A U.S. District Court jury in Los Angeles last week said Francois Pinault, the French tycoon who controls Gucci Group through his PPR conglomerate, must pay $700 million to settle a long-standing dispute over the failed California insurer Executive Life.
PARIS — A U.S. District Court jury in Los Angeles last week said François Pinault, the French tycoon who controls Gucci Group through his PPR conglomerate, must pay $700 million to settle a long-standing dispute over the failed California insurer Executive Life.
But Pinault said in a statement Friday that the decision was invalid and would not hold up under federal and California law, because punitive damages must be accompanied by compensatory damages.
“The allocation of $700 million of punitive damages is not valid,” Pinault said in the statement, issued from his private holding company, Artemis.
Pinault and Artemis were accused of breaking California law when they purchased Executive Life’s valuable junk bond portfolio from French bank Credit Lyonnais in the Nineties. At the time, California forbade banks from owning insurance firms. Pinault reaped huge profits when he sold Executive Life’s junk bonds.
The jury in May cleared Pinault personally of any wrongdoing in the case, but found Artemis liable of conspiracy in the way in which the transaction was conducted. After the verdict, Judge Howard Matz urged Pinault and the California Insurance Department to negotiate a financial settlement as the jury moved to the penalty phase of the case.
“I am confident about the law,” said lawyer Gary Fontana, who represented the state. “I hope that the judge follows the jury’s guidance and the law. If he doesn’t uphold it, that’s what the Ninth Circuit [Court of Appeals] is for.”
“We are confident that [the judge] is going to enter a judgment for zero dollars,’’ said Pinault’s attorney Jim Clark.
Credit Lyonnais and the French government have already agreed to pay $600 million to settle their part in the case, Clark said.
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