Judge expects cases to be settled as lawyers start gathering millions of documents
HOUSTON – Multibillion-dollar lawsuits against Enron Corp. officials and the company’s former auditor, Arthur Andersen LLC, will go to trial in December 2003, a federal judge has ruled.
U.S. District Judge Melinda Harmon in Houston told lawyers before filing the trial schedule that she expects the cases to be settled. But they have 18 months to gather millions of documents and prepare their cases if they take their claims to trial.
“It’s something real now,” said Rod Jordan, 63, a member of the Severed Enron Employees Coalition. Jordan was among 4,500 workers abruptly laid off in December after Enron filed the largest bankruptcy in U.S. history.
He also is among hundreds of former workers, retirees and investors who filed lawsuits over millions of dollars in investments or 401(k) accounts that evaporated when Enron’s once-enviable stock price plummeted to less than a dollar.
“Without a date, it was something that maybe would go to trial someday, maybe it won’t,” Jordan said Friday.
Harmon said in the order filed late Thursday the cases have generated national attention given allegations of accounting abuses and Andersen’s role as Enron’s former outside auditor. She said she hoped an efficient resolution of the cases would change “the nation’s impression that the justice system grinds slowly in a Dickensian fashion.”
Harmon also ordered Enron to provide plaintiffs with all documents the company has given Congress and the Labor Department, both of which are investigating the collapse. The Securities and Exchange Commission and the Justice Department also are investigating.
“We’ll continue to cooperate with all investigations and inquiries,” Enron spokeswoman Karen Denne said Friday.
Harmon’s order addresses class-action lawsuits against current and former Enron officials and Chicago-based Andersen.
Plaintiffs in the consolidated case are large investors, like the University of California regents, the lead plaintiff. They also include several state pension funds, Amalgamated Bank and some individual investors.
Plaintiffs in the other actions are Enron employees and retirees. Those cases will be consolidated April 1.
“The order sends a strong message that the judge wants to move quickly,” University of California spokesman Trey Davis said Friday.
The plaintiffs are seeking more than $25 billion from Enron officials, including former chief executives Kenneth Lay and Jeff Skilling, and the auditing firm.
Davis declined to say whether Arthur Andersen has offered a reported $750 million to settle claims with creditors, investors and employees. But other lawyers involved with the cases said Andersen had claimed that anything more would put the firm out of business.
Andersen spokesman Patrick Dorton declined comment Friday beyond an earlier statement that “we think it is in the best interests of all parties to deal expeditiously and responsibly with what has occurred.”
Randy McClanahan, one of the lawyers representing employees, called the reported offer “a good start,” but that he doubted it would be anywhere close to what plaintiffs eventually will demand.
Anthony Sabino, a professor at St. John’s University and an expert in bankruptcy, oil and gas law, said Andersen’s efforts to settle the claims quickly show the firm wants to leave Enron behind and focus on its other clients.
“Clearly this is damage control in the extreme,” Sabino said. “Right now, job one is to retain the very significant client base they have.”