LOS ANGELES - A bondholders group challenging certain out-of-court settlements in the Washington Public Power Supply System bond fraud case will not pursue an appeal before the U.S. Supreme Court, a lawyer for the investors said yesterday.
"Securing Supreme Court review is a difficult thing," said Robert Sedgwick, who represents the so-called Heerey group. "The odds were against" getting a hearing.
"We do this with some reluctance," he added, because the disgruntled bondholders believe their settlement objections "never did get properly heard."
After a lengthy battle, however, Mr. Sedgwick said some bondholders have concluded it is "perhaps better to just get on with life." Resolving the dispute also might speed payout of the out-of-court settlements, he added.
The Heerey group dropped its challenge under an agreement reached Monday with the WPPSS units 4 and 5 bond trustee, Chemical Bank, and other lawyers in the case, Mr. Sedgwick said. He said he was not at liberty to discuss any terms that accompanied the agreement with those parties.
The out-of-court settlements opposed by the Heerey group arose out of a bond fraud case tied to the supply system's $2.25 billion default in 1983 on nuclear power units 4 and 5 bonds. U.S. District Court Judge William D. Browning of Tucson, who presided over the settlement-shortened trial in the 1988, approved the bulk of settlements three years ago.
The settlement pot, including interest earnings, totals over $800 million. The balance remaining after payment of lawyers fees will be distributed to various bondholder groups, with each group's allocation share tied to the date WPPSS units 4 and 5 bonds were purchased.
Among other things, Mr. Sedgwick's clients challenged anti-suit injunctions in the settlements that bar the Heerey group from pursuing litigation in another forum. The bulk of settlement monies will benefit two groups of class action bondholders who bought their units 4 and 5 securities before June 15, 1983, the date on which the Washington State Supreme Court ruled that local utilities's promises to repay investors were invalid.
Many members of the Heerey group bough their bonds after that cutoff date and were not joined as parties in the class action proceedings.
Last February, the U.S. Ninth Circuit Court of Appeals rejected the Heerey group's challenge of Judge Browning's settlement approvals.
At that time, the Ninth Circuit also rejected an appeal by another bondholder group, the so-called Hoffer group. That group pursued numerous claims against Washington and certain officials because of the default, and challenged the settlement package because it extinguished its pending case in Washington State.
Charles Webb 3d, a lawyer for the Hoffer group, said yesterday that "we're still working" on a filing that would ask the Supreme Court to review the appeal. He added that "we haven't made a final call" on whether to make the filing, which is due by mid-August.
Melvyn Weiss, a lawyer representing class action bondholders who stand to receive the bulk of settlements in the bond fraud case, said he was "very pleased" by the Heerey group's decision to drop its challenge.
Irrespective of whether the Hoffer group asks for a high court review, Mr. Weiss said he plans soon to ask Judge Browning to approve distributing at least some of the settlement proceeds.