The 2019 merger between Viacom and CBS to form ViacomCBS (later renamed Paramount Global) generated extensive litigation that ultimately settled. The Merger — and the Merger-related litigation — followed events involving the two companies going back to 2016, and in fact there had been prior litigation back in 2016 as well. National Amusements, Inc. (NAI), which owned a majority of the voting shares of both CBS and Viacom, sought coverage for the defense and settlement of the 2019 litigation from its D&O insurers. The insurers contended that the 2019 post-Merger litigation and the 2016 lawsuits were interrelated, and therefore that the settlement was covered under policies in force in 2016, rather than under the policies in force in 2019.

In an opinion dated February 17, 2025, but only recently made public, the Delaware Superior Court granted NAI’s motion for summary judgment, holding that the 2019 Suit is not interrelated with the 2016 Suits, and therefore that costs associated with the 2019 Suit were covered under the 2019 Policy and not under the 2016 Policy. The court’s analysis, in which it concluded that the two sets of litigation were not “meaningfully linked,” is detailed and interesting, and helps to explain what factors are relevant in the analysis of the meaningfully linkage issue. A copy of the court’s opinion can be found here.

Background

In 2016 and 2018, prior attempts to merger CBS and Viacom failed. Events surrounding the 2016 attempt were the subject of five separate lawsuits (collectively, the 2016 Suits), one of which was a suit brought against NAI and other defendants by Viacom’s Class B shareholders (the Class B Suit), alleging that the defendants had breached their fiduciary duty by allowing an incapacitated Sumner Redstone to remain as a director and controller of Viacom. The plaintiffs asked the court to declare that Sumner Redstone was incapable of serving as a director and that all actions taken by Sumner Redstone were invalid. All of the 2016 Suits were settled or dismissed.

After the 2019 merger, former Viacom shareholders filed several actions, later consolidated, alleging that the Merger was unfair to Viacom shareholders because the deal’s exchange ratio overpriced CBS’s stock. The plaintiffs in the 2019 Suit sought damages for the allegedly inadequate merger consideration. Among other things, the 2019 suit referred to the Merger as the culmination of Shari Redstone’s four-year scheme to assume control of the media empire of her father, Sumner Redstone.

Shari Redstone, Viacom, and NAI sought indemnification for the 2019 Suit from the insurers, alleging, at the time, that the 2019 Suit should be treated as having been first made in 2016, because the 2016 Suits and the 2019 Suit involved related Wrongful Acts. In the subsequent coverage litigation, however, NAI and Shari Redstone contended that the two sets of litigation were not interrelated, and that the 2019 Suit should be covered under the 2019 policies.

The parties’ coverage litigation has been the subject of a number of prior decisions, including an August 2023 decision by Judge Rennie that the policies’ bump-up exclusion did not preclude coverage for the settlement of the 2019 Suit, as discussed here.

The Relevant Policy Provisions

The 2019 Policy Interrelated Claim Provision states that “all Claims arising out of the same Wrongful Act and all Interrelated Wrongful Acts of the Insureds shall be deemed to be one Claim, and such Claim shall be deemed to be first made on the date of the earliest of such Claims is first made.”

Interrelated Wrongful Acts are defined in the 2019 policies as “all Wrongful Acts that have as a common nexus any fact, circumstance, situation, event, transaction, cause or series of related facts, circumstances, situations, events, transactions or causes.”

The Court’s February 17, 2025, Order

In his February 17, 2025, Opinion, Superior Court Judge Sheldon K. Rennie granted NAI’s motion for summary judgment, holding that the 2019 Suit was not interrelated with the 2016 Suits.

In reaching this conclusion, Judge Rennie considered existing Delaware case law (including the Delaware Supreme Court’s recent holding in the Alexion Pharmaceuticals case, discussed here) stating that in order for claims to be interrelated they must have “some meaningful linkage.” In order to determine whether meaningful linkage exists, the primary factor, the court said, is “if they involve the same conduct.” Beyond the relatedness of the underlying conduct, courts should consider four additional factors, the parties; the relevant time period; a sampling of relevant evidence; and the claimed damages. While “absolute identify is not required,” a “tangential link” is insufficient.

Judge Rennie also noted the Delaware Supreme Court has “instructed lower courts to implement ‘meaningful linkage’ in a coverage context broadly, where possible, to find coverage.”

Judge Rennie found that the primary relatedness factor – the conduct underlying the 2019 Suit and the 2016 Suits – “weighs in favor of finding that the claims are not meaningfully linked. Indeed, he said, “the complaints seem to suggest the opposite result.” Though both sets of suits involve alleged breaches of fiduciary duty, the suits “challenge distinct wrongful acts and involve different legal theories.” The 2019 Suit alleged that Viacom and CBS boards ignored CBS’s financial difficulties and overvalued CBS’s stock, resulting in inadequate consideration for Viacom stockholder. The Class B Action sought to invalidate certain corporate actions because of Sumner Redstone’s incapacity. Accordingly, because the two sets of litigation alleged different Wrongful Acts, “the most important meaningful linkage factor supports finding that the two suits are not related.”

The second factor, the identify of the parties, does not, the court said, support either side. Several defendants, including NAI and Shari Redstone, were named in both suits, whereas the Class B suit also named Sumner Redstone and levied most of the allegations against him. The plaintiffs in the two suits were slightly different as well, as the Class B lawsuit involved a specific set of Viacom shareholders, whereas the 2019 Suit involved all Viacom shareholders. Judge Rennie said that this factor “does not support either parties’ relatedness position.”

The third factor, the suits’ time periods, slightly supports the conclusion that the two sets of litigation are not interrelated. While the 2019 Suit relates to the 2019 Merger and the 2016 Suits relate to 2016 board governance and control decision, the 2019 Suit references conduct in 2016 that formed the basis of the 2016 suits. However, Judge Rennie said, the majority of the 2019 complaint deals with actions after 2016, and so, he said, this factor weighs slightly in favor of finding the suits are not meaningfully related.

The fourth factor, a sampling of the evidence, also supports finding that the two sets of litigation are not related. The relevant evidence in the Class B suit  pertained to Sumner Redstone’s mental capacity. The 2019 suit focused on the 2019 Merger negotiations. While there is “some overlap,” most of the these pools of evidence are distinct.

The fifth factor, the damages claimed, supports the conclusion that the two sets of litigation are not meaningfully linked, as the 2019 Suit sought monetary damages for inadequate merger consideration, while the Class B suit sought declaratory and judgment relief.

In reaching his conclusion that the two sets of litigation are not interrelated, Judge Rennie also rejected the insurers’ argument that prior to filing this coverage lawsuit, NAI and Shari Redstone had themselves contended that the 2019 Suit and the 2016 Suits were interrelated, the opposite of the position they argued for in this case. Judge Rennie refused to consider this evidence falling outside of the policies’ text, saying that, under the Delaware Supreme Court’s First Solar decision (discussed here), such extrinsic evidence can be considered only if there is “remaining doubt” whether claims are interrelated. Because here there is no “remaining doubt” here that the two sets of litigation are not related, the court said it could not consider the proposed extrinsic evidence.

Discussion

If nothing else, the court’s analysis shows what an intricate and fact-specific inquiry the “meaningful linkage” analysis can be. The court found that given the various identified factors, the linkage between the two sets of litigation was not sufficiently meaningful for the court to conclude that claims were interrelated.

I can imagine the insurers’ frustration with the court’s conclusion given that both sets of litigation related to Shari Redstone’s four-year campaign to try to merge Viacom and CBS. I can imagine that in their eyes that because the Merger and ensuing litigation were the culmination of a continuous effort on Ms. Redstone’s part to assume control of her father’s media empire, there clearly is a “common nexus” running through all of the litigation.

I can also imagine the insurers’ frustration that the court refused to even consider the fact that originally NAI and Ms. Redstone had in fact even argued that the 2019 Suit and the 2016 Suits were interrelated. As Geoffrey Fehling of the Hunton Andrews Kurth law firm said in his March 6, 2025, LinkedIn post about this decision (here), the court’s conclusion that where the outcome of the “meaningful linkage” analysis is clear, the court cannot consider extrinsic evidence, represents “a meaningful limitation on Delaware courts’ ability to look at extrinsic evidence to negate coverage.”

The most direct answer to the insurers’ frustration is that despite some apparent commonality between the claims, the overall relevant specific facts, under the court’s careful analysis, led to the conclusion that linkage between the two sets of litigation was not sufficiently meaningful to support a finding that they were related.

Perhaps a more instructive response to the insurers’ frustration can be found in Judge Rennie’s citation, prior to his analysis of the respective linkage factors, to the Delaware Supreme Court’s admonition to lower courts “to implement ‘meaningful linkage’ in a coverage context broadly, where possible, to find coverage.” That is, as Judge Rennie put it, ambiguity is to be “resolved in favor of finding coverage.”  As the insurers undoubtedly might put it, Judge Rennie viewed it as his job to try to find coverage here, and that explains his analysis more than anything else.

Long-time observers with a certain cynical cast of mind might well say that this is just another example of the Delaware courts’ predisposition in favor of policyholders in coverage disputes. Indeed, given insurers’ longstanding concerns about this supposed predisposition, I have long wondered why insurers don’t add choice of forum and choice of law provisions to their policies, to ensure that Delaware’s courts are not deciding coverage disputes on their policies.

While I certainly can appreciate the frustration the insurers might feel from this opinion, and while I can understand that the outcome here might feed the perception that this decision is just one more example of Delaware’s courts’ policyholder friendliness, it is worth noting that in its recent Alexion Pharmaceuticals decision, discussed here, the Delaware Supreme Court ruled in the insurers’ favor, and against the policyholder, in reversing a Superior Court’s ruling in that case that a later lawsuit and an earlier noticed subpoena were not interrelated. The Supreme Court held that they were interrelated. The Supreme Court’s opinion in that case suggests that perhaps the Delaware courts are not irreversibly policyholder friendly. It may also suggest to the insurers at least the possibility that they might do better on appeal of this decision to the Supreme Court.