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World Trade Center leaseholder Larry Silverstein’s out-of-court comments will at a minimum keep him out of the courtroom for the remainder of the trial over how much insurance companies must pay — $3.5 billion or $7 billion — toward the rebuilding of downtown. The only exception will be for his own testimony. Seeking to “protect the integrity of the trial,” Southern District of New York Judge Michael Mukasey said that comments Silverstein made at a press conference Monday violated the judge’s order for both sides to refrain from public statements that might influence the jury. For more than two hours Thursday, Mukasey heard testimony from Silverstein and arguments from lawyers for the developer, the insurance companies, and Silverstein Properties on whether Silverstein should be held in civil contempt and what the consequences of such a finding should be. Silverstein’s press conference on the rebuilding of 7 World Trade Center was attended by a number of public officials and was supposedly focused on Silverstein’s commitment to hiring minority- and women-run firms in the project. But during the event, the developer said he was “fighting like hell” to get the money he deserved from the insurance companies — money that was critical to the future of downtown. The contempt hearing comes during the middle of the trial centering on the intent of the parties as to unfinished insurance agreements that were in place when the twin towers were destroyed by terrorists on Sept. 11, 2001. While Silverstein claims the attacks were two events for insurance purposes and he should be compensated $7 billion, the insurers say he underinsured the premises and, in any event, should be paid half that amount because the attacks were one occurrence. Mukasey, the chief judge of the district court, said he had made it clear, and the parties knew it was clear, that any effort to influence the trial from the outside would not be tolerated. But Silverstein claimed on the witness stand that he was told during a March 10 teleconference with his attorneys, public relations people and others, that the judge had lifted the order banning outside comments. The developer could not identify who made the statement during the teleconference. In fact, Mukasey had been upset with out-of-court statements on the morning of March 10 and expressed his displeasure to the attorneys before lunch. After lunch, the judge returned to the bench to remind the parties he would not tolerate any “publicity campaigns,” but said he would modify his order to allow the attorneys to talk to the press, if only to explain the meaning of what had occurred in court. Mukasey expressed skepticism when Silverstein insisted he believed first that the order had been lifted and second that he did not think his press conference violated the judge’s order. It made little matter to the court that Silverstein, upon reviewing the transcript and his statements, now acknowledges he had violated the order. When asked by David Boies of Boies, Schiller & Flexner, who is representing several of the insurance companies, why he made the comments, Silverstein said, “I found myself speaking at this event and out came the words.” CIVIL CONTEMPT The elements required for civil contempt, Boies reminded the court in legal arguments at the close of the hearing, are first, there must be an order; second, a violation of that order; and third, the inability of the violator to show they were incapable of complying with the order. All three elements were easily met in this case, Boies said, because Silverstein knew there was an order in place and had admitted, in retrospect, that he had not complied. The developer’s only defense was useless, Boies said, because there was no case that supports the excuse of being told by someone, incorrectly that the order had been lifted. The insurance companies are seeking attorney’s fees for prosecuting the contempt motion and a $1 million fine for any future violations. But Floyd Abrams of Cahill Gordon & Reindel, representing Silverstein at the contempt hearing, said the first element of contempt was not met in this case because Mukasey had never actually issued an order. Instead, Abrams said, there was “a series of statements” made by the judge and the attorneys that resulted in an understanding about out-of-court commentary, with the judge indicating at some point that he did not want to “police” an order. Abrams also emphasized that Silverstein’s statements are shielded by the First Amendment. “The statements made ought to be deemed protected,” he said. “What Mr. Silverstein said is precisely the sort of thing that First Amendment law does protect to a very great degree.” But Mukasey said the First Amendment argument carried little weight. Attorneys for the insurance companies said the judge has broad discretion in fashioning orders that protect the right to a fair trial even as the First Amendment rights of the parties are part of the equation. Mukasey also took issue with lead Silverstein lawyer Herbert Wachtell of Wachtell, Lipton, Rosen & Katz, who compared the restraint on out-of-court comments to a “gentleman’s agreement” instead of an order. Bernard Nussbaum, also of Wachtell Lipton, who argued the contempt motion for Silverstein Properties, said that there was minimal impact from Monday’s press conference because only one newspaper had written about the comments. “Any determination of contempt � at all will be enormously prejudicial to the ongoing trial,” Nussbaum said. But Barry R. Ostrager of Simpson Thacher & Bartlett, representing Swiss Re insurance, said the Silverstein comments were part of an ongoing, orchestrated attempt by Silverstein and his public relations firm, Rubenstein Associates Inc., to influence the outcome of the trial. Mukasey said he planned to rule Monday morning on the contempt, including on the issues of attorney’s fees and fines going forward. The judge said he was also considering whether to limit the testimony Silverstein might be allowed to give at the trial.

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