PARIS — In the face of a $100 million bias suit launched by LVMH Moët Hennessy Louis Vuitton, does Morgan Stanley want more evidence from the luxury group, or less?
That was the incredulous stance of counsel for LVMH Tuesday as it faced off against lawyers for the investment bank in the private chambers of magistrate Jean-Pierre Eck at Paris Commercial Court. As reported, Eck has been asked to rule on two Morgan Stanley demands: that the court compel LVMH to confirm that it’s not sheltering evidence, and that LVMH pinpoint exactly what’s germane to its case among 1,900 pages of documents on a CD-ROM it filed as evidence.
LVMH accuses Morgan Stanley analyst Claire Kent of bias and conflict of interest in her equity research on the French group. Morgan’s investment bankers advise LVMH’s luxury rival Gucci Group on acquisitions and other matters.
Eck won’t pronounce his decision on the two questions until April 28. But on Tuesday, he refereed some lively, and sometimes comical, exchanges.
“I don’t know what it signifies,” Morgan Stanley’s lawyer Philippe Nouel, a partner in the firm Gide Loyrette Nouel, said of the CD-ROM, which contains 198 research reports dating back to 1999.
Morgan Stanley wants the court to demand that LVMH clarify the exact purpose of the CD-ROM so it can correctly prepare its defense. It believes, and accepts, that the documents offer examples of boilerplate statements that are among the most contentious points in the suit. The statements, while altered over time, had stated that Morgan Stanley had a director in common with LVMH and that it would be seeking compensation from the French group for investment banking services.
But Georges Terrier, LVMH’s chief legal counsel, was flummoxed by the arguments, throwing his hands in the air repeatedly and shaking his head to the heavens. “The fact that we are still talking about this is surreal,” he quipped.
The LVMH team also made sport with Morgan Stanley when it turned the second question and demanded that LVMH come clean with more evidence: secret weapons alluded to in articles in three French newspapers. French law requires all evidence pertaining to the writ be disclosed at the outset.
Although the magistrate has not yet ruled on the second question, LVMH’s counsel interpreted Eck’s commentary as being in its favor. Eck suggested the court has the discretion to rule on any new evidence — and “in any case, we would give you all the time you need to respond to whatever comes out.”
Following Eck’s ruling on the two questions, the court has set May 12 as the date for the next technical hearing on the case.
But Nouel, pleased with the attention the magistrate gave to his arguments, stressed that Morgan Stanley is under no legal deadline to submit its defense. As reported, Morgan Stanley has said it plans to defend the suit vigorously, and ultimately launch a counterclaim against LVMH for damage done by the proceedings.