Julie Hilden

Why Dan Rather's Suit Against CBS Was Dismissed

By JULIE HILDEN
Monday, October 12, 2009

On September 29, the New York State Supreme Court's Appellate Division (First Department) unanimously dismissed former CBS anchor Dan Rather's suit against the network. In this column, I'll explain why the Appellate Division ruled against Rather.

The Basis of Rather's Claims

The suit had its roots in the controversy over Rather and his production team's claim – in a September 8, 2004 broadcast -- to have uncovered a series of internal memos from the Texas Air National Guard, criticizing President George W. Bush's service with the Guard. With the 2004 presidential election looming, the story drew significant attention.

However, as readers may recall, soon after the broadcast, bloggers presented evidence that the memos were forgeries. Among other things, the bloggers detailed the limited capacities and specific features of the military typewriters used at the time when Bush served, and concluded that the memos at issue could not possibly have been produced by such typewriters.

The incident thus marked a crucial point in the development of "citizen journalism," and was a great embarrassment to Rather and to CBS.

In response to the controversy, Rather retracted the story, and CBS fired the main producer on the story, Mary Mapes. Later, Rather claims, he was "warehoused" – that is, kept on staff but also kept idle -- by the network during the period from March 9, 2005, to June 26, 2006, when he was terminated. Rather went on to take a position with HDNet.

In 2007, Rather sued the network for breach of contract and related claims. That same year, Rather still insisted, on "Larry King Live," that the Bush National Guard story was true.

After last month's dismissal of the suit by the Appellate Division, Rather's attorneys have said that they will go to the New York Court of Appeals -- which, as the state's highest court, will render the final decision in the case.

The unanimity of the five-judge Appellate Division panel suggests that Rather's chances with the Court of Appeals are not good. Yet, the case does pose clean questions of contract interpretation – in particular, questions regarding the interrelationship of various contract clauses -- on which the Court of Appeals could simply go the other way.

Moreover, it's worth keeping in mind that the trial judge in this case had dismissed only some of Rather's claims – suggesting that perhaps reasonable minds might differ here, and that at least part of Rather's case could survive after the Court of Appeals' review.

Overall, I would say the odds are strongly against Rather now, but it's too early to count him out entirely.

The Key Issue: Was CBS Entitled to "Warehouse" Rather?

In his suit, Rather claims that CBS should have paid him for his lost opportunities to work elsewhere during the fifteen-month period of his "warehousing." But the Appellate Division held, in essence, that CBS was entitled under the contract to warehouse Rather, as opposed to putting him on the air, as long as it kept its contractual promise to pay him., which it did.

The Appellate Division's tone suggested, too, that it was crying no tears for Rather. It pointed out that Rather continued to draw down his six-million-dollar-a-year salary from CBS during the period in question – a point it said that Rather's attorneys had conveniently "glossed over." And -- quoting CBS's brief – the Appellate Division stated that "the notion that a network would cede to a reporter editorial authority to decide what stories will be aired is absurd."

The court seemed sympathetic, in other words, to the problems CBS would face if it continued to put a reporter whose work it (and he) had fairly recently retracted on the air – and seemed to gravely doubt that the contract between Rather and CBS had been meant to guarantee the reporter that right. After all, what if Rather had kept producing more stories that had each had to be retracted? Would the network have to keep putting him on the air indefinitely?

Treating Rather as an Ordinary Employee – No More, No Less

The strong flavor of the opinion, then, is that Rather had become a loose cannon, and that CBS, as his employer, was still entitled to call the shots. Indeed, the Appellate Division, in dismissing Rather's claims for breach of fiduciary duty, reaffirmed that this was in essence an ordinary employment relationship, and that Rather – despite his claim to be the face of CBS – was at base an ordinary employee, no matter how great his salary or influence.

Thus, the court was not persuaded by Rather's legal team's reliance on a decision that found fiduciary duties – which are separate and apart from contractual duties -- running from a record company to the naïve "fledgling musicians" who eventually became The Beatles. It emphasized that Rather was a world away from the young Beatles – a power player with a top agent negotiating his contract, who did not need the fiduciary protections to which the young musicians were found to be entitled.

In sum, the court held that -- neither too important to transcend employee status, nor vulnerable enough to trigger fiduciary duties -- Rather would simply have to live with his contract like everyone else.

Insult to Injury: The Appellate Division's Skepticism as to Rather's Opportunities

The Appellate Division also suggested, several times, that even if Rather's suit were to go forward, he would probably not be able to prove that he was damaged by CBS's actions. Here, however, I think the court went much too far.

Rather claimed that the "warehousing" period damaged him in that it prevented him from taking advantage of multimillion-dollar outside opportunities that would otherwise have been forthcoming. And, indeed, when Rather was finally terminated, HDNet did hire him – within a matter of months.

Of course, by then, the Texas National Guard documents scandal had faded in the memory of many. But it seems likely that Rather would also have had similar offers earlier – albeit, not for some substantial period after the scandal broke and the retraction was made. He remained, after all, one of the country's most famous journalists.

Yet the Appellate Division seemed skeptical that Rather would have worked at all – or, at least, could prove he would have worked. It noted that "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."

But that point seems unfair to Rather – for the very fact that he was embroiled in a contract fight with CBS probably drove any other potential suitors away. Had HDNet tried to steal Rather from CBS earlier, for instance, it might well have had its own tortious-interference-with-contract suit from CBS on its hands.

Just because CBS did not want to put Rather on the air, did not mean it wanted to see someone else immediately do so. And CBS might well have anticipated that, on another network, Rather might turn to criticizing CBS and trying to vindicate himself. Indeed, it's possible that this kind of fear – that a disgruntled reporter would move to a competitor and attack his or her original network -- might have been one of the reasons that led attorneys to create the "warehousing" option in the contract in the first place.

Assuming Rather makes good on his threat to take his case all the way to the New York Court of Appeals, it will be interesting to see what that court's take will be, given the complexity of the case.


Julie Hilden, who graduated from Yale Law School, practiced First Amendment law at the D.C. law firm of Williams & Connolly from 1996-99 and has been writing about First Amendment issues for a decade. Hilden, a FindLaw columnist, is also a novelist. In reviewing Hilden's novel, 3, Kirkus Reviews praised Hilden's "rather uncanny abilities," and Counterpunch called it "a must read.... a work of art." Hilden's website, www.juliehilden.com, includes free MP3 and text downloads of the novel's first chapter.