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Andersen appeal granted in Enron suit; delay seen

The first civil law suit involving Enron Corp. set for trial will be delayed again, after a Texas appeals court on Thursday granted defunct accounting firm Andersen the right to add banks to the suit.

The decision by the 14th Texas Court of Appeals means the originally scheduled trial date of Nov. 10 will have to be moved.

Andersen tried to add a number of the former energy giant's investment banks to the suit, arguing that they and Enron hid from them the true nature of a number of complicated financial transactions.

Those transactions were at the root of Enron's collapse into a record bankruptcy in 2001 and are in the suit.

But State District Judge Terry Flenniken in Washington County, about 75 miles (121 km) northwest of Houston, refused and set the case for trial.

Andersen appealed and both sides made their cases before a three-judge panel of the 14th Court in Houston in July.

The thrust of Andersen's argument was that jurors could not get a fair picture of Andersen's conduct unless they were shown the alleged role of the banks.

The plaintiffs' lawyers argued that the banks should not be added because they did not make misrepresentations to their clients. The appeals court disagreed.

“But as the brief history of this debacle show and these pleadings allege, the fall of Enron is not about one person, or even a few people; it is the story of a host of actors,” Judge Wanda McKee Fowler wrote in the court's decision.

Asking the jury to look only at the top Enron executives and Andersen “is like asking someone to look only at the eye of the hurricane and ignore the furor surrounding it.”

Andersen welcomed the decision.

“Our mantra has been that we wanted to have the entire case tried at one time and have one jury decide liability among all the responsible parties. The appellate court said today we have the right,” said Andy Ramzel, a lawyer for Andersen.

Sean Jez, the lead lawyer for the plaintiffs, said he was surprised at the court's decision and said it would make the complex litigation even more so.

“We still believe that this case is going to be more complicated with those folks in there,” Jez said of the banks.

The plaintiffs in the case are a group of investors in Washington County who heard former Enron Chairman Ken Lay tout Enron's stock during a visit there. They allege Lay, other top executives, Andersen and some of its partners misled them about the company's true financial condition.

Most of the hundreds of other civil suits against Enron have been consolidated into a massive federal class-suit that is now in mediation and not set for trial until 2005. This case avoided consolidation because it has fewer than 50 defendants.

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