Morgans Lawyers were Handcuffed
By Paul Tharp
New York Post
June 29, 2006
Morgan Stanley made a desperate last-ditch plea to avoid paying Ron Perelman $1.7 billion in damages for dumping worthless stock on him in a flopped deal eight years ago.
Perelman sued the Wall Street giant over its role in his 1998 sale of camping equipment maker Coleman Co. to Sunbeam Corp.
Calling the penalty "catastrophic," Morgan Stanley lawyer Bruce Rogow told a Florida appeals panel that the case should have been held in New York, not Florida.
But the head of the three-judge panel, Judge Gary Farmer, interrupted Rogow barely one minute into his presentation to all but shoot down his main argument.
"Isn't the law clear in Florida that we protect the victim [more than New York law]?" Farmer asked.
The small courtroom in Palm Beach was packed with about 40 lawyers, mostly from the big entourage of Gary Lynch, the high-profile lawyer named recently as general counsel of Morgan Stanley to repair its massive bungling of the Perelman court fight a year ago.
Morgan Stanley's earlier legal team - most of whom were fired - had stonewalled the local trial judge, Elizabeth Maass, by refusing her repeated orders for e-mails and other evidence. Maass then told the jury they could assume that Morgan Stanley was guilty of a massive fraud.
That made the trial a cake walk for Perelman's lawyers, who had only to prove that they relied on Morgan Stanley's advice to get caught up in the Sunbeam fraud that cost shareholders $4.8 billion in losses.
The jury awarded Perelman $1.57 billion in damages plus interest - Florida's largest ever penalty - which has swelled to $1.7 billion in the past year.
"We were handcuffed," Morgan Stanley lawyer Bruce Rogow told the three-judge panel.
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