January 22, 2008

That Ted Frank guy who told the Legal Times "The proper way to look at it, I think, is that the Enron case is dead after today," appears to have been right. The plaintiffs' attenuated "scheme liability" theory contradicted federal law, as Stoneridge affirmed, and the Court refused to hear the appeal of the Enron plaintiffs from the Fifth Circuit decision shutting down the case.

Of course, the banks that settled for billions of dollars rather than risk tens of billions of dollars of liability after the erroneous district court ruling don't get to get their money back, and the plaintiffs' attorneys (including the felon Bill Lerach) will make hundreds of millions of dollars in their use of the courts as legalized extortion.

(Semi-related update: Bainbridge podcast on Stoneridge at the Federalist Society; Portfolio notes that the Enron plaintiffs return to district court to try a new theory.)