Dan Rather vows to appeal ruling dismissing his lawsuit against CBS

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Attorneys for Dan Rather said they plan to appeal a decision issued today by a New York appeals court dismissing Rather’s $70-million lawsuit against CBS.

“We are extremely disappointed with the Appellate Court’s decision,” Martin R. Gold, Rather’s lead attorney, said in a statement. “We believe the decision is incorrect on a number of grounds and, accordingly, we intend to ask the New York Court of Appeals to review it.”

Today’s ruling was a major blow to Rather, who has personally financed the suit for the last two years, casting it as an effort to rein in the influence of corporations on news organizations.

The longtime anchor claims that CBS broke his contract and committed fraud by sidelining him in the wake of a controversial story he reported in 2004 about then-President George W. Bush’s Vietnam-era service in the Texas Air National Guard. The network was forced to step back from the piece after it admitted that documents cited in the story could not be authenticated. Anxious about the political blowback triggered by the story, CBS then sought to curtail reporting on the issue because of the business concerns of its then-parent company, Viacom, Rather alleged. He said he was pushed out of the anchor chair and essentially warehoused, actions that damaged his reputation and made it hard for him to find work after leaving CBS.

The case appeared to be moving to trial until today, when the appellate division of the New York Supreme Court issued a ruling dismissing the suit in its entirety and finding that Judge Ira Gammerman erred in his decisions on the case.

CBS was jubilant about the ruling. “CBS’s position on each claim was upheld, as we have said they would be for the past two years,” the network said in a statement. “The court agreed with CBS that none of Mr. Rather’s causes of action state a valid claim. The court agreed that this has never been anything more than a contract dispute and that Mr. Rather did not and could not plead that there was any breach of his contract. The court unequivocally rejected Mr. Rather’s allegations of fraud and breach of fiduciary duty.”

The network added that it expects a second suit that Rather has filed against CBS Chief Executive Leslie Moonves and former CBS News President Andrew Heyward to be dismissed as well.

In its ruling, issued more than five months after the parties argued the case before the appellate division, the panel found that CBS did not violate the terms of Rather’s contract because it continued to pay him, citing the contract’s ‘pay or play’ provision. The appellate division wrote that Gammerman should have dismissed Rather’s breach of contract claim against CBS, rejecting the anchor’s argument that the network broke his deal by sidelining him.

“This claim attempts to gloss over the fact that Rather continued to be compensated at his normal CBS salary of approximately $6 million a year until June 2006 when the compensation was accelerated upon termination, consistent with his contract,” the court wrote. Rather’s contract did not require “that CBS actually use Rather’s services or broadcast any programs on which he appears, but simply retains the option of accelerating the payment of his compensation under the agreement if he is not assigned to either program.”

The appellate division found that Rather failed to support his claim that CBS damaged his future business opportunities, saying “it would be speculative to conclude that any action taken by CBS would have alone substantially affected his market value at that time.” And the appeals judges wrote that he could not sue for breach of fiduciary duty because CBS did not owe Rather a fiduciary duty.

Rather had no grounds on which to claim fraud, the court found, dismissing as speculative and irrelevant his argument that he is making substantially less money at his current job at HDNet than the $4 million annually he believed he could have made if he continued at CBS. And the anchor failed to prove that the fall-out from CBS’ handling of the Bush story curtailed other job prospects.

“As to lost opportunities in the trade, while Rather has shown his own track record of earnings and the earnings of other trade professionals, his future earnings are speculative, because there is no basis to conclude that his employment status would not have changed, regardless of CBS’s actions, once he determined to make the broadcast,” the ruling said. “Rather never identified a single opportunity with specified terms that was actually available to him and which he declined to accept because of CBS’ actions.”

-- Matea Gold