Declaration Of Helen J. Hodges In Support Of Lead Counsel's ...

88. Lead Plaintiff filed a 105-page opposition on June 10, 2002 (Docket No. 853), which
argued that the defendants were liable because they made misrepresentations and omissions of
material fact, used manipulative and deceptive devices, and ignored obvious evidence of fraud given
the nature, size and frequency of the subject transactions. Lead Plaintiff contended that its complaint
was sufficient based on submitted minutes of Enron Board meetings and the detail in the complaint
concerning the defendants’ conduct and Enron’s false financial statements.
89. The Court ruled that, as to the §10 claims, while some of the Outside Directors could
be considered to have made statements by virtue of their signing of financial statements, the
complaint failed to plead scienter with allegations of matters discussed at Board meetings and insider
trading; and the §§20(a) and 20A claims accordingly failed for lack of a predicate violation. As to
the §11 claims, the Court dismissed some of them based on the arguments of the Outside Directors,
but upheld others based on the arguments of Lead Plaintiff; it upheld certain of the §15 claims,
finding an adequate predicate violation and sufficient allegations of control. As to the TSA claim,
the Court dismissed it (while granting leave to amend) for failure to adequately plead seller,
aider/abettor or control person liability. See 3/12/03 Memorandum and Order Regarding Enron
Outside Director Defendants’ Motions (Docket No. 1269) at 89-138.
90. On May 8, 2002, motions to dismiss were filed by defendants Rebecca Mark-
Jusbasche (Docket No. 597), Horton, Olson (Docket No. 641), Whalley (Docket No. 643), Frevert
(Docket No. 646), Koenig (Docket No. 656), Kean (Docket No. 657) and Sutton (Docket No. 686);
Fastow (Docket No. 1299), Harrison, Pai, Buy, Hirko, Rice, Causey, McMahon, Derrick, Hannon,
Lay, and Skilling (Docket Nos. 718, 735, 740). In general, the defendants argued for dismissal
because the complaint failed to comply with applicable pleading requirements, such as those
regarding particularity and scienter, and failed to allege any actionable conduct. On June 10, 2002,
Lead Plaintiff filed a 160-page opposition thereto (Docket No. 856). The Court ruled as follows:
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