Attorneys for eight corporations and men accused of costing the state $70 million through stock manipulations argued Friday in a Juneau courtroom that the lawsuit shouldn't be decided there.
"There's no question that any of the defendants had any contact with Alaska," said Peter Barbur from New York in arguing before Juneau Superior Court Judge Patricia Collins that Alaska has no jurisdiction to sue communications giant Time Warner.
Collins took the matter under advisement.
The suit was filed April 1, 2004, by then-Alaska Attorney General Gregg Renkes, claiming the company had misrepresented facts in connection with its January 2001 merger with America Online.
The lawsuit claims the state's biggest loser through subsequent investments in Time Warner securities was the Alaska Permanent Fund. Its loss was listed at $50 million.
Barbur, representing Time Warner and three of the five individuals named as corporate officers, noted that Alaska is one of six states involved in a federal lawsuit in New York against the same defendants. Alaskans can go there to argue their case, he said.
James Finberg, a San Francisco attorney working with Alaska on the case, said the state filed the lawsuit here because state law better addresses the state's concerns.
"Federal law is less favorable to the plaintiffs than Alaska law," he said.
Defense attorneys argued that statements were sent to investors nationwide, and the company did not target Alaskans. Key in their arguments was a U.S. Supreme Court ruling on jurisdiction in a libel case involving Shirley Jones and the National Enquirer.
Barbur argued that in addition to documents not being targeted to Alaska, the state didn't bear the brunt of the alleged injury, following what he took from the findings in the Jones case.
"The defendants themselves have caused the injury in Alaska," Finberg countered.
He argued that state jurisdiction shouldn't be limited to New York and Virginia, where Time Warner does business.
"The standard according to the Supreme Court should be fair play and justice," he said. "In the age of air travel with well-heeled defendants, it is not unreasonable to have jurisdiction in Alaska."
In addition to Time Warner, the 56-page lawsuit names the accounting firm of Ernst and Young and securities underwriter Morgan Stanley and Company.
Attorney Rick Pepperman from New York noted that his client, Morgan Stanley, had been dismissed from the federal lawsuit.
Pepperman said the state alleged Morgan Stanley had made false statements in its opinion concerning the post-merger securities, although the firm believed its opinion to be true at the time. He noted that the opinion was issued in January 2000, "before the tech stock bubble burst."
The Alaska lawsuit charges that if Morgan Stanley did not know the truth about the securities, it should have.
Attorney Robert Hubbell from Los Angeles, representing Ernst and Young, said the company was working in New York and should not be held liable for accounting standards in all 50 states.
Named individually in the suit were Stephen M. Case, former chairman of the board of the merged company who resigned in 2003; Robert W. Pittman, a former chief operating officer for the company who resigned in 2002; J. Michael Kelly, chief financial officer for the company; David M. Colburn, who reported to Pittman and was terminated in 2002; and Eric Keller, who reported directly to Colburn.
Barbur represented Case, Pittman and Kelly. Attorneys for Colburn and Keller said they agreed with Barbur's points and added that their clients were not true corporate officers.
Tony Carroll can be reached at firstname.lastname@example.org.
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