Enron and Justice Delayed

The Supreme Court denied the petition for certiorari in the Enron litigation, the case involving the liability of a number of investment banking firms under the antifraud provisions.  In most instances, this type of action is the end, but maybe not in this case.  The Enron litigation made it to the 5th Circuit in the context of an interlocutory appeal of a decision to grant class status in the case.  As a technical matter, therefore, the only thing resolved by this case is that the district court's motion for class certification (which was granted) is reversed.  As a result, the case is still pending on the merits in the district court in Houston.

As a result, where might the case go?  The parties are presumably free to litigate the case on the merits with a single plaintiff.  Alternatively, they may again seek class certification, but this time do it in the context of the rubric provided by Stoneridge.  This is where the plaintiff can make the argument that Stoneridge does not extend to actors who are more directly involved in the financial disclosure/investment process such as investment banking firms.  The trial judge could decide to certify the class.  Once again, defendants would be expected to seek an interlocutory appeal.  To the extent the case goes back to the same panel (circuits often have a rule that requires cases to return to the same panel once there has been substantial involvement by that panel, this is discussed at greater length here), plaintiffs are not likely to fair well.  At that point, another petition for certiorari would likely be in order. 

The decision by the 5th Circuit, while in the context of a review of an order granting class certification, used reasoning that went to the merits.  Expect in quick order for the defendants to move to dismiss, with Stoneridge at the center of the argument.