JURIST - Paper Chase: US Supreme Court refuses to consider class action status for Enron shareholders

The US Supreme Court [official website; JURIST news archive] on Tuesday denied [order list, PDF] without comment a petition for certiorari filed in University of California Regents v. Merrill Lynch (06-1341) [docket], a derivative lawsuit [class action website] filed in October 2001 by Enron shareholders against their investment banks accusing them of partnering to conceal monetary losses incurred by the company. The shareholders brought the suit as a class action, but the US Court of Appeals for the Fifth Circuit denied class action status [PDF text; JURIST report] last March, reversing a decision by US District Judge Melinda Harmon that had certified the class in June 2006. Defendants Merrill Lynch and Credit Suisse Group [corporate websites] appealed [JURIST report] to the Fifth Circuit, which held that a class action lawsuit was not the appropriate vehicle to sue the banks, thereby forcing investors to file individual lawsuits.

Denial of certiorari essentially ends the shareholder's legal recourse in the case, unless a lower federal court agrees to hear it again. The lead plaintiff in the case, the University of California Board of Regents [official website], has already negotiated settlements [JURIST report] with Lehman Brothers, Bank of America, Citigroup, JP Morgan Chase, and CIBC [press releases, PDF], for a total of over $7 billion in recovery. The lawsuit had sought over $30 billion in monetary recovery from Enron's collapse. AP has more.