Perelman’s MacAndrews & Forbes Loses $16 Million Drapkin Verdict
Ronald Perelman’s MacAndrews & Forbes Holdings Inc. was ordered by a jury to pay $16 million to Perelman’s ex-lieutenant, Donald Drapkin, after jurors found the billionaire’s firm breached a separation agreement.
Jurors in Manhattan federal court deliberated for about 90 minutes before returning their verdict yesterday in Drapkin’s breach-of-contract lawsuit. They had heard three days of testimony.
“I’m very happy,” Drapkin said immediately after the verdict.
“We are obviously disappointed” in the outcome, Barry Schwartz, executive vice chairman of MacAndrews & Forbes, said in a statement. “We believe that the facts unequivocally proved a substantial breach by Mr. Drapkin. We will review all appropriate post-trial options.”
Drapkin, a dealmaker, sued MacAndrews & Forbes in 2009, saying he was hired by Perelman in the 1980s to serve as vice chairman and act as in-house investment banker. In court papers, he said the relationship between the two men had deteriorated so much by 2006 that Drapkin’s salary had been slashed and his responsibilities cut.
Drapkin said he agreed to leave the firm in 2007 in return for millions of dollars in severance and proceeds from the sale of his stock. He claimed he wasn’t paid $16 million. MacAndrews & Forbes said it withheld the payments because Drapkin breached the separation agreement by withholding documents and trying to get Eric Rose, who heads the firm’s life sciences business, to leave.
The judge barred evidence about the soured relationship and said the focus of the trial would be on whether the firm had breached its contract with Drapkin. As a result, much of the three days of testimony focused on contract clauses, document retention and e-mails.
Perelman didn’t testify at the trial, and jurors heard little about him, 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. Perelman wasn’t a defendant in the case.
Drapkin testified, as did his personal assistant, Nancy Link, on whose laptop computer was found firm-related documents. Drapkin and Link said they were unaware that documents had been stored on the computer, which Link was allowed to take with her when they left the firm.
Drapkin’s lawyer, Elkan Abramowitz, told jurors that MacAndrews & Forbes was concocting reasons for breaching its deal with Drapkin, an attorney.
“These so-called material breaches were nothing more than phony excuses,” he said in his summation.
MacAndrews & Forbes presented testimony from Schwartz and Rose. Rose testified that Drapkin had told him in May 2007 that Rose’s career would stall after Drapkin had left the firm.
In closing arguments, Matthew Menchel, a lawyer for MacAndrews & Forbes, argued that Drapkin failed to comply with the separation agreement because he didn’t adequately instruct Link to delete documents on her computer.
He also urged jurors not to be swayed by Drapkin’s testimony about Perelman’s wealth, which Drapkin put at $12 billion. Drapkin had been paid millions of dollars when he quit, Menchel said.
‘Amount of Justice’
“Mr. Perelman and MacAndrews & Forbes are entitled to the same amount of justice as everyone else,” Menchel told jurors.
After the verdict, juror Nibaldo Aguilera said in an interview that the amount of compensation at issue was “obscene, but we acted in accordance with the law.”
“It is sad that friends for 20 or 25 years ended in that way,” he said.
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).
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