Breaking: Appellate court dismisses Dan Rather’s lawsuit against CBS; Rather vows to appeal


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More than two years after Dan Rather filed a $70-million lawsuit against CBS for breach of contract and fraud, a New York Supreme Court appellate division has tossed out his claim.

The ruling, handed down today, dismissed Rather’s claims that CBS News broke his contract and committed fraud by sidelining him in the wake of a controversial story he reported about President George W. Bush’s Vietnam-era service in the Texas Air National Guard. The anchor alleged that CBS sought to curtail reporting on the story because of pressure from its then-parent company, Viacom.


But in its ruling, the appeals 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 finding was a major blow to the longtime newsman, who had cast the suit as part of a broader effort to rein in the influence of corporations on news organizations.

[Updated at 11:11 a.m.: CBS was jubilant about the ruling. “We’re studying the decision right now, but it appears to be a total victory – and vindication for CBS’ position,” said CBS News spokesman Jeff Ballabon. Neither Rather nor his attorneys immediately returned a call for comment.

In its ruling, issued more than five months after the parties argued the case before the appellate division, the court reversed Judge Ira Gammerman’s decisions on the case.

“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,” the ruling said.

The appellate division found that Gammerman should have dismissed Rather’s breach of contract claim against CBS, rejecting the anchor’s argument that he was warehoused by the network constituted a violation of his deal.

“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.

The appellate division wrote that Rather had no grounds on which to claim fraud, dismissing 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 at CBS as speculative and irrelevant. 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.”

[Updated at 11:22 a.m.: Rather’s attorneys said they plan to appeal. “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.”]

-- Matea Gold