School districts must amend Lehman lawsuit
Attorneys for 12 San Mateo County school districts and the Office of Education have until July 18 to amend a lawsuit filed against the county over the schools' loss of about $20 million in the 2008 Lehman Brothers collapse.
San Francisco Superior Court Judge Richard Kramer on June 16 ruled that the lawsuit could not go forward because, among other reasons, state law precluded the schools "from bringing common law causes of action for negligence and breach of fiduciary duty against the county," according to a press release from Keker & Van Nest, the law firm representing the county.
Tom Prountzos of the law firm Jenkins Goodman Neuman & Hamilton, which represents the schools, said his firm is amending the complaint to re-file by July 18.
Twelve area school districts — including Menlo Park City, Las Lomitas, Portola Valley, and Woodside — sued the county and now-retired treasurer Lee Buffington earlier this year for actions that led to the schools' losses.
The treasurer's office is in charge of funds that school districts are required to put in an investment pool; the lawsuit alleges the treasurer invested an "imprudent portion" of the funds in Lehman, and kept them there "after learning of deterioration in the finances, credit rating, and stock price of Lehman."
Overall, the Lehman bankruptcy led to $155 million in losses for the county and other agencies participating in the investment pool. But most of those agencies are not required to participate, unlike school districts. The treasurer's office charges "substantial fees" to manage the money, according to Anne Campbell, superintendent of the county Office of Education.
Of the local school districts, Menlo Park City lost the most by far — about $4 million. The Las Lomitas district lost nearly $400,000; the Portola Valley district, almost $150,000; and the Woodside district, almost $100,000.
Ms. Campbell, the spokesperson for the school districts involved in the lawsuit, said that school officials "certainly appreciate Judge Kramer's willingness to allow us to address the concerns he raised" about the complaint during the June 16 court hearing.