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Grasso Wins Appeal on 4 of 6 Claims at Top N.Y. Court 
By Patricia Hurtado and Edgar Ortega
June 25 (Bloomberg) -- Richard Grasso, the former New York Stock Exchange chairman whose $190 million pay package is under legal attack by the state, won an appeal at New York's highest court that may make it easier for him to keep the money.
The state Court of Appeals in Albany today threw out four of six claims against Grasso filed by ex-Attorney General Eliot Spitzer. The attorney general isn't authorized by state laws to sue under those claims, the court said in a 7-0 ruling.
``The plain language of these provisions reveals a legislative policy decision to provide officers and directors of not-for-profit corporations with the `business judgment' protections afforded their for-profit counterparts,'' it said.
Spitzer sued in 2004, the year after Grasso was ousted from the NYSE, saying the chairman's pay was unreasonably high for a not-for-profit corporation. Lawyer Dan K. Webb said in a report for the exchange that Grasso's pay was about $150 million ``beyond reasonable.''
Webb, of the Chicago law firm Winston & Strawn, made his report in 2005, after Grasso left.
The ruling leaves in place the other two claims, which the court said are harder to prove than those it dismissed. The ones tossed out would have required the state to prove only that the pay was unreasonable, the court said, and no fault by Grasso.
In a separate appeal, Grasso is challenging the part of the case based on the other two claims. A Manhattan trial judge ruled in 2006 the ex-chairman must return part of his NYSE pay, which the state said was as much as $112.2 million.
Lawyers' Responses
Barbara Underwood, New York solicitor general, declined to comment on today's ruling, which upheld a Manhattan appeals court's decision appealed by the state.
Mark Zauderer, a lawyer for Grasso, declined to comment. Gerson Zweifach, also representing Grasso, didn't return a voice- mail message seeking comment. Spitzer's Lawsuit
Andrew Cuomo, Spitzer's successor as attorney general, continued to pursue the case after the 2006 elections. Spitzer became governor, then resigned in March of this year amid a federal investigation of a call-girl ring.
Spitzer argued that while he lacked specific legislative authority to sue under the four claims, as the top state lawyer he could go to court to protect the public.
Today's decision may reduce the ability of the attorney general to pursue claims by relying on its broad authority to safeguard New Yorkers' interests, said Richard Schulman, a lawyer at New York-based Bryan Cave who isn't involved in the case.
Ruling's Impact
``It will certainly have a negative impact in terms of nonprofits, and the question is whether it goes beyond that,'' Schulman said. ``This might have a ripple effect, which is why I think the attorney general felt compelled to bring this appeal, because in the end it was a restriction on the power of the attorney general.''
The lawsuit over the $190 million in compensation during Grasso's years in the top job was part of a Spitzer campaign challenging Wall Street firms and practices during eight years as attorney general.
Grasso spent 35 years at the exchange, rising from clerk to chairman. After he was forced out over his compensation, new Chief Executive Officer John Thain led the move that turned NYSE into a publicly traded company.
Underwood said in June 3 appeals court arguments that the four claims dismissed today were within the scope of the attorney general's ``historic and broad'' powers.
Public Interest
``We're not suing on behalf of the corporation,'' she said. ``We're suing to vindicate the interest of the investing public.''
Grasso's attorney Zweifach, a partner at Williams and Connolly, argued that the state was acting like a ``knight errant'' for the exchange, using legal arguments normally deployed on behalf of ``those who cannot help themselves.''
The NYSE could have sued Grasso and didn't, Zweifach argued. He noted the exchange was formerly owned by 1,366 millionaires, who he said ``had the wherewithal to hire a national law firm, develop this case and threaten to bring suit -- had the ability to pursue a recovery.''
Cuomo may now be more open to reach a settlement with Grasso, Schulman said. The two remaining claims are based on statutory authority and require a tougher standard of proof.
``Now the attorney general, like any litigant, has to evaluate his evidence and see whether it's in the best interest of the people to reach a settlement,'' the lawyer said.
Trial Court Setbacks
Grasso, after setbacks at the trial court level, has appealed to the intermediate appellate court in Manhattan.
The trial judge, state Supreme Court Justice Charles Ramos, in Manhattan, granted summary judgment to the state, or a decision before trial, in part of the case and ordered Grasso to return part of his compensation package.
The $112.2 million estimate came later from state lawyers. The attorney general's office argued that Grasso must disgorge an $81.5 million payment to his pension plan, $12.3 million in interest on two loans and $18.3 million he was paid from an executive savings plan.
Ramos also decided to hold a nonjury trial on the claim that Grasso had unjustly enriched himself and dismissed Grasso's countersuit against H. Carl McCall, the former state comptroller who headed the exchange's compensation committee. Grasso claimed McCall mishandled his pay.
The case is New York v. Grasso, 04-401620, New York Supreme Court, New York County (Manhattan).
To contact the reporters on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net; Edgar Ortega in New York at ebarrales@bloomberg.net.
By Patricia Hurtado and Edgar Ortega
June 25 (Bloomberg) -- Richard Grasso, the former New York Stock Exchange chairman whose $190 million pay package is under legal attack by the state, won an appeal at New York's highest court that may make it easier for him to keep the money.
The state Court of Appeals in Albany today threw out four of six claims against Grasso filed by ex-Attorney General Eliot Spitzer. The attorney general isn't authorized by state laws to sue under those claims, the court said in a 7-0 ruling.
``The plain language of these provisions reveals a legislative policy decision to provide officers and directors of not-for-profit corporations with the `business judgment' protections afforded their for-profit counterparts,'' it said.
Spitzer sued in 2004, the year after Grasso was ousted from the NYSE, saying the chairman's pay was unreasonably high for a not-for-profit corporation. Lawyer Dan K. Webb said in a report for the exchange that Grasso's pay was about $150 million ``beyond reasonable.''
Webb, of the Chicago law firm Winston & Strawn, made his report in 2005, after Grasso left.
The ruling leaves in place the other two claims, which the court said are harder to prove than those it dismissed. The ones tossed out would have required the state to prove only that the pay was unreasonable, the court said, and no fault by Grasso.
In a separate appeal, Grasso is challenging the part of the case based on the other two claims. A Manhattan trial judge ruled in 2006 the ex-chairman must return part of his NYSE pay, which the state said was as much as $112.2 million.
Lawyers' Responses
Barbara Underwood, New York solicitor general, declined to comment on today's ruling, which upheld a Manhattan appeals court's decision appealed by the state.
Mark Zauderer, a lawyer for Grasso, declined to comment. Gerson Zweifach, also representing Grasso, didn't return a voice- mail message seeking comment. Spitzer's Lawsuit
Andrew Cuomo, Spitzer's successor as attorney general, continued to pursue the case after the 2006 elections. Spitzer became governor, then resigned in March of this year amid a federal investigation of a call-girl ring.
Spitzer argued that while he lacked specific legislative authority to sue under the four claims, as the top state lawyer he could go to court to protect the public.
Today's decision may reduce the ability of the attorney general to pursue claims by relying on its broad authority to safeguard New Yorkers' interests, said Richard Schulman, a lawyer at New York-based Bryan Cave who isn't involved in the case.
Ruling's Impact
``It will certainly have a negative impact in terms of nonprofits, and the question is whether it goes beyond that,'' Schulman said. ``This might have a ripple effect, which is why I think the attorney general felt compelled to bring this appeal, because in the end it was a restriction on the power of the attorney general.''
The lawsuit over the $190 million in compensation during Grasso's years in the top job was part of a Spitzer campaign challenging Wall Street firms and practices during eight years as attorney general.
Grasso spent 35 years at the exchange, rising from clerk to chairman. After he was forced out over his compensation, new Chief Executive Officer John Thain led the move that turned NYSE into a publicly traded company.
Underwood said in June 3 appeals court arguments that the four claims dismissed today were within the scope of the attorney general's ``historic and broad'' powers.
Public Interest
``We're not suing on behalf of the corporation,'' she said. ``We're suing to vindicate the interest of the investing public.''
Grasso's attorney Zweifach, a partner at Williams and Connolly, argued that the state was acting like a ``knight errant'' for the exchange, using legal arguments normally deployed on behalf of ``those who cannot help themselves.''
The NYSE could have sued Grasso and didn't, Zweifach argued. He noted the exchange was formerly owned by 1,366 millionaires, who he said ``had the wherewithal to hire a national law firm, develop this case and threaten to bring suit -- had the ability to pursue a recovery.''
Cuomo may now be more open to reach a settlement with Grasso, Schulman said. The two remaining claims are based on statutory authority and require a tougher standard of proof.
``Now the attorney general, like any litigant, has to evaluate his evidence and see whether it's in the best interest of the people to reach a settlement,'' the lawyer said.
Trial Court Setbacks
Grasso, after setbacks at the trial court level, has appealed to the intermediate appellate court in Manhattan.
The trial judge, state Supreme Court Justice Charles Ramos, in Manhattan, granted summary judgment to the state, or a decision before trial, in part of the case and ordered Grasso to return part of his compensation package.
The $112.2 million estimate came later from state lawyers. The attorney general's office argued that Grasso must disgorge an $81.5 million payment to his pension plan, $12.3 million in interest on two loans and $18.3 million he was paid from an executive savings plan.
Ramos also decided to hold a nonjury trial on the claim that Grasso had unjustly enriched himself and dismissed Grasso's countersuit against H. Carl McCall, the former state comptroller who headed the exchange's compensation committee. Grasso claimed McCall mishandled his pay.
The case is New York v. Grasso, 04-401620, New York Supreme Court, New York County (Manhattan).
To contact the reporters on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net; Edgar Ortega in New York at ebarrales@bloomberg.net.