The attention of the business and legal worlds was drawn to Manhattan this week, where private equity baron Guy Hands lost his law suit against US bank Citigroup.
This was a jury trial before Jed Rakoff, US district court judge for the Southern District of New York.
The case centred on claims that Hands’ one-time friend, Citibank’s David Wormsley, tricked him in to paying too much for British music label EMI in an auction in 2007. Hands’ private equity firm Terra Firma’s acquisition of EMI for £4.2bn is is widely quoted as ‘disastrous’.
Coverage in the UK centred on Hands and Wormsley, the reaction of the markets, and the possibility that Terra Firma will forfeit control of EMI to the bank if debt repayment obligations are not met next March.
All very interesting, but it’s also worth looking at the role of Judge Rakoff and the jury in this case.
In the UK juries are seen as having a chequered record in complex business-related cases. The Maxwell and Guinness trials had controversial results, and have become a reference point for critics of the jury system.
Rakoff, in the words of a New York Times business blog, ‘runs a lively courtroom’, and his interventions certainly have a no-nonsense character. When lawyers on both sides in this case made much of the fact that their two key witnesses were married with children, Rakoff noted: ‘I congratulate them on their fertility. But I do think it’s rather irrelevant to any issue in this case.’
He addressed the issue of jury members’ ability to follow the case head-on, seemingly in response to comments on this NY Times blog: ‘Is this jury picking up what Citigroup is laying down? The bank’s lawyer Mr Cohen did have the witness explicate the sentence acronym by acronym. But this is all still pretty mind-numbing stuff for seven New Yorkers unsophisticated in the ways of high finance.’
Rakoff said: ‘In some of the press coverage of this case, there has been a suggestion that the nature of the case is too complicated for a jury to understand. And this touches a sensitive chord with me, because in the 15 years I’ve been a judge, either I or my law clerks have talked to the jury after each and every jury trial, civil and criminal, and as a result of that I’ve become a huge fan of the jury system.
‘And my experience is that most cases, including this one, come down largely to credibility contests. That a jury of everyday folks with everyday experience are supremely gifted in ascertaining who is telling the truth and who is not, greatly, greatly assisted in that case by able counsel and the virtues of the adversary system.’
Going on this result, the jury seems to have followed Citigroup’s evidence, despite the concerns of the NY Times. Perhaps we in the UK have missed the point when we focus on whether a jury is up to deciding ‘difficult’ cases, and, the next time we consider the matter, it is the role of judges and advocates we should be examining.
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