Judge Sets Distant Date for Bankruptcy Trial

SANTA ANA —  Orange County’s $2-billion lawsuit against Wall Street brokerage Merrill Lynch is finally set for trial, but don’t hold your breath.

Eighteen months from now--Sept 15, 1998--is the tentative date on which the case will first be presented to a jury, according to a timetable worked out Monday by U. S. District Court Gary L. Taylor.

“It’s time to get the show on the road,” said Taylor, who expressed irritation over the pace of the litigation, which began more than two years ago in the immediate aftermath of the county’s December 1994 bankruptcy filing.

When a case is not close to trial after two years of legal maneuvering, Taylor added, “I’m saying something’s the matter.”

The setting of a trial date was welcomed by county lawyers who had asked the judge for an earlier date, one about six months from now.

“We’re delighted,” said J. Michael Hennigan, the county’s lead litigation attorney.

Merrill Lynch’s attorneys, who told the judge Monday that setting a trial date was “premature,” declined to comment on the judge’s decision.

Attorneys for the giant Wall Street brokerage argued that they still needed many months to finish taking the depositions of potential witnesses, including that of former county Treasurer Robert L. Citron, who was recently enrolled in a community work program in lieu of serving a one-year jail sentence.

The setting of a trial date is expected to hasten the process of discovery--the exchange of relevant documents between the two sides and the questioning of each other’s witnesses.

In its lawsuit, the county claims that Merrill Lynch, the county’s primary securities provider, sold Citron securities that were unsuitably risky for a public treasury and concocted an elaborate investment scheme that broke state law and led to the collapse of the county’s investment pool.

The county has also filed suits against other brokerages, accountants and law firms it holds responsible for the $1.6 billion in investment pool losses that forced the county into bankruptcy.

The defendants have denied any wrongdoing.

Taylor said he was aware that other litigation could affect the Merrill Lynch case but added that he wanted to set a tentative trial date to move the case along.

According to Taylor’s timetable, both sides should complete discovery by April 30, 1998.

The judge said the parties will meet August 7, 1998, for a pretrial conference, more than a month before the case is scheduled to be brought before a jury.

Ronald Olson, an attorney for the brokerage, hinted again Monday that Merrill Lynch may file a motion to transfer the lawsuit out of Orange County, because local jurors would have a financial interest in the outcome of the case.

Taylor said he would rule on that motion when it is presented to him.

Taylor’s courtroom was packed with lawyers--many representing other defendants sued by the county--prompting the judge to remark: “I don’t think I’ve seen so many dark suits in one place in my whole life.”

As the county’s attorneys left the courtroom, Hennigan was asked if he thought the judge’s decision would push both sides closer to a settlement.

“Setting a trial date” doesn’t spur a settlement, he said. “But getting close to a trial date does.”