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Investment banking giant Morgan Stanley & Co., which is on trial in Palm Beach County Circuit Court in a $2.7 billion civil fraud action brought by financier Ronald O. Perelman, may not want to remove the three jurors who were approached by a stranger in a courthouse smoking area. That’s because the jurors, identified in affidavits only as 6, 8 and 9, have sent Judge Elizabeth T. Maass a number of questions during the trial that indicate to Morgan Stanley lawyers that they are sympathetic to Morgan Stanley’s defense, according to a source familiar with the thinking of Morgan Stanley’s defense team. Still, Morgan Stanley attorneys are pressing for Maass to declare a mistrial. Attorney Mark Hansen said the trial had been affected by “an inappropriate and tainting event.” He told the court that one of his colleagues saw the man who approached the jurors “inspecting” the trial materials prior to speaking to the jurors in the courthouse lounge. Perelman’s lawyers initially told Maass that they would agree to the three jurors being replaced by three alternates in the jury box, but they later told the judge that they oppose the motion for a mistrial. On Tuesday, Maass indicated that she was reluctant to declare a mistrial, saying the county already has invested “enormous resources” in the case. She previously refused a request from Morgan Stanley to recuse herself. They have accused her of bias and have petitioned the 4th District Court of Appeal to remove her from the case. That petition is pending, and Maass will continue to hear the case until it ends, or until and unless the appeals court orders her to step aside. One appellate expert who’s not involved in the case expressed doubt that Maass would grant the request for a mistrial. “I don’t really see this as grounds for a mistrial,” said Robert Jarvis, a law professor at Nova Southeastern University. But Jarvis argues that Maass should subject each juror to questioning, with a court reporter and lawyers for each side present. The object would be to determine whether any of the jurors — not just the three to whom the stranger spoke — believe they have been compromised in any way and if there’s any doubt the jurors can render a fair and impartial verdict. John Mariani, a partner at Gunster Yoakley & Stewart in West Palm Beach, Fla., who’s not involved in the case, said that if Maass denies the mistrial request, she needs to build a sufficient record to convince an appeals court that she in no way abused her discretion. “The standard to be considered on appeal, Mariani said, “is abuse of discretion. That’s a higher hill to climb than the question of legal error.” Jarvis said court officials should impose tighter security around the jury, which routinely shares space in a common area outside the courtroom with the public. Several times a day, for the past four weeks, the nine jurors in the Perelman case have vacated the jury box during breaks in the trial. They’ve filed into the 11th floor reception area outside the downtown West Palm Beach courtroom, with its stunning view out to the sea. But some jurors have eschewed the scenery and taken elevators to a public smoking area outside the building. On Monday, a heavyset, approximately 60-year-old man wearing a navy blazer and a white shirt approached the three jurors in the smoking area and chatted briefly with them. One juror later told Maass that “it was very obvious from the questions he was asking he was trying to get information from us. He kept talking and asking us questions.” The jurors said little in response, the juror said. Morgan Stanley quickly requested a mistrial in the case, which many experts believe the company is losing at least partly because of a pretrial ruling by Maass granting Perelman partial summary judgment. Maass promptly ordered the deposition of the man, James Comyns, who turned out to be a client of Perelman attorney Jack Scarola in a separate case. Scarola, a partner at Searcy Denney Scarola Barnhart & Shipley in West Palm Beach, is Perelman’s lead trial attorney. In his sworn affidavit taken Tuesday, Comyns said he visited the courthouse to try to speak with Scarola, who is representing him in a pending civil case but has been too busy with the Morgan Stanley trial to meet with him. “I never talked to Mr. Scarola about his case — only when did he think he would finish — and I never talked to any jurors about anything,” Comyns said. Comyns acknowledged, however, that he asked the three jurors whether the trial was over for the day and that he commented on how some trials seem to drag on. A source familiar with Morgan Stanley’s case suggested that Comyns’ behavior was suspicious. “He wanted to know at 10 a.m. if the trial was over for the day,” the source said. “And he followed the jurors around as well. Also, this is a man who has been convicted of tax evasion and obstruction of justice, and his very approach to the jurors constitutes a taint.” Scarola argued in court that the incident did not constitute a basis for mistrial. “There is no indication,” he said, “that any information was improperly communicated to the jurors or that any information was improperly communicated from the jurors.” MANY EXPECT PERELMAN TO WIN Perelman is seeking compensatory and punitive damages from Morgan Stanley. He alleges that Morgan Stanley helped then-Sunbeam Corp. chief executive “Chainsaw” Al Dunlap falsify the true value of Sunbeam’s stock and defraud Perelman of hundreds of millions of dollars in a purchase transaction in 1998. In his lawsuit and testimony, Perelman alleges “a massive fraud” perpetrated against Coleman (Parent) Holdings, a company controlled by Perelman that owned 82 percent of the Coleman Co. Coleman had been purchased by Delray Beach, Fla.-based Sunbeam during Dunlap’s tenure as chief executive. Sunbeam bought it in part with Sunbeam stock whose value, according to Maass’ ruling, was fraudulently inflated. Morgan Stanley represented Sunbeam in the purchase and has strenuously denied that it had any knowledge of fraudulently inflated Sunbeam stock prices. The firm argues that it also was duped by Dunlap, and that it suffered $300 million in losses from Sunbeam’s actions. Perelman contends he never would have gone along with the deal if he hadn’t had such high regard for Morgan Stanley. Shortly after Perelman received Morgan’s Stanley’s advice about Sunbeam, the appliance maker restated its financials, and an angry board fired Dunlap. By 2001, Sunbeam was in bankruptcy, and its stock price had plummeted. The appliance maker is now a unit of the Rye, N.Y.-based Jarden Corp. Many observers expect Perelman to win a judgment at least partly because of Maass’ dramatic pretrial ruling March 23. Maas ruled that because Morgan Stanley and its lawyers had failed to comply with her discovery orders last year, she was granting Perelman partial summary judgment in his case against the firm. She ordered a trial on damages only, instructing the jury to accept as fact that Morgan Stanley had colluded with Dunlap in falsifying Sunbeam’s financials. That means Perelman only has to prove that he was damaged and that he relied on Morgan Stanley’s guidance in accepting Sunbeam stock in the sale of Coleman Co. The trial, which began last month, is expected to conclude as early as this week. If Morgan Stanley is hit with a big judgment — and experts say that looks likely — it’s certain that it will file an appeal based heavily on its contentions that the ruling was illegal and unfair, and that Maass showed bias against the company. That’s why Morgan Stanley and its lawyers undoubtedly would welcome a ruling by Maass to grant their request for a mistrial based on Comyns’ approach to the three jurors.

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