docs
12 and the ownership docs, they still complain that we
13 need to produce some kind of documents about control
14 of NAI, some types of emails or communications.
15 We, frankly, don't even know exactly
16 what that means. But what I can tell you is there are
17 no -- with one exception, that I will get to in a
18 moment -- with one exception, that I will get to in a
19 moment --
20 THE COURT: There are no what?
21 MS. KOTLER: There are no such general
22 documents talking generally about the control of NAI,
23 just -- without reference to either CBS or the stock
24 that it owns. And we agreed, as they don't dispute,

79
1 that if there are any of these documents that talk
2 about the ownership of either CBS or Viacom -- excuse
3 me. The ownership of CBS or taking action with
4 respect to CBS, we'll produce them, which we did.
5 And by the way, that swept in, even
6 though it didn't mention CBS on its face, all the
7 documents leading to the September 2016 bylaw
8 amendment. And we told them we were giving them that,
9 even though that was not acknowledged today. And we
10 construed that very broadly. Anything that we could
11 find, any communication about control of NAI with
12 respect to the stock that it owns, with one exception
13 that I'll get to, we told them we'd produce and we did
14 produce. There just aren't documents about some power
15 struggle or discussion of how things worked at NAI.
16 They just don't exist, and we can't produce
17 communications that don't exist.
18 THE COURT: Why the limitation to CBS?
19 MS. KOTLER: Well, we thought it made
20 sense, Your Honor, since this is a case about CBS.
21 THE COURT: But the issue is, or at
22 least the issue for discovery -- forget about whether
23 or not it ultimately becomes relevant at a trial --
24 is, in sort of basic terms, who is really calling the

80
1 shots at NAI.
2 Now, if that's true, at least that's
3 something people had a legitimate right to inquire
4 about. And the structure is essentially the same on
5 the Viacom side of the house as on the CBS side of the
6 house. Right? Shouldn't they be able to inquire into
7 how that's gone down in the past?
8 MS. KOTLER: Your Honor, my answer is
9 we looked for those, too. And the only exception, the
10 only time we withheld documents, which is what we told
11 them we would withhold, are the documents about the
12 written consent and the dispute that had to do with
13 Viacom in May and June of 2016.
14 THE COURT: Why should that be an
15 exception?
16 MS. KOTLER: Well, Mr. Hou will argue
17 that point. But those were the only documents that we
18 withheld for particular reasons. But otherwise,
19 documents about control of NAI, if they existed -- and
20 there were none that were sort of generally about
21 NAI -- we produced them. We cannot create
22 documents --
23 THE COURT: Did you tell them you
24 produced the Viacom ones, if there were any, other

81
1 than the ones that concerned the consent in 2016?
2 MS. KOTLER: Your Honor, we told them
3 we would apply generally for anything that talked
4 about control -- by the way, Your Honor, we asked
5 them, "What do you mean by this? What does that mean,
6 control of NAI? We don't see any, but we'll look."
7 THE COURT: Right. The reason I'm
8 confused is because in your -- or in the papers on
9 this motion, as I understood it, the position that you
10 were asserting, or at least the way it was
11 characterized in the papers, as I read it, is you were
12 only willing to produce documents in response to these
13 four requests that touch on or relate to CBS.
14 But you seem to be telling me that,
15 no, we actually did it for Viacom, with this exception
16 that Mr. Hou is going to talk about. Right?
17 MS. KOTLER: So the reason I'm
18 struggling, Your Honor, is because the documents don't
19 -- there aren't also documents speaking generally
20 about NAI with respect to Viacom, other than outside
21 of the Viacom dispute. There just -- what I'm telling
22 you now is, and what I thought we communicated to
23 them, is we're going to apply broadly our review.
24 It's got to have some connection to voting or

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1 potential action for CBS.
2 We actually, though, in fact, went
3 further. And if there was anything that -- we read it
4 broadly. They have accused us of reading it narrowly,
5 but we read it broadly. And if the documents talked
6 about how things work at NAI that could be construed
7 in any way that could apply equally to CBS or Viacom,
8 just like the September 2016 bylaw amendment, which
9 doesn't mention CBS by name, communications about
10 that, we did, indeed, produce those. And that fell
11 within what we said we were producing.
12 The only category of documents that we
13 told them we would withhold are those with respect to
14 the dispute that involved replacing a trustee and --
15 the two trustees, the two NAI directors, and some
16 Viacom directors, all related to a specific Viacom
17 dispute. That's it.
18 And they have not -- it's their
19 burden. They have not been able to show that, other
20 than those documents which we withheld, there's
21 anything else out there, or that we withheld anything,
22 because we didn't.
23 And that's what I thought we said in
24 our papers in response. And if we didn't make that

83
1 clear, Your Honor, I apologize. But I want to be very
2 clear. We looked very broadly, and if the document
3 talked about control of NAI with respect to the stock
4 that it holds, which -- we produced it, other than
5 with that one exception concerning the consents in
6 2016.
7 THE COURT: Which just to give it a
8 label, I'm just going to call it the 2016 Viacom
9 dispute. Is that a fair way that people understand
10 what we're talking about?
11 MS. KOTLER: Fair enough, Your Honor.
12 Yes.
13 THE COURT: All right. Did you have
14 anything else, Ms. Kotler?
15 MS. KOTLER: I don't, unless Your
16 Honor has any questions for me.
17 THE COURT: No. But what we're going
18 to do at this point, I think, is take about a 10- or
19 15-minute break, and then we can resume.
20 I apologize, because I know I asked
21 you before if it's Mr. Hou or Mr. Hou, and I always
22 get it mixed up.
23 MR. HOU: You nailed it, Judge. It's
24 Hou. Thank you.

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1 THE COURT: Thanks.
2 (A brief recess was taken at 11:33
3 a.m.)
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

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1 THE COURT: Ms. Kotler, I do have a
2 few more questions for you.
3 All right. I just want to get some
4 facts straight in my head here. So I'm looking at the
5 affidavit that was submitted with your papers, which
6 has the 2016 bylaw attached to it, this September 26,
7 2016 bylaw amendment.
8 MS. KOTLER: So, Your Honor, actually,
9 the CBS parties submitted it with their papers for
10 NAI. We submitted the signed copy for NAIEH with our
11 papers. Do you have a particular one in mind that you
12 want to hear about?
13 THE COURT: That may be part of my
14 question. I just want to make sure I understand the
15 facts here.
16 So the one I'm looking at, which was
17 with the Jacqueline Rogers affidavit, I think is a
18 bylaw amendment for Holdings, if I'm reading it
19 correctly. And that is one of my questions. Does
20 this same bylaw provision exist at National
21 Amusements, Inc. as at Holdings?
22 MS. KOTLER: Correct, Your Honor. And
23 I'm glad we talked about this. The Exhibit 2 to the
24 CBS moving papers has, in fact, the board -- it starts

86
1 with the minutes of a special meeting of the full
2 board --
3 THE COURT: Right.
4 MS. KOTLER: -- to approve the
5 resolutions both for NAI and NAIEH. And because what
6 they did was they did not submit a signed version of
7 the NAIEH one, we just gave Your Honor the signed
8 version of NAIEH as an exhibit to our papers. But the
9 NAI ones had the exact same language that I read to
10 you. It's at the bottom, and the page is Bates
11 stamped NAI 115.
12 THE COURT: Okay.
13 And when you say "NAIEH," you're
14 referring to Holdings, what I've been calling
15 Holdings, the LLC.
16 MS. KOTLER: Yes, Your Honor.
17 THE COURT: Okay. So through this
18 bylaw, at least since 2016, there can be three ways
19 that somebody could vote the CBS shares to take
20 action. One could be through the NAI board, for
21 example. The second would be a unilateral action of
22 Mr. Redstone, if he were competent to take such
23 action. And the third would be a unilateral action of
24 Ms. Redstone. Is that right?

87
1 MS. KOTLER: Of Ms. Redstone, that's
2 correct, Your Honor.
3 THE COURT: So, for example, if
4 Ms. Redstone wanted to remove directors of the CBS
5 board, she could do it unilaterally, at a meeting
6 or -- I don't know what the situation is with written
7 consents, whether CBS allows written consents.
8 Do they? Does CBS permit action by
9 written consent?
10 MS. KOTLER: Yes, Your Honor. She
11 could do it or the board could do it. She didn't, but
12 yes.
13 THE COURT: She could do it
14 unilaterally, without the board, under this bylaw.
15 MS. KOTLER: Yes, Your Honor.
16 Although I want to answer, I think what you may be
17 getting at is something that Mr. Allerhand said or a
18 claim that that's somehow inconsistent with the trust.
19 We don't believe --
20 THE COURT: I'm not implying any
21 inconsistency. I'm just trying to understand what the
22 consequence of this bylaw is. That's what I'm trying
23 to understand. Maybe people have arguments that it's
24 not a permissible bylaw, that there's an

88
1 inconsistency. I'm really not focusing on that.
2 Just taking it at face value, this
3 means those three sources, the NAI board, writ large,
4 by board action of the NAI board; Mr. Redstone
5 individually, unilaterally; or Ms. Redstone,
6 individually unilaterally, could remove CBS directors.
7 MS. KOTLER: That's correct, although
8 the only thing I'll add is if you look at the
9 paragraph that talks about the board, it says that if
10 the board takes that action, the CEO and the president
11 cannot limit it or change it or affect it.
12 THE COURT: Okay. Now, next question
13 I have is what happens if the CEO -- let's say the
14 president took such action, removed a bunch of CBS
15 directors, and the CEO, assuming he was competent to
16 make this judgment, disagreed with the taking of that
17 action. What happens then?
18 MS. KOTLER: I'm only pausing, Your
19 Honor, because it's a hypothetical. There's no claim
20 it took place or was going to take place.
21 THE COURT: Right. But is there a
22 mechanism that addresses that?
23 If you don't know, that's okay.
24 MS. KOTLER: I don't know that I can

89
1 give the answer to that.
2 THE COURT: I'm surmising there's
3 probably not.
4 MS. KOTLER: I would have thought that
5 the board probably had inherent authority if it wanted
6 to disagree, but I don't know the answer to that.
7 THE COURT: I'm just trying to
8 understand.
9 MS. KOTLER: The only reason I'm
10 delayed, Your Honor, or don't know the answer is
11 because there is no dispute here, she didn't take that
12 action. We may have a dispute over whether there was
13 a threat that she was going to take that action, and
14 we dispute that --
15 THE COURT: Got it.
16 MS. KOTLER: -- but no.
17 THE COURT: Next question.
18 This bylaw, can you put it in a
19 sequence of time for me relative to the 2016 Viacom
20 consent dispute?
21 MS. KOTLER: Sure.
22 THE COURT: Did this come in the
23 middle of it? At the beginning of it? After it
24 settled? Where did it come?

90
1 MS. KOTLER: After it settled, Your
2 Honor. The settlement was in August, and this was
3 adopted in September. But again, Your Honor, what
4 it -- a big part of what it did was there were
5 questions, maybe not to us directly, but as I had said
6 at the July hearing back in 2016, the board also
7 always has authority to vote the stock, although that
8 was never written anywhere down. It was an inherent
9 authority.
10 And so one of the things that was done
11 through this bylaw amendment was simply to make
12 express the authority of the board to take the action
13 to vote either the Viacom or CBS stock.
14 THE COURT: All right. Those are the
15 questions I had.
16 Mr. Hou, were you going to address
17 something now or do you have the other motion?
18 MR. HOU: I'm happy to address it
19 later when we discuss the Viacom, because that's --
20 THE COURT: Okay. All right.
21 MR. ALLERHAND: I just have two
22 issues, Your Honor.
24 MR. ALLERHAND: Your Honor, just

91
1 following up on the Court's question on the bylaw, we
2 think Your Honor has it exactly right. There were
3 three groups who can act. And I think it's pretty
4 clear, since there's singular power to act, whoever
5 acts first, it becomes a fait accompli.
6 If Mr. Redstone acted pursuant to this
7 power -- he has the power anyway by his control over
8 NAI -- his act would control. If Ms. Redstone acted
9 first, it says she has the singular authority. It
10 doesn't say it's subject to the board. And then if
11 the board acted on its own, it would have the power.
12 But there's no veto. Whoever acts first under any one
13 of these three prongs, it seems to me, would have the
14 power. That's how we read the document. What it
15 means, I don't know, but that's how I think -- I think
16 Your Honor is correct, that's what the document says.
17 THE COURT: Okay.
18 MR. ALLERHAND: Just three points.
19 On the Dr. Gold reports, without
20 getting into the details, if you look at our moving
21 papers on the Sumner motion, and that would be Exhibit
22 3, Your Honor, when the Court has time to, please go
23 back and look at paragraph 12.
24 THE COURT: Tell me again where it is.

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1 MR. ALLERHAND: Sure. Exhibit 3 is
2 the earlier Dr. Gold report that had been provided to
3 us by our adversaries.
4 THE COURT: All right.
5 MR. ALLERHAND: And in particular, if
6 you look at paragraph 12, lines 3 and 4, then you'll
7 see information about the ability of Mr. Redstone to
8 communicate in a certain method, and difficulty.
9 THE COURT: Right.
10 MR. ALLERHAND: I'm not going to --
11 THE COURT: I'm reading the lines. Is
12 there something you want me to compare that to?
13 MR. ALLERHAND: Yes. If you then turn
14 to the more recent Dr. Gold report which we
15 received --
16 THE COURT: Where is that?
17 MR. ALLERHAND: And that is NAI
18 parties' opposition papers, the transmittal affidavit.
19 And that would be Exhibit 6 to the transmittal
20 affidavit.
21 Do you have that, Your Honor?
22 Jacqueline Rogers.
23 THE COURT: I'll find it again. You
24 said Exhibit 6. Right?

93
1 MR. ALLERHAND: Yep.
2 THE COURT: Yes, I do have it.
3 MR. ALLERHAND: And if you turn to
4 paragraph 13, you'll see in the penultimate sentence
5 of that paragraph, the doctor is reporting on
6 Mr. Redstone's ability to communicate. And I had
7 previously drawn the Court's attention --
8 THE COURT: The sentence that begins
9 "at this point"?
10 MR. ALLERHAND: Yes. And you'll
11 notice that something is left out at the end of that
12 sentence which had appeared in the prior report -- I
13 believe the earlier report was from January -- in
14 terms of his ability to communicate.
15 I had referenced that during my
16 argument and I wanted to make sure the Court had it.
17 So you'll compare the difference between the two.
18 You'll see there's a difference with respect to
19 Mr. Redstone's ability to communicate, according to
20 Dr. Gold in the earlier report, and where we are
21 today.
22 In that regard, we are going to notice
23 the deposition of Dr. Gold. We've heard statements
24 today by counsel that are not in his reports about the

94
1 ability of Mr. Redstone to communicate in certain
2 matters. And I just wanted to alert the Court that
3 we're going to do that.
4 And I would hope there won't be
5 opposition, given the representations that are being
6 made. But I'm pretty sure if there will be, we'll be
7 bringing it back to Your Honor's attention.
8 THE COURT: For another day.
9 MR. ALLERHAND: For another day.
10 Enough on the plate. I understand.
11 Importantly, during the argument,
12 counsel for NAI said that Mr. Redstone is not
13 incompetent. And then Your Honor said, That's pretty
14 strong. That's a pretty strong statement. And then
15 it was walked back to a statement, He has not been
16 found to be incompetent under the terms of the trust.
17 This is a game that's been going on
18 now for easily more than two years. You can't be
19 found to be incompetent under the trust unless someone
20 triggers the provisions of the trust which require an
21 examination by a number of doctors, et cetera.
22 Obviously, if the settlor is
23 incompetent, then you wonder who is going to pull that
24 trigger.

95
1 And the last time you heard this
2 argument, two years ago, Mr. Klieger said to you that
3 Dr. Gold, under his Hippocratic oath, has a
4 responsibility when he examines Mr. Redstone twice a
5 week to bring to someone's attention if there are
6 cognitive ability impairments and he can't make
7 decisions, because it might implicate health care
8 directives, et cetera.
9 Number three, we thought it was
10 self-evident from our opposition papers and from our
11 reply that we were going to be pursuing a Rule 31
12 deposition on written examination as an alternative.
13 And I thought it would have been
14 reasonable to expect that our adversaries would have
15 had information as to how Mr. Klieger was able to read
16 interrogatories that would have taken more than an
17 hour, what process was used, so the Court could have
18 assessed whether that process would be available for a
19 lesser-intrusive deposition under Rule 31.
20 Next to last, if you look at Footnote
21 3 in NAI's opposition to this motion -- and that
22 footnote is partially redacted; it goes to the Article
23 G, Section 21 -- it's critical. This is not a small
24 issue. It is a bombshell. They don't disagree with

96
1 our interpretation of the provision. It has real
2 impact for people investing in the stock today and for
3 the importance of the dilutive dividend.
4 And we are telling the Court that
5 their supposed fix is absolutely prohibited under
6 trusts and estates law based on the experts we are
7 consulting with. Of course, Your Honor will do his
8 own research whether or not a settlor's intent can be
9 so easily undone.
10 Finally, on the control document
11 motion, it's hard to understand how we ended up here
12 fighting about this if there's no dispute.
13 When you look at their opposition
14 papers, it's kind of different than what we heard here
15 today. The second sentence of paragraph 1 -- excuse
16 me -- third sentence of their opposition says "Any
17 incremental discovery regarding control of NAI
18 generally would be irrelevant to this litigation and
19 unlikely to lead to admissible evidence."
20 That's an objection that they're not
21 going to provide documents that relate in any way to
22 control over NAI other than, as I understood it when
23 we had our back and forth, if it directly mentioned
24 CBS.

97
1 So I think they should be ordered to
2 produce the documents. If there are no documents,
3 then there are no documents. But there was an
4 objection, Your Honor.
5 THE COURT: I'm trying to understand
6 that these -- two of these motions overlap that I
7 thought may not have been overlapping.
8 The motion concerning Document
9 Requests 41, 42, 47, and 48, if I granted your motion,
10 as you understand it, do you get the Viacom consent
11 documents?
12 MR. ALLERHAND: Well, I think that's
13 been carved out as a separate piece.
14 THE COURT: So that's carved out. I
15 want to be sure --
16 MR. ALLERHAND: If you grant those
17 three paragraphs, that would resolve the motion with
18 respect to the control documents.
20 MR. ALLERHAND: And then all you would
21 be left with is this separate sliver or slice of
22 documents relating to what happened back in 2016 with
23 the consents.
24 With that, I'm done. Thank you for

98
1 your patience, Your Honor.
2 MS. KOTLER: Your Honor, just two
3 minutes.
4 THE COURT: Yes.
5 MS. KOTLER: Mr. Allerhand has pointed
6 out a difference between the Gold affidavits. I'm
7 going to try to speak about this generically. There
8 was a reason for it.
9 The ability to articulate the
10 responses that are noted in the first is no longer
11 there, but there are other ways to articulate those
12 words, exactly what I said before, using an iPad that
13 has a yes or a no.
14 There is no mystery. There was no
15 game playing. We weren't trying to hide anything.
16 With respect to what I said before,
17 Your Honor, with respect to competency, I'm not a
18 doctor, and that's why I needed to sort of be careful
19 with my words. You were right to call me out on that.
20 And I didn't mean to convey anything differently other
21 than he hasn't been found through those procedures to
22 be found incompetent.
23 And the only other thing I will say
24 with respect to the control docs point, Your Honor, is

99
1 they are correct. We asserted an objection. And then
2 we had meet and confers. And we told them what we
3 would be willing to agree to, and we told them we
4 would apply it broadly.
5 So, again, I can underscore, there's
6 nothing further to produce other than with respect to
7 the single category that we identified on the Viacom
8 consents.
9 THE COURT: Thank you.
10 I'm going to deal with these two
11 motions right now. I understand there's timing
12 importance, so you're going to get this while it's
13 fresh in my mind.
14 I'm going to start with the motion to
15 compel the production of documents in response to
16 Requests 41, 42, 47 and 48. And as I understand it,
17 that is to require that documents be produced in
18 response to those requests, overruling the relevancy
19 objection and having the documents produced in
20 accordance with the NAI parties' search protocol.
21 The ruling on this motion will not
22 impact the next motion we're going to hear about,
23 which concerns the Viacom consents.
24 With those caveats and that

100
1 explanation in mind, I'm going to grant the motion in
2 the way it was phrased and enter the order in the form
3 that was submitted with the motion.
4 To state the obvious, it's important
5 to remember that this is a discovery motion, and the
6 operative standard of review is not whether certain
7 evidence is going to be ultimately admissible at trial
8 but whether the documents are reasonably calculated to
9 lead to the discovery of admissible evidence.
10 And I'm going to grant the motion
11 because, in my opinion, these requests are reasonably
12 calculated to lead to the discovery of admissible
13 evidence concerning who effectively or actually
14 controls NAI, which I think is important to this case
15 as a factual matter and potentially as a legal matter.
16 I think it's important as a factual
17 matter because, when I have to write an opinion, I'm
18 going to need to be able to make practical sense about
19 who is calling the shots at NAI to explain the
20 narrative of what occurred here, which may or may not
21 be consistent with how control has occurred in the
22 past, or how it might occur in the future.
23 And I think it's potentially important
24 as a legal matter to this case, because there are

101
1 breach of fiduciary duty claims against the NAI
2 entities, as CBS's controlling shareholder, that are
3 at issue, which means there could be, at least
4 theoretically, liability for the ultimate individual
5 who is in control, if there is such a person.
6 And nobody has suggested to me,
7 frankly, that the control structure of NAI operates
8 differently for Viacom than it does for CBS. So I do
9 not think it's appropriate to impose the limitation
10 that was referenced in the papers that these documents
11 have to be somehow limited to have some direct
12 connection with CBS.
13 So I'm going to enter the order
14 granting this motion in the form it was submitted.
15 I'm going to go now to the next
16 motion. The next motion I've referred to colloquially
17 as the Sumner motion, and I'm going to address it,
18 frankly, as it was presented to me.
19 There's been a lot of discussion today
20 about much broader things, but I'm going to address
21 the discovery motion. And there were four parts to
22 that discovery motion. I'm going to go through those
23 four parts.
24 Part one was a request that the NAI

102
1 parties be ordered to revise the interrogatory
2 responses to strike references to Mr. Redstone having
4 I'm going to deny that request. I
5 think Mr. Redstone may well have discoverable
6 information. Whether he's competent to discuss it,
7 explain, do anything with it, is a wholly different
8 subject. But I don't think it's inappropriate to list
9 him as one of many, many people who could have
10 discoverable information where it is listed in the
11 relevant interrogatory responses.
12 That brings me to item two. There was
13 a request to strike the verification to the
14 interrogatory responses.
15 I'm going to grant that. And this
16 will go hand-in-hand with how we're going to handle
17 the written deposition issue in a moment. I have
18 great skepticism that goes back, frankly, to two years
19 ago, about whether, as a practical matter -- and I'm
20 not making any ruling about competency formally, but
21 just as a practical reality, I have great skepticism
22 that those verifications could have been done in an
23 informed, deliberative way. And I've certainly been
24 given no specifics beyond a general methodology of how

103
1 they were elicited to get me comfortable with that.
2 I'm not even sure what good these
3 interrogatory responses would do. They would be
4 hearsay, ultimately, at trial, I think. If somebody
5 is going to try to submit them as Mr. Redstone's
6 testimony or something of that nature, well, they're
7 not going to be used for that purpose because I just
8 don't have confidence, frankly, that he actually
9 engaged and was able to verify them in a substantive
10 way.
11 And I'll jump over the third item to
12 say I'm not going to order at this time a deposition
13 on written questions of Mr. Redstone.
14 You know, there are some tensions in
15 all sides' positions about these issues, but I do take
16 seriously the affidavit that was submitted to me by
17 Dr. Gold. I believe I saw an affidavit from him two
18 years ago, but I may be having a memory lapse on that.
19 But in any event, whether I did or
20 didn't, I take seriously the concerns about the
21 imposition on his medical situation that a deposition
22 can impose, and so I'm not going to order that the
23 deposition move forward on written questions.
24 That brings me to the last component

104
1 of the motion, which, as I understand it, was a
2 request to prohibit witnesses from testifying, either
3 in discovery or at trial, regarding Mr. Redstone's or
4 NAI's intentions with respect to NAI or CBS.
5 And I'm not going to grant that
6 relief. I think that's highly premature. Discovery
7 proceeds all the time with people testifying about
8 hearsay matters that may not be matters that
9 ultimately can be admitted into evidence. They often
10 are not, but they can be relevant to lead to
12 Of course, this is without prejudice
13 to the right of the CBS parties to seek, at an
14 appropriate time down the road in the context of
15 pretrial proceedings, a motion in limine, when I have
16 context to specific testimony that may have been
17 elicited, as to whether or not it ought to be
18 precluded at trial.
19 On this one, the Sumner motion, I do
20 not have a handy order that I can enter, so if
21 somebody could please prepare one consistent with what
22 I just said, that revolves that motion for today.
23 So why don't we go to the next one.
24 MR. MIRVIS: Good morning, Your Honor.

105
1 Ted Mirvis of Wachtell Lipton for CBS.
2 Just one postscript to the Sumner
3 motion. There was a footnote in our reply brief about
4 seeking relief from the restrictions that had been
5 imposed on the trust. And we proposed, as we
6 understood Your Honor to indicate, to do that by a
7 separate formal motion.
8 It may, in fact, expand upon the
9 sections that were listed in Footnote 4, given the
10 liberty that has been taken here today by counsel for
11 NAI to pick and choose about sections of the trust to
12 be talked about publicly. The sections obviously have
13 nothing to do with personal family issues, which was
14 the basis on which we accepted the document with those
15 restrictions.
16 If I could turn briefly to the motion
17 to compel documents about the 2016 Viacom consents,
18 which was blocked by relevancy objection, in a single
19 sentence, no one gets to plead and present its own
20 narrative and avoid the test of discovery. No one.
21 Not even a dual-class controller. But I might say a
22 bit more.
23 I think it's fair to say --
24 THE COURT: It's all downhill from

106
1 here, Mr. Mirvis.
2 MR. MIRVIS: I was just about to talk
3 about how the ball started rolling. And the ball, we
4 think, did start rolling with the 2016 Viacom consents
5 and the sequence that brings us here today.
6 First, June 2016, to block the Viacom
7 board's business decision to sell Paramount, by how?
8 By imposing a supermajority board vote bylaw. Sounds
9 familiar. I've heard the word "horse choker" invoked
10 in that regard. Ten days later, to replace Viacom
11 directors who disagreed with NAI.
12 And then -- and the sequence was
13 pointed out earlier today -- in September 2016, after
14 the August 2016 settlement, what happens? NAI makes
15 its proposal for the self-dealing merger of CBS and
16 Viacom to the very Viacom board that had just been
17 reconfigured to its liking.
18 THE COURT: What was the date of that?
19 MR. MIRVIS: Excuse me?
20 THE COURT: What was that date?
21 MR. MIRVIS: September.
22 September 2016.
23 And then what happened? Then we had
24 the refusal of the first CBS special committee to

107
1 accede to the same Viacom merger, an idea that never
2 went away, that was formally renewed in 2018 by NAI.
3 And now we also have the allegation in
4 NAI's countersuit here that the Viacom merger, putting
5 Viacom into CBS, is not some on-again-off-again thing.
6 They've alleged in words of one syllable in paragraph
7 68 that that idea, that self-dealing idea, is the
8 first step "in NAI's long-term plans for CBS,"
9 "focused on a two-step process starting with a merger
10 with Viacom," "continuing thereafter with a sale or
11 merger of the combined entity."
12 And then, but only then, only if
13 Viacom is first stuck into CBS, then, "with NAI open
14 to the possibility of relinquishing its voting control
15 as part of the second transaction."
16 Now, we are met with a relevance
17 objection. The 2016 coup at Viacom is not a sideshow.
18 It's central to what brought us here today. It's in
19 paragraph 2 of our complaint. It's alleged in detail
20 as a prime concern of the CBS special committee in May
21 of this year, which faced a situation nearly identical
22 to what NAI and Ms. Redstone executed at Viacom. It
23 came up sua sponte at the May 16th hearing here on the
24 TRO, when Ms. Kotler mocked -- mocked -- the special

108
1 committee's concern about NAI replacing directors.
2 She said, "There is literally no evidence." She said
3 it was all media pundit speculation of what other
4 people are saying we're going to do.
5 To which the Court observed, "I've
6 seen this story before ... dropping consents in the
7 dark of night in the Viacom matter."
8 And then we saw the new narrative, to
9 which counsel retorted, Oh, no, Viacom was very
10 different. That was just a controller trying to
11 "steer that ship in the right direction."
12 And then in the countersuit, they, our
13 friends to the right -- I don't know about the left,
14 but to the right --
15 THE COURT: I drew no political
16 inference.
17 MR. MIRVIS: Indeed.
18 NAI squarely put the 2016 coup at
19 issue, and that's really all that matters for this
20 motion. Because they alleged that the directors of
21 CBS were dead wrong, objectively wrong, in viewing the
22 Viacom coup as "evidence that NAI supposedly has a
23 history of running roughshod."
24 Why were we dead wrong? Because they

109
1 alleged, this is in paragraph 11, that NAI intervened
2 there, in Viacom, only when faced with underperforming
3 leadership that had failed to formulate or execute a
4 long-term strategic plan.
5 They alleged that it was "appropriate
6 to throw the directors out on Viacom." Why? Because
7 NAI believed that Viacom's leadership was destroying
8 short- and long-term value. And here's the punchline.
9 They said, and they pleaded in paragraph 6, "no
10 truth" -- "no truth" -- "to the imagined threats."
11 That's the very foundation of their
12 claim that the stock dividend, leaving the charter
13 issue aside for a minute, that the stock dividend was
14 a breach of fiduciary duty, because they say that the
15 CBS directors "responded to unreasonably perceived and
16 nonexistent threats."
17 This motion to seek discovery is
18 really Pleadings of Discovery 101.
19 I think that's all we need. But if
20 you want to read cases, we all talk about Clabir and
21 its progeny. Clabir and its progeny are perfectly
22 consistent with this.
23 As Vice Chancellor Jacobs put it in
24 Clabir itself, directors are entitled to discovery to

110
1 rebut a claim that their perceptions were "objectively
2 incorrect." And that's why in Clabir, the Court
3 ordered that the directors got discovery and
4 "... would be entitled to test what Clabir's true
5 intentions were ... to test the validity or the truth
6 of what Clabir has claimed that its intentions
7 were ...."
8 Vice Chancellor Parsons I think put it
9 quite well and quite bluntly in Third Point when he
10 said, "I'm not going to listen to testimony of
11 somebody if they precluded the other side from getting
12 access to the documents that would refute what they're
13 saying."
14 There's no such thing as cake and eat
15 it too.
16 And Vice Chancellor Laster said
17 virtually the same thing in Eminence; that the rise
18 and fall idea -- and we heard some of it this
19 morning -- the rise and fall idea, that the directors'
20 decision has to rise and fall with what they knew at
21 the time, he said that does not mean that directors
22 get no discovery if their actions are claimed to be
23 unreasonable.
24 NAI could have stood down. NAI could

111
1 have said, Okay. It was reasonable for the CBS
2 directors to believe that by rejecting the
3 self-dealing transaction they were pressing for, to
4 merge Viacom into CBS, that that might very well have
5 led to a repeat of the Viacom coup, kind of a sequel.
6 If they had chosen to stand down, we wouldn't be here
7 today. But no one --
8 THE COURT: So if they give you a
9 stipulation saying, "Your perception of the threat
10 that Ms. Redstone would remove CBS board members if
11 you didn't proceed to ultimately do a deal with Viacom
12 was reasonable," you wouldn't need this discovery.
13 MR. MIRVIS: That's correct. And in a
14 way, all the papers talk about Clabir. It's really,
15 in some ways, just -- it's a nice thing, sometimes,
16 when the doctrine and common sense sort of fit
17 together. And this is one of those examples.
18 If directors think they faced a
19 danger, Danger X, they can show that they perceived
20 Danger X in good faith, and they can seek to show that
21 Danger X really did exist. And that confirms the
22 directors' perception.
23 And if the discovery shows that the
24 danger was really worse than the directors thought,

112
1 that it was 2X or 3X or 4X, if the NAI consents that
2 were ready to go weren't just to throw out the special
3 committee but to throw out the whole board, that's not
4 just good discovery. That's great discovery.
5 And that's why we think to try to
6 block us on discovery on the 2016 Viacom consents is
7 just beyond the pale. As Your Honor pointed out,
8 we're not talking about admissibility. We're talking
9 about discovery.
10 So where do they end up? Their last
11 refuge is to say, Well, if you grant the motion, that
12 would push the trial into 2019. Really? Really? The
13 discovery should be denied by someone taking an
14 obviously aggressive position on a central issue?
15 We're not talking about a curlicue
16 like search terms or proximity indicators, whatever
17 those are. A party should not be allowed to reward
18 itself with a free pass by making that kind of interim
19 threat.
20 There is no explanation given for that
21 delay. Surely they could and should and presumably
22 did gather the documents. There are no new
23 custodians.
24 They say there was delay on our part.

113
1 The meet and confer letters on this didn't end until
2 July 3rd. We were in the midst of briefing motions to
3 compel. Five days after the decision, we filed this
4 motion. We don't think that's a delay at all. But at
5 most, what, five, ten days? It doesn't put a trial
6 off for four months.
7 We worked hard, and we have worked
8 hard, to resolve disputes wherever we can and to limit
9 the motions that we have to bring.
10 And then we get to the very end of
11 their reply, of their opposition. And they say that
12 if discovery is granted, NAI, they -- they -- will
13 need extensive additional document testimony in
14 discovery.
15 Into what? According to what they
16 wrote in their brief, they will need discovery into
17 "the restructuring of NAI's own board as well as the
18 trustees of the Sumner Trust." They will need
19 discovery into those subjects. And the decade-long
20 history of the new directors and trustees and those
21 who were removed. What does that mean? I have no
22 idea. I literally have no idea. It's hard to
23 understand.
24 They say that the CBS directors were

114
1 dead wrong about what happened at Viacom; that there
2 was no -- that it was unreasonable to look at what
3 happened in Viacom and think it could happen at CBS.
4 Dead wrong. But they can't show that we were dead
5 wrong unless they get mountains of additional
6 discovery. It's just odd. I don't get it.
7 We submit, Your Honor, that the motion
8 to compel on the 2016 consents should be granted.
9 Thank you.
10 THE COURT: Thank you.
11 Mr. Hou.
12 MR. HOU: Thank you, Your Honor. May
13 it please the Court, victor Hou for the NAI parties.
14 The CBS parties seem like they want to
15 try every other case except for the one that they
16 brought. Now that we're finally getting tens of
17 thousands of documents, literally weeks after the
18 substantial completion date, we understand why.
19 The CBS parties have provided us now
20 with a 502-page privilege log, some pretty eye-opening
21 stuff. And what can we glean from this tome? We
22 gleaned that the CBS parties, management, hatched this
23 plan, this dilutive dividend plan, with my creative
24 colleagues at Wachtell Lipton, as early as 2012, some

115
1 six years ago.
2 They even drafted a complaint against
3 NAI to address so-called threats by the controlling
4 stockholder, so the privilege log entry says, against
5 CBS in 2013, five years ago. Three years ago, before
6 these 2016 consents ever happened, Your Honor, they
7 were already plotting.
8 So this committee process that was
9 used to really put forth management's plan to usurp
10 power, that's really the coup that we're talking
11 about.
12 And the ball that got rolling that
13 Mr. Mirvis talks about got rolling in 2012, well
14 before the 2016 consents issue, which was the subject
15 of litigation that some of us were before Your Honor
16 on in 2016.
17 In 2018, in April, this discovery
18 shows that management started plotting this coup once
19 again. They dusted off this plan that they had
20 hatched back in 2012 and talked about in 2013, and
21 then a full month before it was ever considered by the
22 special committee, this board of very august board
23 members, independent board members, we're told,
24 management had decided they were going to use this

116
1 opportunity to finally make this plan a reality.
2 So make no mistake, you'll soon be
3 hearing about our motions on those documents that we
4 withheld. This was a highly orchestrated scheme, and
5 they saw the right opportunity to achieve their goals.
6 *
7 And as Your Honor is now aware, senior
8 management at CBS used TigerText, ephemeral text
9 messaging, self-exploding, self-destructing messages,
10 to hide their tracks, literally and figuratively,
11 telling each other to go off email systems and to go
12 to TigerText in order to discuss this plan to unseat
13 and usurp power from the controlling stockholder.
14 While many relevant texts have been
15 destroyed, document holds were able to -- we're
16 understanding just now the full scope of what is left
17 in terms of remnants. And what we can piece together
18 is that they declared war on Ms. Redstone, on the
19 Redstone legacy, NAI, years ago. And they took the
20 gloves off, in their words, to kill NAI, literally
21 their words, to kill the controlling stockholder.
22 So it's no wonder they use every form
23 of distraction to say, It's not our fault. It's
24 theirs. Don't look at what we did.

117
1 The threats that we talked about, the
2 threats that really formed the basis of their action,
3 what they knew at the time that they brought the
4 dilutive dividend actions, was important. Those
5 threats, we respectfully submit, are as ephemeral as
6 the TigerText they used to cover their tracks.
7 So what are we talking about here when
8 we're talking about the 2016 Viacom consents? They
9 contend that it's important for us to relitigate this
10 issue that was settled in 2016 because it bears on
11 important issues.
12 And let me be very, very clear. What
13 we told the CBS parties in those long meet and
14 confers, which were very painful, what we told them
15 was, We're only making three claims from the Viacom
16 consents.
17 We understand what our complaint says.
18 What we made was a stipulation to them. We said,
19 number one -- there are only three things we want.
20 Number one, we will contend, really,
21 that the NAI board, the NAI actors in that case,
22 replaced five members of the board of directors,
23 including two that were associated and affiliated with
24 NAI.

118
1 Number two, that they replaced those
2 five directors, including the two formerly
3 NAI-affiliated directors, with independent directors.
4 Number three, that out of those five
5 independent directors at Viacom, Ms. Redstone knew
6 only one.
7 That's it. That's what we told them.
8 As much as we'd like to say and
9 justify why we did it, we understand that is a
10 superfluous issue to what happened here. We don't
11 think it's important to relitigate that case that was
12 settled two years ago to talk about the merits of
13 whether or not there was justification for us to take
14 the actions that our clients took at that time, to
15 remove directors, to talk about whether or not the
16 Paramount deal was imminent, and whether it was
17 appropriate for the CEO to pursue that action without
18 the consent of the controlling stockholder. That is
19 irrelevant, and we know it's irrelevant to the issues
20 here.
21 Even if you were to grant that motion,
22 what would that mean for this trial? We have an
23 expedited schedule. We're talking about this case and
24 their actions in this case and the dilutive dividend

119
1 in this case. It has nothing to do with Viacom.
2 Even if we were to say, you know,
3 let's have at it, let's have the full-on discovery --
4 and that's what the requests are saying. They said,
5 We want everything related to the 2016 Viacom
6 consents. That's essentially a whole 'nother case.
7 And they say, from the NAI parties, from Viacom, from
8 Finsbury, from Mr. Klieger, they want all this
9 discovery about Viacom consents in 2016.
10 Even if you gave it to them and they
11 were able to litigate that issue, that would not move
12 this ball forward one inch. And that's what we're
13 trying to do here, on an expedited basis. What we
14 contend is what's important and what the case law that
15 my colleague referenced, including the Atlantic
16 Research case, among many others, is --
17 THE COURT: Just so we're clear,
18 though, you're not willing, at least to date, to
19 stipulate -- your side is not willing to stipulate
20 that the CBS directors' concern that there was a
21 threat that Ms. Redstone would remove board members if
22 they didn't acquiesce to undertaking a CBS-Viacom
23 combination wasn't reasonable. You're not willing to
24 stipulate to that. Right?

120
1 MR. HOU: No, because it's
2 inconsistent with the discovery, Your Honor.
3 THE COURT: Right. And whether it's
4 inconsistent or not inconsistent, you're just not
5 willing to give that stipulation.
6 MR. HOU: Because the -- and I'll try
7 to explain why, Your Honor.
8 THE COURT: Is it a yes or no? And
9 then you can give me as long an explanation as you
10 want.
11 MR. HOU: Thank you.
12 No, we're not ready to stipulate to
13 it.
14 And the reason for that is simple.
15 Because the directors that claimed that they had these
16 reasonable perceptions, their subjective state of mind
17 at the time that this Viacom consents issue occurred
18 in the litigation, they were supportive of
19 Ms. Redstone, as my colleague Ms. Kotler said.
20 Mr. Moonves wrote a supportive letter
21 praising Ms. Redstone during this exact time frame,
22 saying she took courageous actions to support Viacom,
23 and look at the turnaround happening at Viacom.
24 A board member wrote Ms. Redstone and

121
1 said, You did a terrific job at Viacom.
2 Even in TigerText, Mr. Moonves and
3 Joseph Iannielo, his number two, were talking about
4 how Viacom is completely different than CBS; that the
5 controlling stockholder as well as Ms. Redstone had
6 nothing to do with CBS like she does with Viacom.
7 So in their own mind, they know that
8 that wasn't reasonable. So that's the only reason why
9 we're not willing to entertain that, because it's
10 inconsistent with the facts.
11 And even if we were to concede that
12 they had this view that there might be some risk, of
13 course, it's this propensity argument that we've
14 talked about. And I understand Your Honor says and
15 the case law is very clear that discovery doesn't have
16 to be admissible. But that's really what this is:
17 propensity evidence.
18 And what we have, we think,
19 demonstrates very clearly that, in fact, the directors
20 did not perceive that threat in this case, and that
21 wasn't reasonable in this case, subjectively.
22 So the only way that evidence, sort of
23 the truth, if you will, behind the consents is at all
24 relevant -- and we mention this in our papers; the

122
1 case law is clear -- it only is relevant if it's
2 contingent rebuttal.
3 If we, the NAI parties, were to elicit
4 on direct testimony before Your Honor to say that we
5 thought those consents were a great idea in 2016 and
6 we did it for the right reasons, we're making that
7 representation here right now that we're not doing it.
8 That's the same representation that we made to them in
9 the meet and confers.
10 We are not going to put that at issue.
11 I understand it was in our complaint. It's not
12 necessary to the issues we're trying to decide in this
13 expedited proceeding. We took it off the table.
14 So the only marginal relevance all of
15 this 2016 litigation file could possibly relate to is
16 a contingent one. And that's what the Atlantic
17 Research case does. It's contingent. And if we're
18 not raising it, there's nothing for them to rebut.
19 And we're saying that right now. The
20 only things we're going to elicit are those three
21 things that I talked about, which are really not
22 seriously in dispute: that there were five independent
23 directors that were replacing five directors,
24 including two that were formerly affiliated with NAI;

123
1 and that they're independent; and only one person knew
2 Shari Redstone before service on the board. That's
3 it.
4 So we don't see that there's any
5 relevance. And, instead, what we see is burden. What
6 we see is burden on third parties like Viacom that are
7 dragged into this. We see burden on third parties
8 like Finsbury, which is dragged into this. As well as
9 the burden on the NAI parties.
10 But we get it. It's big-time
11 litigation, as Your Honor has pointed out to us. And
12 we'll do our very best to press forward if we're
13 forced to do it.
14 But our position is very clear: Given
15 our proffer and our limited use of the Viacom consents
16 issue, we're not putting forward anything about
17 whether that was a good idea or a bad idea. And
18 without that, all they're asking for is rebuttal
19 evidence for an argument we're not going to make.
20 So with that in mind, Your Honor, we
21 urge you to deny the motion to compel on the Viacom
22 consents.
23 THE COURT: All right. Thank you,
24 Mr. Hou.

124
1 Mr. Mirvis, did you have anything
2 else?
3 MR. MIRVIS: Your Honor, I have even
4 less than I had before, which is, during the meet and
5 confers, in which I did not personally participate,
6 and I thank my --
7 THE COURT: You have the gray hair to
8 show that. It means you're off the hook.
9 MR. MIRVIS: There's some advantages
10 to aging.
11 We specifically asked them to give us
12 a stipulation if they thought it would moot this
13 motion, and they refused. And you heard today, they
14 will not stipulate that our responses were reasonable.
15 Propensity, we've dealt with that in
16 the brief. We've cited State versus Tice. I have
17 nothing else. Thank you.
18 THE COURT: All right. Thank you.
19 I did read the papers carefully
20 beforehand. I'm going to address this motion right
21 now as well.
22 With one caveat I'll get to in a
23 second, I am going to grant the motion in the form it
24 was submitted.

125
1 I think, fundamentally, this is,
2 again, a discovery motion where people are allowed to
3 elicit information that is reasonably calculated to
4 lead to admissible evidence. This is not a question
5 of what is ultimately going to be admissible.
6 By way of disclosure, I actually
7 worked on the Atlantic Research case way back when.
8 It brought back fond memories when I saw it cited.
9 But I think the logic of that decision by Vice
10 Chancellor Jacobs is pertinent here.
11 As everyone knows, the subject of that
12 case was Atlantic Research, which was the target of a
13 not-so-friendly takeover proposal, and was
14 contemplating implementing a rights plan. Atlantic
15 Research wanted to take discovery of the financing
16 sources of the proposed acquirer, Clabir.
17 And Vice Chancellor Jacobs, in
18 addressing that argument, very much like NAI contends
19 here, said that the documents that are relevant to the
20 Atlantic directors' decision to deploy defensive
21 measures really does rise and fall on what the
22 directors knew at the time. But -- and the "but" was
23 very significant -- he permitted the discovery to go
24 forward because Clabir in that case would not rule out

126
1 challenging the reasonableness of the directors'
2 decision-making process and whether their beliefs may
3 have been mistaken or not objectively reasonable.
4 I think that same analysis is
5 pertinent here. Absent a clear stipulation that is
6 acceptable to resolve this -- which does not exist,
7 from the question I asked Mr. Hou and what I
8 understand the other parties are contending -- the
9 discovery sought may be of only conditional or
10 contingent value, but it is certainly something that
11 is discoverable for purposes of where we are in the
12 case at this point.
13 And so I am going to permit the
14 discovery that's been sought.
15 I was looking at the form of order,
16 and I'm fine with paragraph 2 of the order, which is
17 the guts of it. I'm not going to enter a five-day
18 requirement for the production. I'm going to do this
19 on the computer when I go downstairs. But I'll enter
20 a modification that the parties should meet and confer
21 on a reasonable time for the production schedule. I'm
22 not going to impose arbitrarily that time period.
23 So that is my resolution of that
24 motion. Is there anything else we need to cover

127
1 today?
2 All right. So I am going to cover one
3 other thing today concerning the Kopelson video.
4 The bottom line is I'm going to
5 maintain that in camera. It is not going to be made
6 available publicly.
7 I think there is a question as to
8 whether or not 5.1 technically applies to something
9 submitted in camera. I'm not going to sort that out
10 today. I don't need to. Even if it did apply, I
11 think there's good cause to keep the video
12 confidential and intend to do so.
13 In balancing the considerations of
14 what is clearly sensitive information concerning
15 somebody's personal medical condition and personal
16 privacy against the public interest, particularly when
17 we're in discovery -- we're not even at a trial yet;
18 maybe trial is different in that regard, because
19 things become extremely open at trial -- but at least
20 for discovery purposes, I think that the personal
21 privacy interests clearly outweigh the public need for
22 that information.
23 My reasoning for the motions that I've
24 ruled on today is apparent from the record. And

128
1 candidly, my concerns about the issues concerning
2 Mr. Redstone's competency predated seeing that video.
3 I articulated that previously. I think some of that
4 was expressed on the record during the Viacom hearings
5 in 2016.
6 Nobody has formally made a competency
7 determination. But I had concerns and I've had
8 concerns for some time about that. It permeated the
9 Viacom case. It has permeated these compensation
10 cases that I've also been dealing with on the Viacom
11 and the CBS side.
12 But to be clear, I'm not going to
13 strike the video. I do think the video is relevant,
14 actually, to the motion that was brought. It's
15 perhaps just cumulative of other information,
16 including the affidavit that has been submitted to me
17 from Dr. Gold, or the two affidavits that have been
18 submitted to me from Dr. Gold. But I'm not going to
19 do anything with the video in terms of publicly
20 opening it to inspection or anything of that nature.
21 So it will stay where it is, which is it's submitted
22 on an in-camera basis.
23 All right. With that, I wish everyone
24 a good day.

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1 (Court adjourned at 12:36 p.m.)
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130
1 CERTIFICATE
2 We, JEANNE CAHILL and DEBRA A.
3 DONNELLY, Official Reporters for the Court of Chancery
4 of the State of Delaware, do hereby certify that the
5 foregoing pages numbered 3 through 129 contain a true
6 and correct transcription of the proceedings as
7 stenographically reported by us at the hearing in the
8 above cause before the Chancellor of the State of
9 Delaware, on the date therein indicated.
10 IN WITNESS WHEREOF we have hereunto
11 set our hands at Wilmington, this 8th day of August,
12 2018.
13
14
/s/ Jeanne Cahill
15 ------------------------
Official Court Reporter
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/s/ Debra A. Donnelly
18 ------------------------
Official Court Reporter
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1

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN RE CBS CORPORATION : CONSOLIDATED

Chancery Courtroom No. 12A

BEFORE: HON. ANDRE G. BOUCHARD, Chancellor

ORAL ARGUMENT ON THE CBS PARTIES' MOTION TO COMPEL

CHANCERY COURT REPORTERS

2 BRADLEY R. ARONSTAM, ESQ.

CHANCERY COURT REPORTERS

2 MATTHEW E. FISCHER, ESQ.

CHANCERY COURT REPORTERS

1 THE COURT: Good morning, Counsel.

2 MR. MORITZ: Good morning, Your Honor.

3 THE COURT: Just give me one second

5 All right. Mr. Moritz.

6 MR. MORITZ: Good morning, Your Honor.

7 Following the Court's comments at the last hearing,

8 I'll dispense with introductions, with one exception.

9 And that is that I'm pleased to introduce Benjamin

10 Britz of Hughes Hubbard, who is appearing on behalf of

11 Joseph Ianniello, who has been newly added as a party

12 to the case in a recent pleading. And Mr. Britz has

13 been admitted pro hac vice.

14 THE COURT: All right. Welcome.

15 MR. MORITZ: Before the argument,

16 Mr. Belger and I conferred about the order of motions

17 and how we'll present them. If it's acceptable to the

18 Court, we agreed that we would proceed with presenting

19 argument on what I'll just -- not to read the whole

20 title -- refer to as the Sumner motion and our motion

21 to compel documents concerning control of NAI, those

22 two motions first combined. So the CBS parties will

23 argue, the NAI parties will respond, there will be a

24 reply, and then we move on to the next motion after

CHANCERY COURT REPORTERS

1 that, which would be the CBS parties' motion to compel

2 regarding NAI's consent actions against Viacom. So if

3 acceptable to the Court, that's the order that the

4 parties have discussed proceeding in.

5 THE COURT: All right. That's fine.

6 MR. MORITZ: Thank you, Your Honor.

7 With that, I'll hand off to Mr. Allerhand for the

8 first set of motions.

9 THE COURT: Very well.

10 MR. MORITZ: Thank you, Your Honor.

11 MR. ALLERHAND: Good morning, Your

12 Honor. May it please the Court, for the CBS directors

14 I'm going to try something a little

15 different this morning, which is to proceed somewhat

16 deliberatively, a little carefully, and for a bunch of

17 reasons that the Court is aware of. So bear with me

18 if I'm not my usual animated going 110 miles an hour.

19 I want to be careful here.

20 I think we should start with two

21 questions which will help the Court deal with some

22 very thorny issues which arise in the context of a

23 discovery motion, but really have so much more impact

24 than just the discovery ruling. And thank you, Your

CHANCERY COURT REPORTERS

1 Honor, for making time to hear us.

2 So what I would like to do by way of

3 introduction is first telescope for the Court what do

4 we think on our side of the V is the state of play on

5 who is the controller of NAI and, therefore, the