Merrill Lynch Seeks to Move Trial to Arizona

Attorneys for Merrill Lynch & Co. asked a federal judge Tuesday to move Orange County’s $2-billion damage suit to Arizona, saying that a fair trial was “impossible” if the case were kept here.

Citing the brokerage’s own opinion polls and studies of media bias in support of its request, Merrill’s attorneys suggested that county residents summoned to be jurors could not be impartial in “this extraordinary, highly politicized and emotionally charged case.”

“Every citizen of Orange County has a personal stake in the outcome of this case,” said Timothy Gilles, a spokesman for the brokerage in New York.

“Moreover,” Gilles added, “county residents have been exposed to unceasing coverage of the bankruptcy. . . . Given the press attention, and the personal financial stake of county residents, the deck will clearly be stacked against a fair trial.”

Merrill’s request that the case be moved came one day before U. S. District Judge Gary L. Taylor was expected to start deliberating how the trial--scheduled to begin Sept. 15, 1998--will be conducted in his Santa Ana courtroom.

Taylor will now have to decide whether to grant Merrill’s request that the trial be held outside the county.

Attorneys for the county said they plan to oppose Merrill’s move, describing it as another legal maneuver to delay the trial’s start.

“We are highly confident that a fair trial can be achieved in this courthouse and by the people who would be appropriate jurors,” said J. Michael Hennigan, the county’s lead litigation attorney. “This seems to be another desperation move by Merrill Lynch.”

Merrill is the prime target in the county’s legal campaign to recoup the $1.64 billion its investment pool suffered in trading losses that triggered the nation’s largest-ever bankruptcy by a governmental body in December 1994.

The suit, filed shortly after the county sought Bankruptcy Court protection, accuses Merrill Lynch officials of duping former Orange County Treasurer-Tax Collector Robert L. Citron into purchasing inordinately risky securities in violation of state law.

According to the county’s lawsuit, Merrill Lynch sold Orange County 68% of the securities in the $21-billion investment portfolio, which included $14 billion bought with borrowed money.

Merrill Lynch officials have repeatedly stated that Citron made his own decisions and that the county’s Board of Supervisors was now trying to shift that blame to the brokerage.

In his motion for a new venue, Merrill attorney Ronald L. Olson asserted that Orange County jurors would have a clear conflict of interest because each household stood to benefit more than $2,000 if the county extracted $2 billion from Merrill.

Olson referred to news coverage of a $30-million settlement the brokerage paid this summer to Dist. Atty. Michael R. Capizzi to end his criminal investigation of the brokerage.

That coverage, Olson said, “has poisoned residents’ perceptions of Merrill Lynch and irreversibly corrupted the pool of potential jurors in Orange County” and in neighboring Southern California counties.

The “pervasive media coverage” of the bankruptcy has also made it virtually impossible to hold a fair trial elsewhere in California, Olson said.

He cited a study by a UC Irvine marketing professor--hired by Merrill--who found that “65% of newspaper articles portray Merrill in a negative light.”

Results of an opinion poll, also commissioned by Merrill, found that “a vast majority of Orange County residents foresee direct and substantial positive effects on themselves and their county from a verdict against Merrill Lynch,” Olson said.

County residents are therefore predisposed to approve of action against the brokerage, Olson said.

Olson said the brokerage’s poll showed that 70% of residents of Maricopa County, Ariz., didn’t have an opinion as to which party should win the lawsuit.

The Phoenix or Tucson areas would be convenient locations for a trial, Olson said, because of their close proximity to Orange County and the abundance of hotel accommodations and legal services for attorneys.

If the case is not moved to Arizona, Olson said, it should at least be moved outside the seven-county Central District of California, which stretches from San Luis Obispo to Orange County.

Hennigan said a move to Arizona would delay the case by several months, possibly years, because attorneys would have to find an available courtroom and then move thousands of files into temporary offices there.

Taylor, who earlier this year set the September trial date, was expected to discuss Merrill’s request at a 10 a.m. hearing today. The judge had initially scheduled today’s session to discuss how the courtroom will be arranged and what electronic equipment was needed for a trial.