## Facts

- CBS had a dual-class capital structure in which National Amusements, Inc. (NAI), through high-vote shares, held roughly 80% of CBS’s voting power but about 10% of its economic interest; public stockholders held low-vote shares.
- NAI, controlled by Shari Redstone, also controlled Viacom and pressed for a CBS–Viacom merger; a prior 2016 merger effort had been declined after review by a CBS special committee.
- In 2018, after Redstone again proposed a merger, CBS formed a special committee of independent directors to evaluate the transaction.
- The special committee was willing to consider economic terms but sought governance protections, including a majority-independent post-merger board for a multi-year period and a vote by unaffiliated CBS stockholders on any merger.
- The committee concluded the controller would not accept those protections and decided not to recommend the merger.
- Independent directors feared the controller would use voting control to remove directors, reconstitute the board, and cause CBS to pursue a merger on terms harmful to minority stockholders.
- CBS’s board considered an “extraordinary” defensive measure: a special stock dividend designed to substantially dilute NAI’s voting control (from about 80% to about 17%) by expanding voting power among other stockholders; CBS represented it would not implement the dividend without court approval.
- CBS and the special committee sought an emergency temporary restraining order (TRO) to prevent NAI/Redstone from altering governance documents, removing/replacing directors, or otherwise interfering with the board’s process while fiduciary-duty claims were litigated.

## Issues

1. Whether CBS satisfied the TRO requirements (likelihood of success, imminent irreparable harm, and balance of equities) to justify restraining the controller from exercising stockholder voting and governance rights pending further proceedings.
2. Whether, in a board–controller conflict involving perceived threats to minority stockholders, the court should preserve the board’s ability to implement a voting-dilutive dividend before adjudicating the dividend’s legality and the controller’s alleged misconduct.

## Decision

- The Court of Chancery denied CBS’s motion for a TRO.
- The court declined to restrain the controller from exercising stockholder rights, including actions that could change board composition, on the expedited TRO record.
- The ruling did not decide the merits of the fiduciary-duty claims or the legality of the proposed dilutive dividend, and the dispute later settled without a final merits adjudication.

## Legal Principles

- A TRO is extraordinary relief; the movant must show (i) a reasonable likelihood of success on the merits, (ii) imminent irreparable harm absent relief, and (iii) that the balance of equities favors an injunction.
- In deciding emergency relief, the court avoids effectively determining novel and consequential merits questions on a truncated record.
- Delaware law generally recognizes a controlling stockholder’s statutory and contractual rights to vote shares and exercise governance powers (including director elections and permissible bylaw action); enjoining those rights requires a developed showing of actionable wrongdoing.
- Where both sides propose measures that could significantly reallocate corporate power (e.g., board action to dilute controller voting power versus controller action to replace directors), maintaining “status quo” may itself be contested; the court may refuse interim relief that would materially shift power before merits review.
- Potential later remedies (fiduciary-duty review and equitable relief) can weigh against emergency restraints when immediate, non-remediable harm is not clearly established on the record presented.

## Conclusion

The Court of Chancery refused to grant emergency relief that would have curtailed a controller’s voting and governance rights while the court had not yet developed a full record or addressed the legality of the board’s proposed voting-dilutive dividend, leaving the central board-versus-controller power dispute unresolved at the TRO stage.


CBS Corp. v. Nat'l Amusements, Inc., 2018 WL 2263385 (Del. Ch. May 17, 2018)