NEW YORK — During a court hearing last week, Dan Rather's long and costly battle against CBS Corp. appeared to be finally getting some traction. Ira Gammerman, the New York Supreme Court judge hearing motions on the case, repeatedly urged the squabbling parties to resolve their conflicts over deposition and discovery so Rather's lawsuit against his former employer could go to trial. He ruled that Rather could depose Viacom Chairman Sumner Redstone, dismissing CBS' objections.
"Let's get this case moving," Gammerman said.
But Tuesday, a state appellate court halted the $70-million suit in its tracks. In a unanimous decision, the appellate panel dismissed the case in its entirety, writing that Gammerman had erred in allowing Rather to pursue his allegations of breach of contract, breach of fiduciary duty and fraud.
Rather's attorneys immediately vowed to appeal. But the decision represented a severe blow to the 77-year-old newsman, who has been personally financing the suit for two years. Pursuing the case has estranged him from the news division where he worked for 44 years and led CBS executives to disparage him recently in strikingly personal terms.
Rather declined to comment, referring questions to his legal team. Martin Gold, Rather's lead attorney, said the anchor remains "resolute" and determined to pursue the suit. "He's already committed so much to this case, he's certainly not going to abandon it now," Gold said.
Gold characterized the appellate court's ruling as a "dismissal on technical grounds" and said that the appellate panel appeared "hostile" to Rather's position from the outset.
"I think the decision was wrong on the law," he said. "I hope we can convince the Court of Appeals that they were wrong."
CBS attorneys said they believe there is a low probability that the Court of Appeals will take the case and cast Tuesday's decision as an unmitigated victory.
"We're really happy," said Lou Briskman, general counsel for CBS. "Everything that we thought was correct when the complaint was filed, the court reaffirmed today."
Briskman said that he expects a second suit that Rather filed, against CBS Chief Executive Leslie Moonves and former CBS News President Andrew Heyward, to be dismissed as well. If Rather does not prevail with the Court of Appeals, that could end what has been a searing chapter for both the anchor and his former network.
"It's painful to litigate against Dan because Dan was our anchorperson, and we think very highly of him," Briskman said. "I don't know where he got this advice for this lawsuit, and I know he spent a lot of time and a lot of money, and I'm hoping it's at an end."
Rather's suit stems from a controversial "60 Minutes II" piece he reported in 2004 alleging that former President George W. Bush received preferential treatment during his Vietnam-era service in the Texas Air National Guard. In the story, Rather cited documents CBS had obtained, purportedly written by Bush's commanding officer at the time. But after the validity of the documents came under intense scrutiny, the network conceded that they could not be authenticated.
Rather said he was forced to apologize for the piece and dissuaded from further reporting on the topic because CBS was worried about the political repercussions for its then-parent company, Viacom. He said he was pushed out of the anchor chair, sidelined at the network and ultimately shown the door prematurely, actions that damaged his reputation and made it hard for him to find work after leaving CBS.
The heart of his suit is his allegation that CBS breached his contract by not providing him with the airtime or resources he was guaranteed in the story's aftermath. But the appellate court, which got the case after both CBS and Rather appealed various rulings, forcefully rejected that argument, citing the "pay or play" provision of the anchor's contract.
"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 panel also found that Rather failed to support his allegation that CBS hurt his future business opportunities, saying that "it would be speculative to conclude that any action taken by CBS would have alone substantially affected his market value at that time."
Rather had no grounds on which to allege fraud, the court found, dismissing as irrelevant his argument that he is making substantially less money in his current post at HDNet than the $4 million annually he believed he could have commanded if he continued at CBS. And the anchor failed to prove that the fallout from CBS' handling of the Bush story curtailed other job prospects.
"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," the court wrote.