Newby v. Enron Corporation
In a class action lawsuit brought by plaintiffs seeking $1 billion in damages with respect to the sale of Enron Zero Coupon Notes, a federal judge granted summary judgment in favor of Analysis Group’s client, Alliance Capital Management, L.P. (now AllianceBernstein L.P.). The case involved claims by shareholders that an Alliance executive, Frank Savage, had served on Enron’s board in order to protect Alliance’s interests; that Alliance had controlled Savage’s activities as an Enron director; and that as a result, Alliance was liable for some of the damages resulting from misstatements in Enron's financials.
An Analysis Group team led by Managing Principal Mark Egland identified and provided consulting support for several academic experts. Senior Advisor Elizabeth Evans supported academic affiliate John Lacey in his analysis of accounting issues in the case; Managing Principal Lee Heavner supported academic affiliate Ronald Gilson on issues of corporate governance; and Principal Marnie Moore supported academic affiliate Robert Comment on damages.
In dismissing the plaintiffs’ claims after the close of fact and expert discovery, U.S. District Judge Melinda Harmon wrote: “There is no evidence that Alliance had any authority to influence, supervise or determine Savage’s actions at Enron, nor any evidence that Alliance induced Savage to watch out for Alliance’s interests while on Enron’s board, nor that Savage did watch out for Alliance’s interests after joining the Enron board.” Citing a rarely used provision of the 1933 Securities Act, Judge Harmon also ordered plaintiffs' counsel to pay a portion of Alliance’s attorneys’ fees.
James Moyle, partner at the law firm Clifford Chance and counsel for AllianceBernstein, commented: “Analysis Group played a pivotal role in helping us achieve this incredibly successful outcome. In addition to identifying experts in highly specialized areas of finance and corporate governance, Analysis Group provided our legal team with top-notch consulting expertise covering all of the key issues.”