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Houston’s Vinson & Elkins, longtime outside counsel for Enron Corp., was dismissed from a massive shareholder securities class action filed by disgruntled Enron shareholders. In an order signed Wednesday, U.S. District Judge Melinda Harmon of Houston dismissed a number of other defendants from the class action, which is set for trial in April, including former Enron executives Lou Pai, Kenneth Rice, Joseph Hirko, Kevin Hannon and Lawrence Greg Whalley. She also dismissed the estate of former Enron Chairman Kenneth Lay, who died in July 2006 after he was convicted in federal court of criminal charges stemming from the collapse of Enron. Harmon’s order grants a motion filed by the plaintiffs to voluntarily dismiss Vinson & Elkins and the others from Mark Newby, et al. v. Enron Corp., et al., which seeks billions of dollars in damages from Enron-related defendants. Harmon granted voluntarily dismissals without prejudice under Federal Rule of Civil Procedure 41(a), which means that the parties she dismissed from the suit on Wednesday could later be sued by plaintiffs or other defendants. The lead plaintiff in the class action, the Regents of the University of California, alleged it sought the dismissals in an effort to streamline the trial. Harmon noted in a 13-page opinion and order that many class members and the public may be angered by the dismissals of Vinson & Elkins and Enron executives without determining if they are liable for defrauding shareholders. However, she wrote, “the court recognizes the right of lead plaintiff to control its suit, to streamline it for trial, and to pursue the ‘deepest pockets’ without expending further time and money on defendants from which it does not expect to be able to collect substantial funds.” Harry Reasoner, a former managing partner at Vinson & Elkins, said Harmon’s opinion is “very well reasoned and clearly correct.” “Obviously, getting out of the overhang of a massive class action is terrific,” Reasoner said. Harmon’s ruling came just a few days after she heard arguments on the motions seeking the voluntary dismissal of Vinson & Elkins and the other defendants. Herbert Washer, a partner in Shearman & Sterling in New York who argued for the defendant financial institutions at that hearing on Jan. 19, refered comment to Bill Hallden, a spokesman for Merrill Lynch. Hallden declines comment. Plaintiffs lawyer Patrick Coughlin, a partner in San Diego-based Lerach Coughlin Stoia Geller Rudman & Robbins, did not immediately return a telephone message. This article originally appeared in Texas Lawyer, a publication of ALM.

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