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

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• Arthur Andersen LLP (“Andersen”) approached us early in the litigation. Despite multiple mediation sessions over several months in 2002, which involved many competing constituencies, Andersen’s indictment and conviction, although later overturned, drove Andersen out of business and the early settlement discussions were for naught. After Andersen’s conviction, Andersen Worldwide SC (“AWSC”) renewed the discussions on behalf of the Andersen foreign affiliates. The Class and the Tittle (ERISA) plaintiffs agreed to settle with AWSC for $40 million. Near the close of fact discovery Andersen agreed to pay $72.5 million. • Kirkland & Ellis (“K&E”) agreed to pay $13.5 million shortly after being dismissed from the case. 2 • Bank of America (“BofA”) and Lehman next contacted the firm about settlement just prior to the commencement of fact depositions. We reached an agreement to settle with BofA for $69 million, which began earning interest for the benefit of the Class in late May 2004, and an agreement to settle with Lehman for $222.5 million that began earning interest for the Class in October 2004. • The Outside Directors next approached, agreeing to pay the Class 10% of their Enron stock sales gains plus $200 million of the directors and officers insurance (the remaining coverage). It was and remains unusual for individuals to contribute from their own pockets to securities class action settlements. 3 • LJM2 was pursued by our bankruptcy co-counsel, Genovese Joblove & Battista. The proof of claim we filed in the LJM2 bankruptcy was resolved by agreement to divide the LJM2 estate with Enron such that the Class received 2/3 and Enron received 1/3. The Class has received over $51.9 million from the LJM2 estate due to these efforts. • Citigroup, JPMorgan Chase (“JPMorgan”) and Canadian Imperial Bank of Commerce (“CIBC”) came to the table as litigation pressure increased and the negotiations with these banks spanned many months culminating in a $2 billion settlement with Citigroup, an agreement with JPMorgan for $2.2 billion and finally CIBC, the bank with the smallest comparative market size, agreed to pay $2.4 billion. The $6.6 billion in pretrial settlements with Citigroup, JPMorgan and CIBC were the largest recoveries ever in a class action securities case. 2 At K&E’s insistence, this settlement included a refund provision in the event the Class recovered K&E-related funds in connection with the LJM2 bankruptcy. As a result, $3.34 million was ultimately returned to K&E for a net settlement of $10.16 million. 3 To overcome objections by Enron and by the non-settling insured defendants to this use of the remaining insurance proceeds, we negotiated an agreement to pay 17.2% of insurance proceeds to the Enron estate and $13 million of the proceeds to non-settling insured individual defendants. Ultimately, the Class received $168 million from the settlement with the Outside Directors and Kenneth Harrison (“Harrison”). The settlement halted further depletion of the wasting asset insurance policies through payment of defense costs. - 4 -
6. The above recoveries were based in large part on the successful presentation of the scheme and pursuit of a scheme/conduct liability theory – i.e., that the insiders and third parties participated with Enron in a scheme to defraud Enron’s investors. Some argued the theory was foreclosed by the Supreme Court’s Central Bank decision prohibiting aiding and abetting liability. The skillful pleading of the banks’ active involvement in structuring deals and falsifying Enron’s financials, together with aggressive briefing, resulted in a series of landmark opinions by Judge Melinda Harmon upholding this legal theory and sustaining the complaint even in the face of the PSLRA’s elevated and very difficult pleading standards. In re Enron Corp. Sec. Litig., 235 F. Supp. 2d 549 (S.D. Tex. 2002); In re Enron Corp. Sec. Litig., 310 F. Supp. 2d 819 (S.D. Tex. 2004). 4 Eventually the SEC adopted and expanded on the theory filing an amicus brief in the Ninth Circuit outlining the elements. Simpson v. Homestore.com, Inc., No. 04-55665, Brief of the Securities and Exchange Commission, Amicus Curiae, In Support of Positions that Favor Appellant (9th Cir. Oct. 21, 2004). 7. During the time period (2003-2006) that these settlements were obtained, Coughlin Stoia was mounting an unprecedented litigation offensive to prepare the Enron case for trial. The firm opened a state-of-the-art litigation center in Houston, Texas, regularly visited and inspected by The Regents personnel, who praised the scope and efficiency of the operation. In addition, the firm’s San Diego office devoted attorneys, forensic accountants, investigators, paralegals and other 4 As we were preparing our oppositions to the numerous motions to dismiss in 2002, we approached the Securities and Exchange Commission (“SEC”) about filing an amicus curiae brief in support of plaintiffs. Although it is highly unusual for the SEC to take action at the trial court level, we succeeded in having it do so here. The SEC submitted briefs it had filed in other cases on the issue. In addition, we reached out to Attorneys General and with the Texas Attorney General leading the charge, they filed amicus curiae briefs in support of investors at the trial court level and in the Fifth Circuit. Judge Harmon referenced both the SEC and the Attorneys General briefs when she denied the banks’ motions to dismiss in December 2002. - 5 -
Page 1 and 2: UNITED STATES DISTRICT COURT SOUTHE
Page 3 and 4: 2. The Parties Establish a Document
Page 5 and 6: I, HELEN J. HODGES, declare as foll
Page 7: • Reviewed over 70 million pages
Page 11 and 12: gathered and which the banks and En
Page 13 and 14: 14. In this endeavor, Coughlin Stoi
Page 15 and 16: 17. Lead Counsel prosecuted the lit
Page 17 and 18: [T]his representation has been unde
Page 19 and 20: and the necessary involvement with
Page 21 and 22: case. The Court hereby awards attor
Page 23 and 24: published an article, “Enron Jolt
Page 25 and 26: statements. We compiled profiles on
Page 27 and 28: 34. We had no way of knowing whethe
Page 29 and 30: which witnesses to pursue, but cont
Page 31 and 32: the market in October 2001. The ana
Page 33 and 34: said it was unable to determine whe
Page 35 and 36: depositions because discovery was p
Page 37 and 38: 65. After the motion was filed, The
Page 39 and 40: institutional plaintiffs, their rep
Page 41 and 42: drawing on the expertise of our in-
Page 43 and 44: 83. On May 3, 2002, the Preferred P
Page 45 and 46: finance certain of the partnerships
Page 47 and 48: and participated in a scheme to def
Page 49 and 50: (j) Arthur Andersen LLP (Docket No.
Page 51 and 52: Lead Plaintiff had adequately alleg
Page 53 and 54: (a) The Court ruled that Lead Plain
Page 55 and 56: director of New Power, and issuance
Page 57 and 58: 94. On September 26, 2002, Lead Pla
Page 59 and 60:
mandamus review, and that the Court
Page 61 and 62:
106. On May 6, 2003, defendant Citi
Page 63 and 64:
scheme, and certain specific allega
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pled with the requisite particulari
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Merrill Lynch and Deutsche Bank Ent
Page 69 and 70:
4. Motions to Intervene Additional
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Gramm, Jaedicke, LeMaistre, Meyer,
Page 73 and 74:
professionals and experts, and atte
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121. On May 7, 2003, the Outside Di
Page 77 and 78:
of Enron’s prominence and magnitu
Page 79 and 80:
131. As part of discovery, Lead Cou
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Third Parties and Defendants Date S
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Third Parties and Defendants Date S
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133. Document requests and subpoena
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139. In responding to the document
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146. In addition to JPMorgan’s in
Page 91 and 92:
10. Requests for Admission 152. In
Page 93 and 94:
Protocol Order provided for the ord
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privilege. And the defendants agree
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Deponent Entity Date[s] Location No
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Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
promptly responded to all discovery
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Enron securities, and questions con
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securities, understanding of a repr
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187. Lead Counsel made further supp
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April 16, 2004, Lead Counsel filed
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195. On April 13, 2004, defendants
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Plaintiffs’ Investors Partner Lif
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• Outside Directors’ Memorandum
Page 121 and 122:
208. A two-day hearing was held reg
Page 123 and 124:
Expert Entity Area of Opinion Dorri
Page 125 and 126:
and is the basis for a presumption
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nature of Enron’s financial condi
Page 129 and 130:
economically valid method and frame
Page 131 and 132:
primarily involving Deutsche Bank,
Page 133 and 134:
We filed a notice of request for se
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236. Bankruptcy Examiner Batson him
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egarding the §11 claims, which wer
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proceeds for our settlement. Thus,
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egarding the policies and he moved
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team; for example, we reviewed info
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Court ruled that Lead Plaintiff fai
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Opposition to Deutsche Bank’s Mot
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Sec. Litig., 443 F.3d 987 (8th Cir.
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Plaintiff’s Opposition to Motion
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dated June 5, 2006 as It Pertains t
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the Pleadings (Docket No. 5019). On
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joint-and-several liability for kno
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pricing or trade volume data, estim
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y the court and cited in In re Cend
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296. Attached hereto as Ex. 2 is a
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ADDITIONAL SERVICE LIST Stuart Yoes
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ENRON COUGHLIN STOIA GELLER RUDMAN
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Name Title Hours Rate Lodestar Meye
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ENRON - SUMMARY OF PLAINTIFFS' FIRM
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EXHIBIT 4
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TOP SECURITIES SETTLEMENTS Case Nam
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Exhibit Listings and Notes regardin
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