This week, I will talk briefly about e-discovery's "billion-dollar verdict."
In 2005, a Florida court sanctioned investment bank Morgan Stanley in the case of Morgan Stanley & Co. v. Coleman Holdings Inc. In 1998, billionaire Ronald Perelman sold his majority share in camping equipment company Coleman, in exchange for Sunbeam stock. After Sunbeam went bankrupt in 2001, Perelman sued Morgan Stanley, claiming he was fooled into accepting the Sunbeam shares.
The judge sanctioned Morgan Stanley for not turning relevant emails over to Perelman. Because of this punishment, Perelman did not have to show he was damaged by the deal. Instead, he had to prove only that he relied on Morgan Stanley's advice on the Coleman-Sunbeam transaction.
After a trial, the jury returned a $1.5 billion verdict for Perelman. This included over $600 million in actual damages, and over $850 million in punitive damages!
This verdict was a shock to the financial world. A billion-dollar decision, because of e-discovery issues! The result drew even more attention to electronic discovery and its importance.
Years later, a Florida appeals court reversed the decision - Morgan Stanley wasn't able to present a defense in the case. But the original verdict put the fear of liability into a lot of people. It showed that e-discovery issues matter.
(And, on an unrelated note, some World Cup congratulations go out to: the U.S. team, for holding England to a draw; the German team, for the crushing defeat of Australia; and the Swiss team, for the shocking upset of Spain!)
Monday, June 14, 2010
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