The law firm of Reish, Luftman, Reicher & Cohen has posted on their website the Memorandum in Support of Tittle Plaintiffs’ Motion for Preliminary Approval of Proposed Partial Settlement and Conditionally Certifying Class for Purposes of Settlement (pdf 135 pages). (Thanks to Benefitslink.com for the pointer.) The settlement was reached on Wednesday, May 12, 2004 as discussed in previous posts here and here.
The Memorandum contains an interesting discussion on the issue of damages:
To determine damages, a Court may look at the return plaintiffs’ would have obtained had the plan’s investment in Enron stock been invested instead in the best performing fund alternative in the plan. . . The Defendants will undoubtedly attempt to dispute this measure of damages or offer some alternative measure of damages. . .In order to assist the Court with its evaluation of the adequacy of the settlement amount, the following information is provided with respect to theoretical damages for both the Savings Plan and ESOP. The analysis for the Savings Plan includes separate calculations of both “purchaser” and “holder” damages because both those who held stock in their accounts at the beginning of the Class Period and allocated moneys to the Enron Stock Fund (and received matching contributions from Enron in the form of Enron common stock) during the Class Period were damaged. . .[T]the approximate range of total holder and purchaser damages for the Savings Plan and the damages for the ESOP, not taking into account the risk of not prevailing, is between $1.1 billion and $1.2 billion. Therefore, under scenarios assuming the highest conceivable recovery after a full trial on the merits, the proposed settlement amount is between 7.73% and 7.09% of the total potential damages suffered by the Savings Plan and ESOP. If, as the defendants likely will argue, only purchaser claims for the Savings Plan may be considered, the range of alleged damages is between $856 and $865 million, under which scenario the proposed settlement amount is between 9.94% and 9.83% of the damages allegedly suffered by the Plans.
This article from the HoustonChronicle.com–“Recovery is closer for Enron retirement cash
But Lay, Skilling hold partial claim,” reports that “[a]bout 20 percent of the total would likely be consumed by federal fines and plaintiffs attorneys fees.”