WASHINGTON, D.C., MARCH 26, 2007 -- The Florida Fourth District Court of Appeal overturned a $1.6 billion jury verdict on March 21, 2007 against Morgan Stanley & Co. in a securities fraud case brought by Coleman (Parent) Holdings (CPH), a company owned by New York financier Ronald O. Perelman.
A team of Baker Botts lawyers was instrumental in the court’s ruling in favor of Morgan Stanley.
CPH alleged that Morgan Stanley made false representations to it about the financial condition of Sunbeam, a company in which CPH was acquiring a stake. As a result of discovery sanctions, however, Morgan Stanley was not permitted to dispute its culpability at trial; the case was tried solely on the issues of reliance and damages. The jury returned a verdict of $604 million in compensatory damages and $850 million in punitive damages.
The Fourth District Court of Appeal reversed and remanded for entry of judgment in favor of Morgan Stanley, on the ground that CPH had failed to present competent proof of damages. Under Florida law, a plaintiff seeking benefit-of-the-bargain damages must prove the difference between the stock’s represented value and its actual value on the date of the transaction. CPH did not prove actual value on the date of the transaction, but instead sought recovery for all declines in Sunbeam’s stock price over the several years it held the stock. The court held that evidence insufficient under Florida law.
Because CPH failed to present legally sufficient proof of damages, the court did not order a new trial, and instead ordered entry of judgment in favor of Morgan Stanley. The court further held that, absent a compensatory award, CPH was not entitled to punitive damages. In light of its disposition of the damages issue, the court did not reach Morgan Stanley’s other arguments on appeal, including its claim that the discovery sanctions were an abuse of discretion.
Baker Botts appellate lawyers are involved in appellate and trial matters in state and federal courts across the country. The firm’s appellate lawyers have argued more than 25 cases before the United States Supreme Court, have argued in all 13 federal courts of appeals, and have appeared before several state courts of last resort.
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