Rather v. Cbs Corp.

• Decision Date: 29 September 2009
• Docket Number: 475C,475.,475B,475A
• Citation: 2009 NY Slip Op 6738,886 N.Y.S.2d 121,68 A.D.3d 49
• Parties: DAN RATHER, Respondent-Appellant, v. CBS CORPORATION, Appellant-Respondent, and VIACOM, INC., et al., Respondents.
• Court: New York Supreme Court — Appellate Division

68 A.D.3d 49

2009 NY Slip Op 6738

886 N.Y.S.2d 121

DAN RATHER, Respondent-Appellant, v. CBS CORPORATION, Appellant-Respondent, and VIACOM, INC., et al., Respondents.

475.

475A

475B

475C

Appellate Division of the Supreme Court of New York, First Department.

Decided September 29, 2009.

Weil, Gotshal & Manges LLP, New York City (James W. Quinn, Mindy J. Spector and Yehudah L. Buchweitz of counsel), and CBS Law Department, New York City (Anthony M. Bongiorno and Mary Catherine Woods of counsel), for appellant-respondent and respondents.

Sonnenschein Nath & Rosenthal LLP, New York City (Martin R. Gold, Gary Meyerhoff, Edward J. Reich, Daniel Pancotti and Zhubin Parang of counsel), for respondent-appellant.

OPINION OF THE COURT

CATTERSON, J.

This action asserting breach of contract and related tort claims arises out of a September 8, 2004 broadcast that plaintiff Dan Rather narrated on the CBS 60 Minutes II television program about then President George W. Bush's service in the Texas Air National Guard. Rather alleges that CBS disavowed the broadcast after it was attacked by Bush supporters, and fraudulently induced him to apologize personally for the broadcast on national television as well as to remain silent as to his belief that the broadcast was true. Rather alleges that, following President Bush's reelection, CBS informed him that he would be removed as anchor of the CBS Evening News. Rather claims that although his employment agreement required that, in the event he was removed as anchor, CBS would make him a regular correspondent on 60 Minutes or immediately pay all amounts due under the agreement and release him to work elsewhere, CBS kept him on the payroll while denying him the opportunity to cover important news stories until May 2006 when it terminated his contract, effective June 2006.

Rather commenced this action against CBS Corporation, Viacom Inc., and individual defendants Leslie Moonves, Sumner Redstone and Andrew Heyward in September 2007. He asserted, inter alia, claims of breach of contract and breach of fiduciary duty against CBS, claims of fraud against CBS and the individual defendants and a claim of tortious inducement of breach of contract against Viacom and the individual defendants.

Now, Rather appeals and defendants CBS Corporation and Viacom Inc. cross-appeal from orders entered by Supreme Court on April 11, 2008 and September 23, 2008, which granted defendants' motion to dismiss the claims for fraud, breach of the implied covenant of good faith and fair dealing and tortious interference with contract, and denied defendants' motion to dismiss the claims for breach of contract and breach of fiduciary duty.

For the reasons set forth below, this Court finds that the motion court erred in denying the defendants' motion to dismiss the claims for breach of contract and breach of fiduciary duty, and therefore we find the complaint must be dismissed in its entirety.

As a threshold matter, we find that Rather's appeal from the portion of the April 11, 2008 order that dismissed his fraud claims against the individual defendants was not rendered academic by his service of an amended complaint against the remaining defendants. (See Velez v Feinstein, 87 AD2d 309, 312-313 [1982], lv dismissed in part and denied in part 57 NY2d 737 [1982].) Moreover, for reasons set forth below, we find that Rather's service of a second amended complaint does not render moot his cross appeal from that portion of the September 23, 2008 order that dismissed his fraud claim. On the record before us, we assume, without deciding, that Rather's claim of breach of the implied covenant of good faith and fair dealing asserted as against CBS in the original complaint may also properly be reviewed. (Cf. O'Ferral v City of New York, 8 AD3d 457, 459 [2d Dept 2004] [since court granted leave to file amended complaint that superseded original complaint, issue of disposition of claim included in original but not in amended complaint is academic].)

At the outset, we find that Supreme Court erred in declining to dismiss Rather's breach of contract claim against CBS. Rather alleges that he delivered his last broadcast as anchor of the CBS Evening News on March 9, 2005, and that, since he was only nominally assigned to 60 Minutes II and then 60 Minutes, he should have received the remainder of his compensation under the agreement in March 2005. Rather claims that, in effect, CBS "warehoused" him, and that, when he was finally terminated and paid in June 2006, CBS did not compensate him for the 15 months "when he could have worked elsewhere." 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.

Contractually, CBS was under no obligation to "use [Rather's] services or to broadcast any program" so long as it continued to pay him the applicable compensation. This "pay or play" provision of the original 1979 employment agreement was specifically reaffirmed in the 2002 Amendment to the employment agreement.

That Amendment also provided, in subparagraph 1 (g), that if CBS removed Rather as anchor or co-anchor of the CBS Evening News and failed to assign him as a correspondent on 60 Minutes II or another mutually agreed-upon position, the agreement would be terminated, Rather would be free to seek employment elsewhere, and CBS would pay him immediately the remainder of his weekly compensation through November 25, 2006.

We agree that subparagraph 1 (g) must be read together with subparagraph 1 (f), which provided that if CBS removed Rather from the CBS Evening News, it would assign him to 60 Minutes II "as a full-time Correspondent," and if 60 Minutes II were canceled, it would assign him to 60 Minutes as a correspondent "to perform services on a regular basis." However, this construction does not render any language of the agreement inoperative, since, consistent with the "pay or play" clause, neither subparagraph 1 (g) nor 1 (f) requires 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.

It is clear that subparagraph 1 (g) applies only to a situation where CBS removed Rather as anchor of CBS Evening News and then failed to assign him "as a Correspondent on 60 Minutes II." The amended complaint alleges that when Rather no longer performed anchor duties at CBS, he was assigned to 60 Minutes II. Thus, Rather implicitly concedes that CBS fully complied with subparagraph 1 (g).

Supreme Court erred in finding that subparagraph 1 (g) modified the "pay or play" provision when it ignored the initial prefatory clause to the rest of that subparagraph, which states "[e]xcept as otherwise specified in this Agreement." As the defendants correctly assert, the seven words are crucial because they require subparagraph 1 (g) to be read together with the "pay or play" provision, and thus, subparagraph 1 (g) cannot modify the "pay or play" provision to mean that CBS must utilize Rather in accordance with some specific standard by featuring him in a sufficient number or types of broadcasts. As the defendants aptly observed, "the notion that a network would cede to a reporter editorial authority to decide what stories will be aired is absurd."

Rather's claim for lost business opportunities due to CBS's failure to release him to seek other employment is insufficiently supported. Since, according to Rather's own allegations, an immediate result of the September 8, 2004 broadcast was criticism that he was biased against Bush, it would be speculative to conclude that any action taken by CBS would have alone substantially affected his market value at that time. Rather's claim for damages for loss of reputation arising from the alleged breach of contract is not actionable. (Dember Constr. Corp. v Staten Is. Mall, 56 AD2d 768 [1st Dept 1977].)

Rather's cause of action for breach of fiduciary duty must also be dismissed. Supreme Court held that the issue of "whether a fiduciary duty has been created in the course of the long relationship between Rather and CBS is really a question of fact." Previously, the court determined that "the length of [Rather's] contractual relationship with CBS, and the nature of the service that [Rather] performed under his contracts" created an issue of fact that could not be resolved on motion. This was error.

Rather claims that his "four-decade history" with CBS constituted a "special relationship that imposed fiduciary duties upon CBS toward [Rather]." The law in this Department, and indeed enunciated in every reported appellate-division-level case, is that employment relationships do not create fiduciary relationships. Simply put, "[the employer] did not owe plaintiff, as employee, a fiduciary duty." (Angel v Bank of Tokyo-Mitsubishi, Ltd., 39 AD3d 368, 370 [1st Dept 2007], citing Weintraub v Phillips, Nizer, Benjamin, Krim & Ballon, 172 AD2d 254 [1st Dept 1991]; see Schenkman v New York Coll. of Health Professionals, 29 AD3d 671, 672 [2d Dept 2006] ["(employees) failed to plead any facts demonstrating how the arm's length, employer-employee relationship ... gave rise to any fiduciary duty"]; Cuomo v Mahopac Natl. Bank, 5 AD3d 621, 622 [2d Dept 2004], lv denied 3 NY3d 607 [2004].)

The length of Rather's tenure at CBS is irrelevant to, and does not support, this claim of a fiduciary relationship (see e.g. Michnick v Parkell Prods., 215 AD2d 462 [2d Dept 1995]), nor does Rather's status as "the public face of CBS News after Walter Cronkite retired." (See e.g. Maas v Cornell Univ., 245 AD2d 728 [3d Dept 1997].)

Supreme Court's reliance on Apple Records v Capitol Records (137 AD2d 50 [1st Dept 1988]) and Wiener v Lazard Freres &amp Co. (241 AD2d 114 [1st Dept...