Rather, 77, filed suit against CBS in September 2007 on grounds of fraud, breach of fiduciary duty and breach of contract in relation to a September 2004 broadcast about President George W. Bush's military service, which relied on documents that were critical of Bush's service record.
In the suit, Rather claimed that CBS "warehoused" him and did not appropriately compensate him during his final 15 months with the company before his June 2006 termination. Rather stepped down from the Evening News in May 2005, but continued to report for 60 Minutes before he was permanently let go.
"This claim attempts to gloss over the fact that Rather continued to be compensated at his normal CBS salary of approximately $6 million a year until June 2006," Justice James Catterson wrote in the dismissal. "CBS was under no obligation to use Rather's services or to broadcast any program so long as it continued to pay him the applicable compensation."
The state court specifically cited CBS' "pay or play" provision in its ruling. So although Rather may have been pushed to the side during his final 15 months, CBS was not at fault since they continued to pay him his full salary in the months in between.
The ruling comes five months after the case was tried in the appellate division and tosses out the July 2009 judgment from New York Supreme Court Justice Ira Gammerman, which reinstated Rather's claim.
Rather's attorney, Martin Gold, said in a statement that he and his client were "extremely disappointed" and announced their plan to appeal the case to the New York Court of Appeals.
CBS had a markedly different choice of words. "We're studying the decision right now, but it appears to be a total victory — and vindication for CBS' position," CBS News spokesman Jeff Ballabon said in a statement.
The Bush report gained negative press for both the news anchor and CBS when the documents' accuracy was called into question. Rather felt the company had hurt his reputation by not supporting his report and by subsequently firing him altogether, according to the suit.
Rather has another fraud lawsuit pending against CBS CEO Leslie Moonves and former CBS News President Andrew Heyward, which was filed in August. James Quinn, an attorney at a firm that represents CBS, told Bloomberg News that he expects this second lawsuit to be dismissed on similar grounds.
Rather spent 24 years as anchor of the CBS Evening News and 44 years with CBS. He now produces an hour-long news program for cable station HDNet.