×

CBS Shareholder Files Class Action Suit Against National Amusements

A CBS shareholder filed a class action suit on Thursday against National Amusements Inc., siding with the CBS board in its ongoing fight against the company’s controlling stockholder.

The Westmoreland County Employees’ Retirement System filed the proposed class action in Delaware Chancery Court, where CBS and NAI are already doing battle over a proposal to dilute NAI’s voting control over the company.

The retirement plan, which holds CBS common stock, accuses NAI and its president, Shari Redstone, of breaching their duties to public stockholders by taking steps to thwart the dilution. On May 17, the CBS board voted 11-3 to award a dividend of voting shares to non-voting Class B stockholders, effectively stripping Redstone of control of the company. The unprecedented move reflected the board’s increasing frustration with Redstone’s push for a merger with Viacom, which she also controls.

The day prior to the vote, Redstone issued bylaw amendments requiring a 90% supermajority for such an action. Because NAI controls three seats on the CBS board, the bylaw amendment would give her a veto over the plan. The dilution was made contingent on approval of the Delaware court, where CBS and NAI have been filing competing claims over the validity of the action.

As a Class B stockholder, the Westmoreland County Employees’ Retirement System stands to gain voting power if the dilution is approved. The complaint alleges that the board’s action should hold sway, and that the bylaw amendments undermine the independent governance of CBS.

“There is no independent Board if the controlling stockholder is allowed to thwart the Board’s ability to act independently,” the suit alleges.

NAI has argued that the dilution was precipitous and unwarranted, as Redstone has no intention of forcing a merger against the will of both companies’ boards.

In response, NAI said it had a legal right to change the bylaws.

“Furthermore, as detailed in NAI’s complaint, the efforts of the CBS Directors to unilaterally dilute the voting rights of its controlling shareholder are extraordinary, unjustified and unlawful,” the parent company said. “We are confident the court will uphold NAI’s action.”

Popular on Variety

More Biz

  • Hopper Reserve

    Dennis Hopper's Dying Wish: His Own Strain of Marijuana

    Even as celebrity brands are starting to flood the emerging Cannabis market, Hopper Reserve stands out. The brand was launched by Marin Hopper, Dennis Hopper’s daughter from his marriage to Brooke Hayward. Hopper Reserve is a gram of California indoor-grown flower, two packs of rolling papers, a pair of matches and a trading card either [...]

  • Snoop Dogg Weed

    In the Cannabis Business, Not All Star Strains Are Created Equal

    With the cannabis green rush in full swing, many celebrities are jumping into the fray with their own brands, including such well-known stoners as Willie Nelson, Snoop Dogg and Tommy Chong. But as it turns out, not all star strains are created equal, so we assembled a trio of crack experts to put the product [...]

  • Richard Branson Jason Felts

    Kaaboo Festival Acquired by Virgin Fest Owner Jason Felts

    Kaaboo, which says it has “shifted the music festival paradigm by offering a highly amenitized festival experience for adults,” is now under new ownership. Virgin Fest founder and CEO Jason Felts (pictured above with Virgin founder Richard Branson) has fully acquired all of the festival brand assets through an affiliate of Virgin Fest, the music [...]

  • Live Nation Chief Michael Rapino Talks

    Live Nation-Ticketmaster Chief Michael Rapino Talks Dept. of Justice Inquiries

    Back in August, Senators Richard Blumenthal of New Jersey and Amy Klobuchar of Minnesota made the most recent of several requests for an Department of Justice antitrust investigation into competition in the ticketing industry, and it soon became clear that the target of the probe was Live Nation and its 2010 merger with Ticketmaster, which [...]

  • Lowell Smokes Cafe Marijuana

    With Cannabis Lounges, On-Site Consumption, Marijuana-Infused Meals Go Legit

    Can this century’s Roaring ’20s repeat history but with pre-rolled joints instead of whiskey flasks and soccer moms as the new flappers? This month, West Hollywood will see the opening of the nation’s first at least quasi-legal cannabis consumption lounge, officially dubbed Lowell Farms: A Cannabis Café, located at 1211 N. La Brea between Fountain [...]

  • 2020 TV Season Preview

    How 2020's Fall TV Season Is Already Shaping Up

    Aiming to stand out in a crowded field, broadcasters this season have leaned on the stability of their schedules and the return of established hits. But for many of the same reasons, they’ve also begun to seed the ground for next year’s crop of shows, considering that top performers like “How to Get Away With [...]

  • Taylor Swift Talks Scott Borchetta’s ‘Sneaky’

    Taylor Swift Talks Scott Borchetta's 'Betrayal,' 'Sneaky' Deal With Scooter Braun

    While Taylor Swift’s sprawling Rolling Stone cover interview is largely about her music and herself, there’s also plenty about the personal and business dramas of the last three years. And not surprisingly, Scooter Braun and Scott Borchetta — who this summer inked a reported $300 million deal for the Big Machine Records catalog and with [...]

More From Our Brands

Access exclusive content