5: Paragraph 25 There's also the matter of unemployment benefits: Hutton Trust's bylaws defined me as a senior corporate officer and provided that a senior officer could be fired, with or without cause, only by a three-fifths vote of the board of directors. (Abbes kept asking me to resign because he didn't want to have the directors vote on it; that's how he'd gotten rid of Butler, and then Abbes changed the old board minutes to make it look like Butler hadn't held the offices it required a board vote to terminate.) When I was fired, I filed for unemployment benefits, and Hutton didn't answer the claim; I submitted the newspaper clippings where Hutton said I was fired for making improper demands, and the unemployment office made written findings that didn't amount to cause under Delaware law, so I collected unemployment for much of 1986.
5: Paragraph 26 After I filed suit, Hutton also moved to dismiss on the grounds that I'd been fired for cause, and it submitted minutes of a board meeting ratifying my termination for cause but not saying that the vote was more than a simple majority. Given the bylaws requiring a supermajority vote and the ruling of the unemployment office, which Hutton didn't appeal when it had the chance, Hutton's position had to be rejected as a matter of law, but Longobardi has always treated it as an open question whether I was fired for cause, as Hutton says, or to keep me from talking to the bank examiners, as I say. I could give you more examples of how Longobardi, who's now chief judge for the district, has sided with Hutton to give me a hard time, but you get the idea.
5: Paragraph 27 The trial took most of two days: 30 September and 1 October 1991. I testified the first day, and my cross examination continued into the second day, then Hutton put on four witnesses: one of Hutton's inside lawyers who was still working for Shearson, Abbes, Hitchcock, and Shapiro. Not only did they not contradict my allegations, they actually testified that they were true in every material aspect!
5: Paragraph 28 There were many comical moments: Hitchcock, trying as usual to wimp out from under any responsibility, testified to not having known then or not remembering now most of what I asked him, and Abbes testified to not knowing who had issued his pay checks. While I'd been testifying, I'd several times tried to introduce a subject, like Lockwood's tantrum when he fired Butler, and Foster had objected, and Longobardi had ruled it out; then her witnesses got on the stand and testified to it for me. The way Longobardi fawned all over Shapiro would have been funny if it weren't so pathetic: The only thing more disgusting than having to watch a federal judge suck up to anybody that much is having the guy he's sucking up to be your opponent's star witness.
5: Paragraph 29 I was suspicious of my good fortune when the first three witnesses not only didn't counter my evidence but actually supported my case, but then Shapiro took the stand and did so much to help me that I considered whether I was dreaming, and the alarm clock would go off any minute for me to get up and go to the real trial. Malarkey was dead by then, and I'd figured there was no way to prove who was responsible for his lying to the press — saying there was no truth to my charges when his own reports documented everything I was saying — so I hadn't even included any defamation claims in my complaint, but the appellate court had ruled that "loss of earnings, benefits, and reputation constitute self-evident injury as in any standard wrongful discharge action." My reputation had certainly been injured by his making me out to be a liar, but I doubted I'd be able to blame Hutton for it — I'd expected Hutton to be smart enough to say Malarkey must have done that on his own, so Hutton wasn't liable to me for it.
5: Paragraph 30 But Shapiro testified — voluntarily, on direct examination, in answer to Foster's questions, and before I even started to cross examine him — that he was the one who suggested that Malarkey tell the reporters that! That admission meant Hutton was liable for the deliberate injury to my reputation, because one of the federal civil procedure rules says that if you prove something at trial that you didn't put in your complaint, it shall (not "may" but "shall") be treated as if you did include it in your complaint. That was like Christmas coming early, but then it got even better.
5: Paragraph 31 Shapiro had testified on direct examination that when Malarkey issued his 1986 audit report on Hutton Trust, it showed the same problems that had been described in the 1985 report, what Shapiro helpfully described as the kind of problems you'd expect from having brokerage people trying to run a bank. I'd never seen the 1986 report, and I hadn't asked for it during discovery because it was written after I'd been fired, so I knew Longobardi would rule I couldn't have it, and I'd hate like the devil to give either him or my opponents the satisfaction of keeping me from getting something I want. But I knew the federal evidence rules pretty well, and one of them says if a witness looks at a document to refresh his recollection before testifying, you get to see it.
5: Paragraph 32 So I asked Shapiro if he'd reviewed any documents in preparation for testifying, and Bingo! He admitted to reviewing the commissioner's 1986 report, I asked for it, and Longobardi said they had to let me see it; Foster objected and kept dithering about it being too late for me to make a request for Hutton to produce documents, but that just showed she didn't understand the rules of evidence. Moments like that made the trial truly memorable.
5: Paragraph 33 Neither Hutton nor I had asked to have a jury for the trial: I didn't, because I thought the breaches of fiduciary duty, both the trustee's duties and the directors' duties, were too technical for many jurors to care about, and I wasn't sure a jury would see me as a sympathetic plaintiff; you'd have to ask Hutton why they didn't want a jury. Besides, a jury comes back with a verdict, and you're pretty much stuck with it, but when you have the judge decide the case, he has to issue an opinion setting forth his reasons, and if you appeal his ruling, the appellate court goes over his reasoning as well as his result. And whatever his shortcomings of intellect and temperament, Longobardi used to be a vice chancellor and so must have a solid background in both types of fiduciary breach.
5: Paragraph 34 At the end of the evidence on 1 October, he gave us an expedited schedule for filing our written arguments because, he said, he wanted us all "to deal with this while it's hot and fresh in our minds." The last brief was submitted on 7 December 1991; as I write this, in June 1992, we're still waiting for him to deliver the verdict.