Plaintiffs' Memorandum of Law in Opposition to Motions to Dismiss ...
Plaintiffs' Memorandum of Law in Opposition to Motions to Dismiss ...
Plaintiffs' Memorandum of Law in Opposition to Motions to Dismiss ...
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I. Introduction<br />
In the wake <strong>of</strong> the most brazen, massive corporate fraud <strong>in</strong> his<strong>to</strong>ry – a fraud that cost<br />
thousands <strong>of</strong> <strong>in</strong>ves<strong>to</strong>rs their pension plans and hard-earned life sav<strong>in</strong>gs – this securities class action<br />
was brought on behalf <strong>of</strong> purchasers <strong>of</strong> Enron's publicly traded equity and debt securities between<br />
10/19/98 and 11/27/01 (the "Class Period"). Defendants are Enron's <strong>to</strong>p executives and direc<strong>to</strong>rs as<br />
well as Enron's audi<strong>to</strong>r and its affiliated entities and partners (collectively, "Andersen"), the law<br />
firms <strong>of</strong> V<strong>in</strong>son & Elk<strong>in</strong>s and Kirkland & Ellis, and Enron's banks.<br />
The motions <strong>to</strong> dismiss filed by the follow<strong>in</strong>g Enron Defendants are addressed <strong>in</strong> this<br />
memorandum: Belfer, Blake, Chan, Duncan, Foy, Gramm, Jaedicke, LeMaistre, Mendelsohn, Meyer,<br />
Pereira, Savage, Urquhart, Wakeham, Walker, W<strong>in</strong>okur (the "Outside Direc<strong>to</strong>rs"). 1 Defendants<br />
Mendelsohn, Meyer, Pereira, Savage, Urquhart, Wakeham, Walker and W<strong>in</strong>okur are sued only under<br />
claims for violations <strong>of</strong> §§11 and 15 <strong>of</strong> the Securities Act, for which the Consolidated Compla<strong>in</strong>t<br />
("CC") expressly excluded and disclaimed allegations that could be construed as alleg<strong>in</strong>g fraud.<br />
1005. 2 Thus, descriptions here<strong>in</strong> <strong>of</strong> the Outside Direc<strong>to</strong>rs' <strong>in</strong>volvement <strong>in</strong> Enron's scheme <strong>to</strong><br />
defraud do not apply <strong>to</strong> Mendelsohn, Meyer, Pereira, Savage, Urquhart, Wakeham, Walker and<br />
W<strong>in</strong>okur.<br />
Despite a detailed and specific CC describ<strong>in</strong>g the enormity <strong>of</strong> the fraud, Enron's outside<br />
direc<strong>to</strong>rs – whose approval <strong>of</strong> fraudulent transactions, conflicts <strong>of</strong> <strong>in</strong>terest and deceptive account<strong>in</strong>g<br />
were at the center <strong>of</strong> the fraud – now move <strong>to</strong> dismiss the CC. The CC sets out <strong>in</strong> great particularity<br />
the participation <strong>of</strong> each <strong>of</strong> the Outside Direc<strong>to</strong>rs <strong>in</strong> the Enron scheme. The CC alleges with<br />
particularity, the who, what, when, where, and why <strong>of</strong> each statement, signed by each Outside<br />
Direc<strong>to</strong>r. Further, the CC avers specific facts that describe manipulative and deceptive devices these<br />
board members used <strong>to</strong> defraud Enron's <strong>in</strong>ves<strong>to</strong>rs, as well as their know<strong>in</strong>g and reckless participation<br />
1<br />
This brief responds <strong>to</strong> the follow<strong>in</strong>g briefs filed by the Outside Direc<strong>to</strong>rs: Motion <strong>to</strong> <strong>Dismiss</strong><br />
<strong>of</strong> Defendants Robert A. Belfer, Norman P. Blake, Jr., Ronnie C. Chan, John H. Duncan, Joe H. Foy,<br />
Wendy L. Gramm, Robert Jaedicke, Charles A. LeMaistre, John Mendelsohn, Jerome Meyer, Paulo<br />
Ferraz Pereira, Frank Savage, John Wakeham, Charls E. Walker, and Herbert S. W<strong>in</strong>okur ("Outside<br />
Dir. Br."), filed jo<strong>in</strong>tly, and responds as well <strong>to</strong> the separately filed brief <strong>of</strong> John A. Urquhart.<br />
2<br />
All "__" references are <strong>to</strong> pla<strong>in</strong>tiffs' CC filed 4/8/02.<br />
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