SETTLEMENT ENDS SECURITIES TRIAL, BUT FRAUD CASE IS FAR FROM OVER
WASHINGTON POWER MUST DIVIDE MILLIONS AMONG 24,000 PLAINTIFFS
A $20 million settlement with the final defendant essentially ends the Washington Public Power Supply System securities-fraud trial, but the nearly 6-year-old case is far from over.
The federal judge hearing the case still must decide whether to approve the out-of-court settlements reached by defendants in the class-action suit, then how to divide the roughly $750 million among 24,000-plus plaintiffs and attorneys.An attorney for the plaintiff, Mel Weiss, said late Thursday that the settlement pool may not be dispensed until late next year, or even later if disputes arise.
The settlement with the final defendant, Blyth Eastman PaineWebber Inc., a financial adviser to WPPSS, was announced Thursday.
U.S. District Judge William Browning still must approve 16 separate settlements dating to September 1987. Browning already has approved four settlements.
The legal action grew from WPPSS' 1983 default on $2.25 billion in bonds sold to finance two nuclear power plants that were abandoned before completion. The default was the biggest in the history of the municipal bond market.
Browning was hearing the securities fraud case in Tucson, Ariz., because of pretrial publicity in Washington state.
The more than 100 original defedants have agreed to pay about $700 million to settle the case, and $50 million more could be collected from contested insurance claims.
The plaintiffs, bondholders, had made claims totaling $1.6 billion.
The trial, which started Sept. 7, had been expected to take up to a year. Browning now is expected to dismiss the jurors, who recessed Dec. 1.
Distribution of the money will be determined after Browning holds hearings, presumably in Seattle. If all the money is in hand and there are no challenges, the award can be sent to plaintiffs all at once, said Weiss.
"We hope that can be done by the end of 1989," he said.
Some money still could be distributed if there is a dispute, with the court withholding disputed funds.
Defendants in the federal lawsuit, which incorporated dozens of separate suits dating to Feb. 22, 1983, included the supply system, the 88 utilities that contracted with WPPSS to build the two plants, engineering firms, Wall Street bond underwriters, utility and WPPSS directors and Blyth Eastman.