The federal judge overseeing the Enron shareholders’ class-action lawsuit in Texas granted summary judgment dismissing a $1 billion claim brought by plaintiffs’ counsel William Lerach against investment firm Alliance Capital Management. In an unusual move, the judge ordered that plaintiffs' counsel pay Alliance’s attorney’s fees under Section 11(e) of the Securities Act incurred in preparing the summary judgment motion.
"As for attorney's fees and costs under section section 11(e), the Court finds that at the time this suit was filed, given the sophisticated concealment of Enron's financial condition, Plaintiffs' suspicions arising from Savage's dual-hat roles at Alliance were not unreasonable. Thus at its inception and at least through Savage's deposition in January 2005 and for a period of discovery thereafter, the Court finds that this case was not frivolous, without merit, and/or brought in bad faith. It appears to this Court, however, that the summary judgment briefing should not have been necessary and the continuance of the claim against Alliance was at that point without merit."
The order requires the attorneys, not their clients, to pay the award. Apparently they have collected almost $7 billion in settlements for clients in Enron-related litigation so this small setback won't carry much sting.