Plaintiffs’ Cert. Petition Denied in Enron Class Action Litigation

On January 22, 2008, the Supreme Court of the United States denied the plaintiffs’ petition for a writ of certiorari in the Enron federal securities class action litigation, allowing the ruling of the United States Court of Appeals for the Fifth Circuit to stand. The Supreme Court rejected the plaintiffs’ petition following its recent ruling in Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., et al., a case that presented similar legal issues as the Enron securities action. In March 2007, the Fifth Circuit, located in New Orleans, reversed and remanded the district court’s class certification decision in the class action in which the Firm’s client, Credit Suisse, is a defendant. The class had been seeking approximately $40 billion in damages. The Fifth Circuit held that Credit Suisse and other banks did not have a fiduciary obligation to Enron’s shareholders and no duty of disclosure, and therefore plaintiffs are not entitled to a presumption of classwide reliance. The Fifth Circuit also held that plaintiffs are not entitled to a fraud-on-the-market presumption because the banks did not make any misrepresentations to the market, and their alleged actions do not rise to the level of a primary violation of the securities laws.

Cravath partner Richard W. Clary argued the Fifth Circuit appeal on behalf of Credit Suisse. Mr. Clary was previously appointed by Judge Harmon (Federal District Court for the Southern District of Texas) and Judge Gonzalez (Federal Bankruptcy Court for the Southern District of New York) to be liaison counsel for all of the financial institutions in the Enron mediation. Mr. Clary handled the opposition to the plaintiffs’ petition for certiorari for Credit Suisse, and also filed an amicus brief in Stoneridge on behalf of other clients.