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Grasso's lawyer says judge broke promise and should be removed

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NEW YORK -- A lawyer for former New York Stock Exchange chief Richard Grasso asked an appeals court Wednesday to remove the judge in the fight over Grasso's $187.5 million pay package because he broke a promise to his client.

Attorney Gerson A. Zweifach said Justice Charles E. Ramos promised during settlement talks that he would take himself off Grasso's case if, after he acted as mediator, they failed.

During such talks a judge could learn things from both sides that would color his view of a case if talks failed and the case went to trial with him presiding.

Grasso, who has rarely been in court to hear arguments about his case, showed up Wednesday at the state Supreme Court's Appellate Division for the hearing. He declined comment on the proceedings as he left.

Justice James McGuire, one of the four justices of the state's Appellate Division who heard the arguments, asked Zweifach, "Is the basis of your motion that the judge who would be the trier of fact broke his word?"

"Yes," Zweifach replied.

The settlement talks were held with lawyers for Attorney General Eliot Spitzer, who sued to recover some of the money Grasso received in 2003. The money included salary, retirement and other funds.

Spitzer said that the total was excessive under laws that govern nonprofit organizations and that NYSE board members were misled about the size of the compensation package.

An internal NYSE review known as the Webb Report claimed up to $156.7 million of Grasso's package was excessive when compared to compensation packages for the chief executives of most U.S. corporations.

Assistant Attorney General Avi Schick argued that the talks were "perfunctory" and collapsed almost immediately and that Grasso's side revealed nothing to the judge or the attorney general that would prejudice his case.

Schick said he knew of no promise by Ramos to quit the case if the talks failed. He said Zweifach "wants a different judge because he didn't like the decisions" Ramos has made.

"There is absolutely nothing in the record to support the reassignment of this case," Schick told the appeals judges.

The judges seemed skeptical of Zweifach's arguments that Ramos should be removed because he acted as mediator in pretrial settlement talks.

Justice David Saxe said removing a judge on that ground "would have a chilling effect on trial judges in settlement conferences."

The Appellate Division judges didn't say when they would rule.

NYSE lawyer Robert Michaels argued against removing Ramos, saying it did not matter whether Ramos promised to get off Grasso's case: "Judges make promises all the time they don't necessarily follow through on," he said.

McGuire, laughing, said he did not think that was a good argument.

Ramos has refused to give up the case. He also declared, over Zweifach's objections, he will hear Grasso's trial without a jury.

Zweifach argued that state law guarantees Grasso a jury trial. He said any case in which the state claims a law was violated is a case in which the defendant can choose to have a jury trial.

Zweifach wants Ramos off the case because, he has said, the judge has shown bias against Grasso in statements and decisions he has made.

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