The University of California’s lawsuit against Enron moved one step further as the federal judge overseeing the case denied motions to dismiss filed by several secondary defendants.
U.S. District Judge Melinda Harmon ruled on Dec. 20 to allow claims to proceed against ten firms allegedly involved in fraudulent activities relating to the Enron bankruptcy. In another ruling, Harmon also ruled to keep documents filed during discovery public.
As the lead plaintiff in the case, the UC welcomed the news.
In a statement, UC General Counsel James Holst called the decision a “major victory for Enron’s investors,” adding “we look forward to aggressively pursuing the case on behalf of the class.”
Harmon completely denied motions filed by Barclays Bank PLC, Citigroup Inc., Credit Suisse First Boston, Canadian Imperial Bank of Commerce, J.P. Morgan Chase and Co., and Merrill Lynch, all investment banks and brokerages. Houston law firm Vinson & Elkins and Arthur Andersen LLP also had their requests denied.
Motions filed by Bank of America and Lehman Brothers Holding Inc. were partially denied, while dismissal was granted to Deutsche Bank AG and Washington D.C. law firm Kirkland and Ellis.
Representatives for most of the defendants could not be contacted by Friday, though Shirley Norton, press aide for Bank of America, declined comment. Richard Mithoff, an attorney for J.P. Morgan said the judges ruling means only that the plaintiffs can continue to press their case.
The plaintiffs allege the defendants financed and advised Enron as the firm misrepresented its profitability, while the banks had inside knowledge of questionable business dealings.
The UC believes the defendants had active and knowing involvement of illegal activities allegedly committed by Enron, and that financing provided by banks represented “more than just the average loan,” said press aide Trey Davis.
Following some procedural matters, the case can now begin the discovery process, said Davis.
During discovery, both sides of a lawsuit can ask each other for any information that may be relevant to the case before the actual trial begins.