Opinion
No. MDL 1446 H-01-3624, Civil Action No. H-01-3645 Lead Case Consolidated With., H-01-3892, H-01-3690, H-01-3998, H-02-1838, H-02-1832, H-02-1922, H-02-3427.
April 8, 2005
This matter having come before the Court for hearing, pursuant to this Court's Scheduling Order dated December 22, 2004, on the Notice and Motion of the Official Committee of Unsecured Creditors of Enron Corp. (the "Creditors Committee") for the dismissal of all pending derivative claims against the Outside Directors, James Derrick, Ken L. Harrison, and Richard Buy (the "Released Defendants") as set forth in the Stipulation of Settlement dated as of January 12, 2005 (the "Stipulation"), and due and adequate notice having been given to interested parties pursuant to the procedures of Rule 9019 of the Federal Rules of Bankruptcy Procedure, and the Court having participated in a joint hearing with the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") on the settlement between the Creditors Committee, the Outside Directors, James Derrick, Ken L. Harrison and Richard Buy (the "Settlement") and the Court having considered all papers filed and proceedings had herein and otherwise being fully informed in the premises and good cause appearing therefore, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that:
1. This Order incorporates by reference the definitions in the Stipulation, and all capitalized terms used herein shall have the same meanings as set forth in the Stipulation, unless expressly defined herein.
2. The notice given to interested parties of the Settlement and the matters set forth in the Stipulation, including the notice issued pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure and the notice given to the Settlement Class pursuant to this Court's order of January __, 2005 was the best notice practicable under the circumstances. Said notice provided due and adequate notice of these proceedings and of the matters set forth in the Stipulation, including the proposed Settlement, to all persons entitled to such notice, and to the extent that Rule 23.1 is applicable, said notice fully satisfied the requirements of Rule 23.1 of the Federal Rules of Civil Procedure and due process.
3. Pursuant to Rule 23.1 of the Federal Rules of Civil Procedure, this Court directs that all claims against the Released Defendants in the above referenced causes of action (the "Derivative Claims") be dismissed with prejudice in accordance with the terms and conditions set forth in the Stipulation.
4. This Court hereby dismisses the Derivative Claims in their entirety as to the Released Defendants and against Enron Corp. and the Creditors Committee, with prejudice and without costs (except as otherwise provided in the Stipulation).
5. Upon the Effective Date, the Creditors Committee and Enron, on behalf of themselves, their successors and assigns, and any other Person claiming (now or in the future) through or on behalf of them, shall be deemed to have, and by operation of this Order and Judgment shall have, fully, finally, and forever released, relinquished, and discharged all Released Claims against the Released Defendants, and shall have covenanted not to sue the Released Defendants with respect to all such Released Claims, and shall be permanently barred and enjoined from instituting, commencing, or prosecuting any such Released Claim against the Released Defendants. Notwithstanding the foregoing release, nothing in this Order and Judgment is intended, nor shall it be construed to release or discharge Harrison from any matter that might be alleged as a defense to, avoidance of, or defensive counterclaim against Harrison's claims asserted as Claim No. 2390500 (a/k/a Claim No. 0000023905) in the matter In re Portland General Holdings, Inc., S.D.N.Y. Bankr. Case No. 03-14331C95 (AJG) (the "Harrison Proof of Claim"); provided, however, that any net affirmative recovery against Harrison shall have been released, discharged, and barred. (The foregoing sentence is referred to herein as the "Enron Defensive Proviso.")
6. Upon the Effective Date, all obligations of the Released Defendants to the Creditors Committee or Enron Corp. arising out of, based upon, or otherwise related to the transactions and occurrences that were alleged, or could have been alleged, on behalf of Enron Corp. or the Creditors Committee in the Derivative Actions shall be fully, finally, and forever discharged, with the exception of the Enron Defensive Proviso, and all Persons shall be permanently barred and enjoined from instituting, prosecuting, pursuing or litigating in any manner any such claims against the Released Defendants, including by litigating claims against the Released Defendants for contribution or indemnity that arise out of or relate to the Released Claims. 7. Any person so barred and enjoined, including the defendants in the adversary proceeding captioned Enron Corp., et al., v. Citigroup Inc., et al., Adv. Pro. No. 03-09266 (AJG) (the "Adversary Proceeding"), shall be entitled to a judgment credit in accordance with any applicable statutory or common law rule. This Order shall not be considered or deemed in any way to be a determination as to which law is applicable in any manner in the Adversary Proceeding or whether any particular loss allocation or comparative responsibility statute or common law rule is applicable in any manner in the Adversary Proceeding. Based upon the agreement of the Parties and with respect only to the Released Defendants and the effect of the Settlement and this Order on the Adversary Proceeding:
i) to the extent that Texas law is found to apply to loss allocation with respect to any claims asserted in the Adversary Proceeding, the Released Defendants shall be "settling persons" pursuant to section 33.011(5) and 33.012(b) of the Texas Civil Practice Remedies Code in the Adversary Proceeding and accordingly the Released Defendants shall be assigned a percentage of responsibility in accordance with section 33.003 of the Texas Civil Practice Remedies Code in the Adversary Proceeding; and
ii) to the extent that New York law is found to apply to loss allocation with respect to any claims asserted in the Adversary Proceeding, the defendants in the Adversary Proceeding shall be entitled to have the plaintiffs' claims reduced in accordance with section 15-108(a) of the General Obligations Law and accordingly the plaintiffs' claims shall be reduced by the greater of the amount of the settlement payable by or on behalf of the Released Defendants under the Settlement or the amount of the Released Defendants' equitable share of the damages under Article 14 of the Civil Practice Laws and Rules.Nothing in this Order shall limit the rights of the defendants in the Adversary Proceeding to obtain discovery from the Released Defendants, develop evidence in discovery and/or present evidence or arguments at trial to support an appropriate judgment credit that reflects the Released Defendants' proportionate share of responsibility. Nor shall this Order limit the rights of the defendants in the Adversary Proceeding to defend the Adversary Proceeding and to assert any substantive or procedural rights provided by applicable law, subject to the bar on instituting, prosecuting, pursuing or litigating in any manner claims against the Released Defendants, including by litigating claims against the Released Defendants for contribution or indemnity, as set forth in paragraph 6 of this Order.
8. 9. Upon the Effective Date, all obligations of the Creditors Committee or Enron Corp. to the Released Defendants, arising out of, based upon, or otherwise related to the transactions and occurrences that were alleged, or could have been alleged, on behalf of the plaintiffs, Enron Corp. or the Creditors Committee in the Derivative Actions, or related to their participation or involvement as an officer or director of Enron or its predecessors or affiliates (including claims of indemnity) shall be fully, finally, and forever discharged, with the exception of the Harrison Proof of Claim Proviso, and all Persons shall be permanently barred and enjoined from instituting, prosecuting, pursuing or litigating in any manner any such claims.
10. Nothing in this Order in any way affects any defense of the defendants in the Adversary Proceeding, including defenses that would preclude the plaintiffs in the Adversary Proceeding from any recovery. Further, nothing in this Order in any way limits the rights of the defendants in the Adversary Proceeding to develop evidence in discovery or present evidence or arguments at trial in support of their defenses, including evidence or arguments relating to the imputation of the acts or omissions of the Released Defendants, or any other officer or director of Enron, to the plaintiffs in the Adversary Proceeding. 9. 11. This Order and Judgment Dismissing Derivative Claims is a final judgment in the Derivative Actions as to the Released Claims among the Outside Directors, James Derrick, Ken L. Harrison, and Richard Buy on the one hand, and Enron Corporation and the Creditors Committee, on the other hand. This Court finds, for purposes of Rule 54(b) of the Federal Rules of Civil Procedure, that there is no just reason for delay and expressly directs entry of judgment as set forth herein. 10. 12. In the event that the Effective Date does not occur, this Order of Final Judgment and Dismissal shall be rendered null and void and shall be vacated nunc pro tunc, and the provisions of ¶ 7.5 of the Stipulation shall apply.
IT IS SO ORDERED.