CORPORATE CRIME REPORTER
Grasso
Attorney Fires Back at Spitzer
23 Corporate Crime Reporter 22(7), June 2, 2009
Eliot Spitzer is on a tour of media outlets – large and small.
Earlier this month, it was Corporate Crime Reporter’s turn to interview Spitzer.
And what we published did not sit well with Williams & Connolly partner Gerson Zweifach.
In the interview, Spitzer defended his lawsuit against former New York Stock Exchange Chairman Richard Grasso.
Spitzer said that “we won a summary judgment motion from the trial court,” and then an appellate judge appointed in a “political deal” ruled that the conversion of the Stock Exchange to a for-profit business robbed the court of jurisdiction, an “aberrant decision” that Spitzer’s successor, Attorney General Cuomo, inexplicably failed to appeal.
Spitzer directed the public to the trial court summary judgment opinion as a vindication of his charges against Grasso, and blamed the undoing of the ruling by a “very bad judge” who “should never have been appointed to the bench in the first place – it was a political deal.”
(For a complete transcript of the Interview with Eliot Spitzer, see 23 Corporate Crime Reporter 19(11), May 11, 2009, print edition only)
In a letter to Corporate Crime Reporter last week, Gerson Zweifach, Grasso’s attorney, says that Spitzer’s account of the Grasso case is “simply false.”
“Not spin, not simply unfair, but false,” Zweifach writes.
Zweifach says that the appellate court decision overturning the order of summary judgment against Grasso was authored by four judges – not the one that Spitzer focuses his fire on.
“Mr. Spitzer’s description of the order overturning the trial court entry of summary judgment as being authored by one “political” appointee, instead of being the considered judgment of four judges from both parties, says more about Mr. Spitzer than about the judge he attacked,” Zweifach writes.
And Zweifach defends Cuomo’s decision not to appeal the ruling.
“That same Court of Appeals had already had a good look at Mr. Spitzer’s case against Mr. Grasso, and all seven judges found that Mr. Spitzer, in his zeal to pursue Mr. Grasso, had overstepped the boundaries of his office,” Zweifach writes. “Mr. Spitzer had made the bed, and Mr. Cuomo rightly decided that he no longer had to lie in it. Not surprisingly, Mr. Spitzer has nothing to say about the ruling by the Court of Appeals, which also unanimously affirmed an earlier opinion written by the same appellate judge whose competence Mr. Spitzer now attacks. Mr. Spitzer blames the demise of his case against Dick Grasso on one appellate judge whose bona fides Mr. Spitzer calls into question, when in fact Mr. Spitzer’s case was discredited by the facts, the law, and his own overreaching, as confirmed by the unanimous rulings of eleven appellate judges, including seven from the highest court of the State of New York. Even for Eliot Spitzer, this is a singularly shameful performance.”
The
complete letter from Zweifach is reprinted below.
In your May 11 edition, you reported on an interview with former New York Governor
Eliot Spitzer. Mr. Spitzer stated the following with respect to the outcome
of the case that he had brought against former New York Stock Exchange Chairman
Richard A. Grasso: “we won a summary judgment motion from the trial court,”
and “then” an appellate judge appointed in a “political deal”
ruled that the conversion of the Stock Exchange to a for-profit business robbed
the court of jurisdiction, an “aberrant decision” that Mr. Spitzer’s
successor, Attorney General Cuomo, inexplicably failed to appeal. As he had
a week earlier in an interview on CNBC, Mr. Spitzer directed the public to the
trial court summary judgment opinion as a vindication of his attack on Mr. Grasso,
and blamed the undoing of that accomplishment on a technical ruling by a “very
bad judge who should never have been appointed to the bench.”
Others can decide the motivation and effectiveness of Mr. Spitzer’s recent publicity campaign, but the Corporate Crime Reporter owes its audience more than simply repeating Mr. Spitzer’s attempted rewrite of Spitzer v. Grasso. The rulings of the courts are a matter of record. Mr. Spitzer’s account is simply false: Not spin, not simply unfair, but false.
On July 1, 2008, the Appellate Division, First Department, decided Mr. Grasso’s appeal of the summary judgment entered against him. In the first part of the opinion, the Appellate Division ruled – unanimously – that the summary judgment against Mr. Grasso must be reversed, as it failed to account for the wealth of testimony by Stock Exchange directors that they authorized Mr. Grasso’s compensation and retirement benefits with knowledge of the material facts, and that Mr. Grasso had no reason to believe otherwise. Spitzer v. Grasso, 54 A.D. 3d 180, 218-19 (1st Dep’t 2008) (Opinion of Mazzarelli, J., agreeing with Judges McGuire, Buckley and Saxe that summary judgment order was improper).
The panel members, who were appointed to the bench by Governors from both parties (two from each), were unanimous in concluding that the summary judgment was improper as a matter of fact and law. For any lawyer, let alone one formerly entrusted with the responsibility of being the chief law enforcement officer of the State of New York, to represent to the public that a decision found to be unlawful should be regarded as a true judgment on Mr. Grasso is irresponsible. Mr. Spitzer’s description of the order overturning the trial court entry of summary judgment as being authored by one “political” appointee, instead of being the considered judgment of four judges from both parties, says more about Mr. Spitzer than about the judge he attacked.
After the Appellate Division threw out the trial court summary judgment that Mr. Spitzer still embraces, the court proceeded to consider whether the case should proceed to trial. The court ruled 3-1 that the claims under the Not-for-Profit-Corporations Law should be dismissed. The majority opinion was, again, joined by two judges who were appointed to the bench by Governors from both parties. Mr. Spitzer criticizes Attorney General Cuomo for not appealing that judgment to New York’s highest court, the Court of Appeals. But here, Mr. Spitzer ignores a ruling entered seven days earlier by that same Court of Appeals, a ruling that made clear that it was Attorney General Cuomo’s predecessor, not Mr. Grasso, who had violated the limitations imposed by law.
Mr. Spitzer had brought two kinds of claims against Mr. Grasso, statutory claims under the Not-for-Profit Statute, and certain purported common-law claims. On June 25, 2008, the New York Court of Appeals ruled unanimously that, by bringing the common-law claims, Mr. Spitzer had exceeded the limitations imposed by the Legislature and violated the separation of powers doctrine. Spitzer v. Grasso, 11 N.Y.3d 64 (2008). The Court of Appeals found that Mr. Spitzer had brought common-law claims that purported to incorporate part of the Legislature’s statute, but that sought to “circumvent” the standard of liability provided by the Legislature. 11 N.Y.3d at 72. This rebuff of Mr. Spitzer’s abuse of his authority was announced in an opinion authored by Chief Judge Kaye, a highly-respected appointee of Governor Mario Cuomo, and joined by all six Associate Judges of the Court of Appeals, one of whom was appointed by Mr. Spitzer (apparently not in a “political deal”).
By leaving out all reference to the decision by the highest court of the State of New York, your account disserves both your readers and Attorney General Cuomo. The reason that the July 1 ruling by the Appellate Division dismissing the statutory claims meant the death of the Grasso case is that the Court of Appeals had thrown out the rest of the case seven days earlier. As for Mr. Cuomo’s decision declining to pursue an appeal to the Court of Appeals, that judgment was pragmatic.
That same Court of Appeals had already had a good look at Mr. Spitzer’s case against Mr. Grasso, and all seven judges found that Mr. Spitzer, in his zeal to pursue Mr. Grasso, had overstepped the boundaries of his office. Mr. Spitzer had made the bed, and Mr. Cuomo rightly decided that he no longer had to lie in it. Not surprisingly, Mr. Spitzer has nothing to say about the ruling by the Court of Appeals, which also unanimously affirmed an earlier opinion written by the same appellate judge whose competence Mr. Spitzer now attacks. Mr. Spitzer blames the demise of his case against Dick Grasso on one appellate judge whose bona fides Mr. Spitzer calls into question, when in fact Mr. Spitzer’s case was discredited by the facts, the law, and his own overreaching, as confirmed by the unanimous rulings of eleven appellate judges, including seven from the highest court of the State of New York. Even for Eliot Spitzer, this is a singularly shameful performance.
For those interested in the final tally of Mr. Spitzer’s foray against Dick Grasso and Ken Langone, the record reflects the following: first, the Stock Exchange directors uniformly confirmed that they made the compensation decisions, not Mr. Grasso, and that they made those decisions with eyes open to the market for executive compensation at the time and Mr. Grasso’s extraordinary performance; second, not only did the Stock Exchange recover nothing, but because of the Attorney General’s lawsuit, the Stock Exchange through its insurers paid tens of millions of dollars to indemnify the Stock Exchange’s former officers and directors (including Mr. Grasso) for their legal fees arising out of this ill-conceived venture, which will raise the Stock Exchange’s insurance premiums for years; third, for all of the State’s efforts (including paying to send the Attorney General’s deputies to London, Los Angeles, Palo Alto, Chicago, and Florida in a futile effort to find proof to support Mr. Spitzer’s charges), the only individual found by the New York courts to have overstepped any laws in this case was Eliot Spitzer. If this was a successful case that vindicated an “important principle,” as Mr. Spitzer says, one would hate to see what he would call a failure.
Whatever Mr. Spitzer may be up to, surely the road to redemption requires, at minimum, acknowledging the truth about the past. For those familiar with how Mr. Spitzer conducted his affairs as Attorney General, his account of the end of the Grasso case comes as a disappointment, but not a surprise.
On behalf of Mr. Grasso, I ask that you correct the record.
Sincerely,
Gerson A. Zweifach
May 21, 2009
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