Legal News

Post-Stoneridge, Supremes Weigh Whether to Hear Enron

By Peter Lattman

Are the reports of the demise of the Enron shareholder class-action greatly exaggerated?

Sorry for the overused cliche (perhaps we should ban it?), but the question seemed appropriate for what’s going down at One First Street, NE, today, when the justices are slated to sit around and talk not only about the Giants chances on Sunday, but also discuss whether they should hear the Enron class-action in light of their Stoneridge ruling this week.

On Tuesday, the court ruled in Stoneridge that third parties such as lawyers and accountants can’t be sued for fraud unless investors relied on them when making their investing decisions. Given its similarity to Stoneridge, it seems unlikely the Supremes will agree to hear the Enron case, but the shareholders’ lawyers are giving it the old college try.

Lawyers for Enron shareholders think that they should be able to press ahead in their lawsuit against investment banks and securities firms over their role as advisers to Enron. In a brief filed yesterday, lead plaintiffs’ lawyer Coughlin Stoia said ”this court’s decision in Stoneridge demonstrates critical differences between Enron and Stoneridge — differences that warrant a grant” of certiorari. “Enron is, at its core, a case about financial fraud, executed by financial professionals targeting investors,” said the brief. The court should “clarify when financial professionals may be liable for deliberately misleading investors.”

There are two other possibilites for the Supremes besides agreeing to hear the case. They could reject the appeal and end the case. Or, they could send it back to the Fifth Circuit for reconsideration in light of Stoneridge. The Fifth Circuit scuttled the case last March.

Full post as published by Law Blog - WSJ.com on January 18, 2008 (boomark / email).