U.S. Supreme Court skips petition in WPPSS case; payout is left hanging.

LOS ANGELES - The U.S. Supreme Court did not make any decision yesterday on an appeal petition tied to the Washington Public Power Supply System bond fraud case, thereby leaving in limbo the timing of settlement fund payouts from the litigation. The high court is considering a petition from the Hoffer class action group, which comprises the last bondholders to oppose certain settlements in the case. Court observers expected the justices to act on the Hoffer petition yesterday because the filing appeared on a list of cases under consideration for immediate action. occasionally, however, the court will not act on cases on the expected date. In most such instances, no reason is given for the delay. The bondholder group, named after plaintiff Arthur Hoffer, argues that a federal appeals court erred by concluding that Hoffer's lawsuit, which is pending in Washington State, could be snuffed out as part of an out-of-court settlement package that brought a separate federal case to a halt in late 1988. The suits were spawned by the supply system's 2.25 billion default in 1983 on units 4 and 5 bonds.

The federal case generated out-of-court settlements totaling almost $900 million. U.S. District Court Judge William Browning, who presided over the settlement-shortened WPPSS trial in Tucson. said he wants to see how the Supreme Court handles the Hoffer petition before authorizing any distribution of the settlement funds.

Lawyers for class action members in the federal litigation want Judge Browning to approve a partial distribution of about $500 million, while holding the balance in reserve to cover potential legal fees, taxes, and other allocations.

Some public entities that contributed to the settlement raised questions about a partial distribution if the high court hears the Hoffer case. Judge Browning said he would rule on those arguments if the high court accepts the case or does not act on the Hoffer petition by Oct. 30.

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