Morgan Stanley Hit With Class Action Alleging Discovery Improprieties
Daily Business Review
A new class action lawsuit in Florida alleges that Morgan Stanley committed violations of discovery rules in as many as 1,000 securities arbitration cases across the country. Coral Springs, Fla., lawyer Darren C. Blum filed the suit on behalf of Miami firefighter Robert Quintana, his wife, Alina, and other Morgan Stanley clients said to be in their situation.
Last June, the Quintanas received a $400 award in an NASD arbitration proceeding against the New York City-based financial services giant.
In every NASD and New York Stock Exchange arbitration, both sides sign a stipulation that they have provided all relevant data and communications for the resolution of the dispute.
Todd A. Zuckerbrod, of counsel at Greenberg Traurig in West Palm Beach, Fla., has defended Morgan Stanley in a number of cases involving South Florida plaintiffs represented by Blum, including the Quintanas.
In an April 21 letter to the plaintiffs, he wrote that "there are additional sources that might contain additional responsive e-mail. These additional sources, however, are not actively used for information retrieval and are not readily searchable. It will take an as-yet unknown period of time to determine if there is e-mail or other electronic data from those sources that is responsive to discovery obligations."
In an interview, Blum said that means the Quintanas did not receive a fair arbitration hearing at the NASD, formerly known as the National Association of Securities Dealers, because they didn't have access to all relevant information. The lawsuit in Miami-Dade County Circuit Court seeks a new hearing and return of the Quintanas' filing fees and those of what Blum estimates would be another 1,000 similarly situated plaintiffs. Blum estimates that the average filing fee for members of the class is $1,500.
Zuckerbrod did not return a call for comment Thursday. A Morgan Stanley spokeswoman said it's unclear whether the data sources mentioned in Zuckerbrod's letter "will have any additional e-mails relevant to any particular matter." She said she had not yet seen the complaint.
In March, Morgan Stanley was hit with a tough sanction for discovery violations in the $2.7 billion civil fraud suit in Palm Beach County Circuit Court brought by New York financier Ronald O. Perelman.
Circuit Judge Elizabeth T. Maass ruled that the financial services firm had violated discovery orders and issued a partial summary judgment in Perelman's favor. That leaves the jury to decide only the extent to which Perelman had been damaged in a business deal with Morgan Stanley. The trial has yet to reach a conclusion.