Remember the $132 million Delaware Chancery Court suit that Viacom and its lawyers at Paul Weiss Rifkind Wharton & Garrison filed in September against the former owners of Harmonix Music Systems, the company behind the once-mighty Rock Band video game? After Rock Band’s popularity plummeted, Viacom was forced to write off nearly its entire investment in Harmonix, which it acquired in 2006 in a $175 million deal. Viacom claimed in the Delaware suit that it vastly overpaid former Harmonix shareholders under an earn-out agreement in the sale contract, and it demanded that the stockholders repay the difference.
As it turns out, almost a year before Viacom filed its complaint, Harmonix stockholder representative Walter Winshall had hired Sidley Austin to file his own Delaware suit against Viacom over the very same earn-out payments. The suit was the mirror image of Viacom’s case, claiming that it was Harmonix’s shareholders who were short-changed. And now, in a ruling issued Nov. 10 by Chancellor Leo Strine Jr., the case is history. Strine granted the defendants’ motion to dismiss, leaving Viacom to press its own claims against Winshall and the other shareholders.
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