We were retained to represent the Outside Directors of Enron’s Board in the defense of all the litigation and regulatory investigations that arose from Enron’s collapse. This litigation was unique in a variety of ways:
First, our clients remained on Enron’s board for some time after its collapse. During that phase of the representation, we advised them as they worked actively to investigate wrongdoing at the company in a process that ultimately yielded the Powers Report. We also advised our clients as they oversaw the initial shepherding, preservation, and sale of certain of Enron’s assets through the early phases of Enron’s bankruptcy.
Second, on a parallel track to these ongoing fiduciary responsibilities of the Board, we served as lead counsel to the Outside Directors as they responded to numerous congressional inquiries, regulatory investigations, and over 100 lawsuits that were filed against them in jurisdictions around the country. Those lawsuits were consolidated in a multi-district litigation in Houston. We successfully obtained orders dismissing all of the fraud claims filed in the securities class action, and the remaining claims were settled thereafter in a settlement in which insurance proceeds covered 95% of the settlement costs.
In order to effectuate that settlement, we handled groundbreaking litigation in the district court and the court of appeals concerning the interpleader of the insurance policies and whether the policy limits could be exhausted to fund settlements for our clients when claims against other insureds remained outstanding. Both the district court and the Fifth Circuit held that the settlements could be funded. In a separate appeal generated by a sanctions order entered in one of the coordinated cases, Gibbs & Bruns again achieved appellate success by vindicating the authority of the district court to refuse to vacate a sanctions order even after the underlying case had been settled.
Third, we assisted our clients in responding to numerous requests for testimony from enforcement personnel and criminal prosecutors. Our clients cooperated fully, and although virtually every senior Enron executive was charged with criminal or regulatory wrongdoing of some type, our clients were never charged with any criminal or regulatory violations of the securities laws.