One of the cases that former New York Attorney General Eliot Spitzer might have expected to be a slam dunk was his six charges against former New York Stock Exchange Chairman Richard Grasso.
Spitzer filed the case following disclosure that Grasso had accepted a $187.5 million compensation package in 2004. Spitzer sought to force Grasso to give up the package, arguing among other things that it was unreasonably large for a nonprofit executive and violated both the public interest and New York state public policy.
Spitzer, of course, has since been elected New York’s governor and was succeeded as attorney general by Andrew Cuomo, former secretary of the U.S. Department of Housing and Urban Development under President Clinton.
A New York appeals court, however, said earlier this week that Spitzer lacked authority under state law to bring the suit. In a lengthy decision that threw out four of Spitzer’s six charges against Grasso, the court said “the authority to bring suit in what the attorney general perceives to be the interest of the state cannot trump contrary determinations about the public interest made by the legislature.’’ In other words, Spitzer was not at liberty as attorney general to decide on his own what is in the public interest.
Two of Spitzer’s charges remain, but the decision removed the most serious of the six. A spokesman for Cuomo said an appeal was likely.
A Spitzer spokesman said that while the decision hinged on a technicality, the governor continues to believe the attorney general should have authority to regulate nonprofits in New York.
In other words, Spitzer is putting on a brave face, even though the most important part of his case against Grasso has now been rejected by the courts.
To be sure, Grasso is far from an attractive defendant for Spitzer’s growing chorus of critics to rally around. Even so, considering Spitzer’s ambitions for higher office, it is refreshing to see a New York court give the former state attorney general a much-needed lesson in the legitimate use of authority.
