Enron Shareholders Could Get Chance to Distinguish Stoneridge
The U.S. Supreme Court could decide as early as Monday whether to deny cert to Enron shareholders or return the case to an appeals court, giving an indication whether the suit against Enron bankers is doomed by the Supreme Court’s ruling yesterday in Stoneridge Investment Partners v. Scientific-Atlanta Inc.
In the Stoneridge suit, which involved a cable company, the high court held that third parties are not liable for participating in corporate wrongdoing if they did not directly mislead investors. Enron shareholders, who are suing banks accused of helping the energy company hide financial problems, could seize on one section of the majority opinion to distinguish Stoneridge from their case, the New York Times reports.
The relevant language, in the majority opinion by Justice Anthony M. Kennedy, notes that Stoneridge concerned an arrangement between a cable company and suppliers that “took place in the marketplace for goods and services, not in the investment sphere.”
The language could be used to distinguish third-party lawsuits that deal more directly with financial markets. Louis Bograd, senior litigation counsel for the Center for Constitutional Litigation, expressed some optimism. “There’s clearly some daylight there, but it’s too soon to say how much,” she told the Times.
