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$40 Billion Class Action Enron Suit Blocked
Breaking Legal News |
2007/03/20 17:28
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The US Fifth Circuit Court of Appeals withdrew class action status Tuesday from Enron shareholders who filed a shareholder derivative lawsuit in October 2001. US District Judge Melinda Harmon certified the class in June 2006, but defendants Merrill Lynch and Credit Suisse Group appealed to the Fifth Circuit, alleging the certification should be thrown out because it allows Merrill Lynch and Credit Suisse to be held liable for actions taken by other defendants even though they had no actual knowledge of those actions.
The Fifth Circuit held that a class action lawsuit was not the appropriate vehicle to sue the banks, thereby forcing investors to file individual lawsuits. Although this effectively ends the shareholder's ability to allege that Merrill Lynch and Credit Suisse were primary participants in fraud, the lead plaintiff in the case, the University of California Board of Regents, has already negotiated settlements with Lehman Brothers, Bank of America, Citigroup, JP Morgan Chase, and CIBC, for a total of over $7 billion in recovery.Harmon denied a motion in February, filed by defendants Merrill Lynch and Credit Suisse, to delay the trial pending the outcome of the certification appeal to the Fifth Circuit. The case is still scheduled to resume on April 16. In January, Harmon dismissed seven defendants from the class action suit, including late ex-Enron CEO Ken Lay. Lay, convicted in May of fraud and conspiracy charges for providing investors with false and misleading financial information from 1999 up until Enron filed bankruptcy in late 2001, died suddenly of a heart attack in July. |
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Class action or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued. This form of collective lawsuit originated in the United States and is still predominantly a U.S. phenomenon, at least the U.S. variant of it. In the United States federal courts, class actions are governed by Federal Rules of Civil Procedure Rule. Since 1938, many states have adopted rules similar to the FRCP. However, some states like California have civil procedure systems which deviate significantly from the federal rules; the California Codes provide for four separate types of class actions. As a result, there are two separate treatises devoted solely to the complex topic of California class actions. Some states, such as Virginia, do not provide for any class actions, while others, such as New York, limit the types of claims that may be brought as class actions. They can construct your law firm a brand new website, lawyer website templates and help you redesign your existing law firm site to secure your place in the internet. |
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