What's left of Enron is asking a federal judge to extract $9.15 million from the human resources firm that botched the first wave of lawsuit settlement payments to former Enron employees.Enron Creditors Recovery Corp., the successor to Enron, this week asked U.S. District Judge Melinda Harmon to force Illinois-based Hewitt Associates to pay for its mistake and facilitate payment of the remaining settlement money.
The lawsuit, filed on behalf of employees who were in Enron retirement plans when the energy company collapsed in 2001, resulted in a settlement totaling more than $218 million. Hewitt was hired to send out the first $89 million in 2006. But $22 million went to the wrong people because of a miscalculation.
According to Enron's filing this week, and a lawsuit filed last fall by the retirement plan, Enron Corp. Savings Plan, 7,700 people were overpaid and 12,600 were underpaid.
The court documents say the $9.15 million is the amount that can't be recovered by adjusting the second payments that will go out to employees when the matter is cleared up.
"In the end Hewitt's stance reduces to the contention that although it admits it wrecked the car, it should not have to pay to fix it," Enron says in its filing.
"We're asking they pay the $9 million for their inexplicable mistake," said Harlan Loeb, Enron spokesman. He said it's "ludicrous" for Hewitt to say Enron should make up for the error. "Hewitt's own counsel admitted responsibility for the misallocation in court."
In July, Hewitt lawyer Bill Boies said his client acknowledged responsibility for the mistake. He said Hewitt will fix it. But Boies balked at Hewitt being labeled the fund administrator, saying Enron itself is the administrator with ultimate responsibility for distributions and for Hewitt's work.
Hewitt spokeswoman Maurissa Kanter said in an email Thursday that Hewitt has been trying "to reach an agreement that would allow for the immediate funding of the shortfall to these participants."
Enron's motion "significantly throws into doubt the ability of these parties to achieve a resolution," she said.
"It is important to note that Enron, as the plan sponsor, has the obligation to fund any shortfall to its participants," Kanter wrote.
Hewitt has not replied formally to the fall lawsuit or to Enron's request this week for $9.15 million.
The second set of payments to employees totals around $129 million but is held up in discussions about how to address the errors in the first payments. A different company will handle the second payments, said Enron's Chicago-based lawyer, Peter Rush.
Rush said it will be up to Judge Harmon whether to follow Enron's suggestion that Hewitt put up the $9.15 million to allow the distribution to go forth.
Enron is suggesting the money be a loan, followed by an effort to recover overpayments that went to people who are not due more money in the second series of payments.
Enron proposes that anything retrieved go back to Hewitt.
Employees who were overpaid the first time around but are still due more will receive smaller second payments to adjust for the miscalculations.
The retirement settlement with employees is distinct from a class action lawsuit on behalf of Enron shareholders. That lawsuit is coming close to payouts of its final settlement of $7.2 billion.
Lynn Sarko, a Seattle-based lawyer for the ex-employees, compared the error in the payment amounts to "a medical malpractice case that ends in corrective surgery and then that's botched."
The Enron court papers indicted that the U.S. Labor Department also has pushed for Hewitt to cover the shortfall. A department spokeswoman could not confirm the government's role in the matter.
"In the end Hewitt's stance reduces to the contention that although it admits it wrecked the car, it should not have to pay to fix it," Enron says in its filing.
"We're asking they pay the $9 million for their inexplicable mistake," said Harlan Loeb, Enron spokesman. He said it's "ludicrous" for Hewitt to say Enron should make up for the error. "Hewitt's own counsel admitted responsibility for the misallocation in court."
In July, Hewitt lawyer Bill Boies said his client acknowledged responsibility for the mistake. He said Hewitt will fix it. But Boies balked at Hewitt being labeled the fund administrator, saying Enron itself is the administrator with ultimate responsibility for distributions and for Hewitt's work.
Hewitt spokeswoman Maurissa Kanter said in an email Thursday that Hewitt has been trying "to reach an agreement that would allow for the immediate funding of the shortfall to these participants."
Enron's motion "significantly throws into doubt the ability of these parties to achieve a resolution," she said.
"It is important to note that Enron, as the plan sponsor, has the obligation to fund any shortfall to its participants," Kanter wrote.
Hewitt has not replied formally to the fall lawsuit or to Enron's request this week for $9.15 million.
The second set of payments to employees totals around $129 million but is held up in discussions about how to address the errors in the first payments. A different company will handle the second payments, said Enron's Chicago-based lawyer, Peter Rush.
Rush said it will be up to Judge Harmon whether to follow Enron's suggestion that Hewitt put up the $9.15 million to allow the distribution to go forth.
Enron is suggesting the money be a loan, followed by an effort to recover overpayments that went to people who are not due more money in the second series of payments.
Enron proposes that anything retrieved go back to Hewitt.
Employees who were overpaid the first time around but are still due more will receive smaller second payments to adjust for the miscalculations.
The retirement settlement with employees is distinct from a class action lawsuit on behalf of Enron shareholders. That lawsuit is coming close to payouts of its final settlement of $7.2 billion.
Lynn Sarko, a Seattle-based lawyer for the ex-employees, compared the error in the payment amounts to "a medical malpractice case that ends in corrective surgery and then that's botched."
The Enron court papers indicted that the U.S. Labor Department also has pushed for Hewitt to cover the shortfall. A department spokeswoman could not confirm the government's role in the matter.
Source: Houston Chronicle| By MARY FLOOD
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