Grasso Wins Dismissal of Remaining Parts of Pay Case
By Karen Freifeld and Thom Weidlich
July 1, 2008 12:16 EDT
July 1 (Bloomberg) -- Richard Grasso, the former New York Stock Exchange chairman, won dismissal of the two remaining parts of the state's lawsuit over his $190 million pay package.
A state appeals court in Manhattan today said former New York Attorney General Eliot Spitzer lost the authority to maintain the case against Grasso when the Big Board was converted to a for-profit business.
``Unless it's reversed on appeal, Grasso has won this particular lawsuit, because there's nothing left,'' said Richard Schulman, a lawyer with Bryan Cave in New York who isn't involved in the case.
Grasso, 61, won another appeal in the case last week when the state's highest court threw out four of six claims against him. Attorney General Andrew Cuomo may seek a top-court review of today's ruling, which wipes out the other two, in an effort to keep the case alive. ``We're reviewing the decision,'' Alex Detrick, a spokesman for Cuomo, said by e-mail.
The appeals court said today the state was seeking ``only a money judgment that would benefit the owners of the for-profit entity into which the not-for-profit has been converted.'' The case ``vindicates no public purpose,'' it said.
The judges said the trial judge in Grasso's case, Charles Ramos, was wrong in 2006 when, without holding a trial, he ordered the ex-chairman to repay up to $112.2 million in retirement pay. And Ramos was wrong in holding that the state's right to sue outlived the Big Board's status as a not-for-profit, the appeals court said.
Case History
Spitzer sued Grasso in 2004, eight months after he was forced from his job over the amount of his pay. The state claimed the $190 million in compensation in the top job violated the state law saying officers of not-for-profits must be paid ``reasonable'' amounts.
Grasso spent 35 years at the exchange, rising from clerk to chairman. New Chief Executive Officer John Thain turned the NYSE into a publicly traded company.
After directors forced Grasso out, a report for the exchange by attorney Dan K. Webb of the Chicago law firm Winston & Strawn concluded the ex-chairman's pay was ``far beyond reasonable.''
Grasso got about $150 million in excess pay in the chairman's job, Webb said.
The case is New York v. Grasso, 04-401620, New York Supreme Court, New York County (Manhattan).
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