Perelman Trial Turns Into Fight Over E-Mail Deletion Habits, Contracts

Billionaire Ronald Perelman is unlikely to testify as his firm, MacAndrews & Forbes Holdings Inc., defends a $16 million breach-of-contract claim by his former lieutenant, Donald Drapkin.

At the end of the second day of a trial in Manhattan federal court, lawyers for MacAndrews & Forbes identified two witnesses who they expect to testify tomorrow before they rest their case. Neither was Perelman.

“Probably not,” a spokeswoman for the firm, Christine Taylor, said in an interview after the firm’s lawyers, Steven Kobre and Matthew Menchel, named for the judge their two final witnesses.

Drapkin, the former vice chairman, is suing Perelman’s MacAndrews & Forbes Holdings Inc. for $16 million that he says the firm failed to pay him after he left in 2007. Lawyers for Drapkin concluded their case today.

Because the judge has narrowed the issues in front of the jury, the trial is focused largely on whether Drapkin breached his separation agreement by urging a former colleague to quit MacAndrews & Forbes and by failing to return documents stored on his assistant’s personal computer.

Jurors have heard little about Perelman, his prominent ex- wives including actress Ellen Barkin, or intrigue at the closely held firm, owner of cosmetics maker Revlon Inc. (REV) and Deluxe Entertainment Services Group Inc., a provider of movie services.

Dealmaker

Drapkin, a dealmaker, says he was hired by Perelman in the 1980s to serve as vice chairman and act as in-house investment banker. In court papers, he says that the relationship between the two men had deteriorated so sharply by 2006 that Drapkin’s salary had been slashed and his responsibilities cut.

Drapkin says he agreed to leave the firm in 2007 return for millions of dollars in severance and from the sale of his stock. He has yet to be paid $16 million, money that MacAndrews & Forbes says it rightly withheld from him because he breached the terms of the separation deal by withholding documents and trying to induce an executive to leave.

Drapkin’s lawyer, Elkan Abramowitz, yesterday accused MacAndrews & Forbes of “nitpicking” and says the firm didn’t come up with these reasons for not paying Drapkin until months after the lawsuit began.

‘String Out Payments’

Drapkin concluded his testimony today, only occasionally mentioning Perelman. At one point he explained why MacAndrews & Forbes wanted to take two years to pay him $12 million as part of a stock repurchase deal.

“Mr. Perelman likes to string out payments whenever possible,” Drapkin testified. “I thought it was a typical MacAndrews move to delay things as long as possible.”

At another point, Drapkin, a lawyer, said he began to worry in January 2009 that his former firm wouldn’t pay him the money it owed after MacAndrews & Forbes was mistakenly asked to pay a $224 medical bill for Drapkin’s daughter.

“I may have been Pollyanna-ish,” he testified. “I was praying that Mr. Schwartz and Mr. Perelman would come to their senses over a $224 bill and not hold up $30 million.”

Drapkin said he complied with the separation agreement by having his personal assistant, Nancy Link, delete e-mails and firm-related documents from a laptop computer that MacAndrews & Forbes allowed her to retain after leaving. Link testified that Drapkin instructed her to delete the files.

Confidential Documents

MacAndrews & Forbes presented evidence of what it says were confidential firm documents found buried on Link’s laptop. Drapkin’s successor as vice chairman, Barry Schwartz, testified about one such document from 2006 listing deals that the firm was then weighing.

“We did not want to share this information,” he said.

Much of today’s testimony focused on mundane issues of a breach-of-contract suit, like the frequency with which Link deleted e-mail, whether Drapkin received paper or electronic versions of deal documents, and if Link understood what certain archived files were.

She said she didn’t.

The cases are Drapkin v. Mafco Consolidated Group, 09- cv-1285, and MacAndrews & Forbes LLC v. Drapkin, 09-cv-4513, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: David Glovin in New York at dglovin@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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