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----- Forwarded by Richard B Sanders/HOU/ECT on 04/30/2001 06:42 AM -----
showard@agsk.com 04/27/2001 07:51 PM To: Richard.B.Sanders@enron.com cc: Subject: NSM Update Richard, The only significant deposition this week is taking place in Minneapolis. The deponent is Arthur Cobb, a disclosure/due diligence expert retained by Robins, Kaplan in several cases in which Enron is not named. Mr. Cobb's report did not mention ECT Securities, and the California plaintiffs did not designate him to testify in the CA cases, so we decided not to attend his deposition. We are getting daily transcripts by e-mail. Next week an expert designated by the CA plaintiffs on causation and damage issues is being deposed in San Francisco. Roland has a scheduling conflict, so I am sending Jonathan Goldblatt. The subject on which we want to ask questions is damages relating to certain purchases by Farallon after the initial offering. This is a very discrete area, easy to understand, and Jonathan is on top of it. I believe that you recently received a bill from Gerry McGrath. Gerry worked very hard on his report, putting in about 50% more hours than he thought he would when he agreed to cap the total fee for his report. He is very focused on the requirement in his engagement letter that he be paid in 30 days. I think Gerry did quite a good job, and we definitely need his best effort going forward. I would urge Enron to pay Gerry's bill very promptly. Farallon is currently threatening to move to compel further answers to interrogatories from us. It is much ado about nothing. We just want to deal with it in the least expensive way. Many of the plaintiffs have filed motions around the country, including in CA, seeking to compel Natwest to produce more audio tapes of employee conversations. My guess is that the plaintiffs have found more good stuff, and Natwest is trying to limit their losses. We are hard at work on the research that you and I have been discussing. It is frankly quite complex and involves several unanswered questions of law. The problem is that CA has a special statutory contribution provision (pro rata, not relative fault) in the state securities statutes and a common law doctrine of partial indemnity in tort actions that is based on relative fault. The later doctrine may not apply to the securities causes of action against ECT Securities, but definitely applies to the common law fraud and negligent misrepresentation causes of action. How all of this works together is virtually uncharted. With reference to your question about procedures at trial, none of the defendants has cross-complained against the other defendants for a determination of relative fault in the pending case; and, on the basis of the current pleadings, no such determination will be made at trial. If Enron goes to trial and loses, along with others, theoretically the plaintiffs could collect their entire judgment from Enron and leave Enron to pursue the other defendants, post-trial, for their respective shares of the liability, whether such shares are determined pro rata or by relative fault. We are working on a memorandum or outline that will lay all of this out for you. I think you will find that Enron has some powerful incentives to settle (assuming that we can get the price low enough.) Steve Howard Alschuler Grossman Stein & Kahan LLP phone: 310-407-7613 fax: 310-552-6077 cell: 213-716-0536 e-mail: showard@agsk.com ................................................ ALSCHULER GROSSMAN STEIN & KAHAN LLP ATTORNEYS AT LAW www.agsk.com 2049 Century Park East Thirty-Ninth Floor Los Angeles, CA 90067-3213 Tel 310-277-1226 Fax 310-552-6077 This transmission is intended only for the use of the addressee and may contain information that is privileged, confidential and exempt from disclosure under applicable law. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you have received this communication in error, please notify us immediately via e-mail at postmaster@agsk.com or by telephone at 310-277-1226. Thank you. ...............................................
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