National Amusements called the lawsuit "outrageous" and said that it disputes CBS' "characterization of recent events.We intend to defend our position vigorously and look forward to presenting our arguments in court".
It then lists a number of ways that Shari has allegedly abused her power to undermine the board and hijack control for herself and National Amusements.
Both companies are under the umbrella of Redstone-controlled holding company National Amusements. Should the CBS board declare the dividend, it would dilute National Amusements' voting interest from approximately 79% to 17%.
According to reports, CBS has always been reluctant to do the deal, first starting in 2016, when Redstone initially pushed the idea.
CBS said in its lawsuit it is seeking to prevent the Redstones from ousting any directors or changing the company's bylaws before its full board meets on Thursday to consider issuing a dividend that would curb National Amusements' voting power.
National Amusements reacted by saying it is "outraged" that CBS would file a lawsuit, noting that it has "no intention of replacing the CBS board or forcing a deal that was not supported by both companies".
The two companies have been locked in an unusual tussle. But getting them back together has proved challenging.
Indeed, CBS shareholders appear to be more content without the weight of a relaunched Viacom to worry about. CBS Chief Executive Officer Leslie Moonves would prefer his own people in charge.
Redstone wants the two companies to combine, and this is the second time in two years that she has tried to make a merger happen. Since then, the two sides have argued over price and who will lead the combined company. Dauman later resigned as Viacom's CEO.
"In a move that escalates an internal battle for control, CBS has filed a lawsuit in Delaware Chancery Court against Shari Redstone, Sumner Redstone and National Amusements, Inc., now the controlling stakeholder for CBS", The Hollywood Reporter's THR, Esq., reports.
The 94-year-old Redstone's mental health was at the center of a more than year-long fight over Viacom.