Eliot Spitzer Rebuffed
In a 3-to-2 decision, New York’s intermediate appeals court dismissed most of former New York attorney general Eliot Spitzer’s lawsuit against former New York Stock Exchange Chairman Dick Grasso for collecting an enormous $187 million pay package, finding that he did not have standing to raise a number of claims he made in his lawsuit.
The majority concluded that New York State’s law on nonprofits, by expressly providing certain specified remedies for excessive executive pay, impliedly excluded other sorts of remedies, such as lawsuits by the state attorney general.
It rejected the dissent’s position that the state attorney general has broad common-law powers to sue over any alleged violation of the law whenever he deems it to be in the public interest. It concluded that such a broad delegation of power to the state attorney general would violate principles of separation of powers, by allowing the state attorney general to effectively rewrite statutory remedies provisions enacted by the state legislature.
Spitzer’s challenge to Grasso’s multimillion-dollar pay was ironic, given that Spitzer himself helped bring about an even larger $625 million payout to lawyers who brought New York State’s copycat lawsuit against the tobacco companies.
As CEI has noted elsewhere, state attorneys general have used their purported power to sue in the “public interest” to extract multibillion dollar settlements from out-of-state businesses for business practices that were long considered lawful, and to divert billions of dollars in attorneys’ fees to politically-connected trial lawyers hired on a contingency fee basis to bring lawsuits in the name of the state attorneys general.