----- Forwarded by Jeff Dasovich/NA/Enron on 02/12/2001 04:06 PM -----

	Mike D Smith@EES
	02/12/2001 03:48 PM
		 
		 To: Phillip K Allen/HOU/ECT@ECT, Robert Badeer/HOU/ECT@ECT, Tim 
Belden/HOU/ECT@ECT, Shelia Benke/Corp/Enron@Enron, William S 
Bradford/HOU/ECT@ECT, Rick Buy/HOU/ECT@ECT, Andre 
Cangucu/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Alan Comnes/PDX/ECT@ECT, Wanda 
Curry/HOU/EES@EES, Jeff Dasovich/NA/Enron@Enron, Karen 
Denne/Corp/Enron@ENRON, Mike Grigsby/HOU/ECT@ECT, Mark E 
Haedicke/HOU/ECT@ECT, Mary Hain/HOU/ECT@ECT, Steve C Hall/PDX/ECT@ECT, Joe 
Hartsoe/Corp/Enron@Enron, Keith Holst/HOU/ECT@ect, Robert 
Johnston/HOU/ECT@ECT, Paul Kaufman/PDX/ECT@ECT, Steven J Kean/NA/Enron@Enron, 
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Mitchell Taylor/Corp/Enron@ENRON, Michael Tribolet/Corp/Enron@Enron, Robert 
Williams/ENRON@enronxgate, Greg Wolfe/HOU/ECT@ECT, Roger Yang/SFO/EES@EES, 
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Scott Gahn/HOU/EES@EES, Elizabeth Sager/HOU/ECT@ECT, Peggy Mahoney/HOU/EES@EES
		 cc: Vicki Sharp/HOU/EES@EES
		 Subject: Hearing on SCE Federal Court Case

SCE's motion for preliminary injunction seeking an order permitting 
recoupment of past and future undercollections was denied today.   It appears 
that the case will now be scheduled for a future hearing after the parties 
have had a chance to develop any relevant facts and fully brief the legal 
issues.  

Below is a summary of what occurred today: 

________________________________________________

     Motion for Preliminary Injunction:  The Court denied SCE's Motion for a 
Preliminary Injunction on the merits.  Judge Lew stated that the Motion was 
"wholly inappropriate" and that granting it would violate the 11th 
Amendment.  The Court stated that mandatory injunctions, such as the one 
requested here, are "strongly disfavored" and involve a heightened standard 
that SCE failed to meet.  The Court also said it was constrained by the 
matters put at issue in the pleadings, and that here the Motion sought relief 
in excess of that requested in the complaint.

     While the Court let defense counsel argue for about 15-30 minutes, he 
mostly appeared disinterested in what they were saying.  Plaintiff's counsel 
did not make any oral argument.

    The Court also said that this case turns on the Pike County exception, 
which depends on whether there were alternative markets available; and that 
if the exception applies, there is no preemption claim.  The Court said that 
there were certain narrow issues before it which is all that it will address, 
and that the Court is not a "do it all" problem solver for the parties.  The 
Court did not indicate whether it was predisposed to rule for any side.

     Motion for Order Specifying Facts without Substantial Controversy:  The 
Court granted the motion as to facts 1-10, 12, and denied it as to facts 1, 
13.  The Court found that these particular facts were not substantially 
disputed by the defendants, and that further discovery was not needed for the 
Court to determine them. (Since I do not have a copy of the filings, I am 
unable to provide further comment.  Please let me know if you want me to 
obtain copies of the filings.)

     Motions to Intervene:  The Court granted the Motions to Intervene 
(permissive intervention) filed by Los Angeles County and the Utility Reform 
Network on the ground that their participation would assist the court in 
hearing the complex matters presented.

     Motion to Specially Appear:  The Court denied the California Attorney 
General's motion to "specially appear" as inappropriate, but without 
prejudice to filing a motion for permissive intervention.

     Criticism of Counsel:   The Judge castigated SCE's counsel in several 
instances.  He called the preliminary injunction motion "wholly 
inappropriate."  He criticized SCE's description in briefs of his ruling on 
January 8, 2001, which the Judge said was "flatly wrong."  (He said his 
January 8 order did not hold that the filed rate doctrine permits the 
plaintiff to recover recoupment costs.)  With respect to the Motion for Order 
Specifying Facts, he said he was "not fooled" by SCE's "creative arguments."  
The Court also gave a general admonishment about "spinning" his rulings 
outside of the courtroom.  Reading between the lines, the Judge seemed 
bothered by media reports.  I do not know if the Judge was aware, but SCE had 
a public relations person mingling in the court room with the many reporters 
present.

     Calendar:  The Court advanced the March 19, 2001 Scheduling Conference 
to March 5 at 9:00.  The Conference will address matters including discovery 
practice, motion deadlines and the trial date.  The Judge said he would 
consider SCE's request for an early trial date.  However, he also said that 
it appeared that the primary disputed issues were legal, not factual, and 
therefore he expected that summary judgment motions would be filed by both 
sides.

     Consolidation with PG&E matter:  The Court initially expressed concern 
that the PG&E case was transferred from Northern California, saying he had 
doubts that this was the proper venue.  Later, however, the Judge seemed 
placated when PG&E's counsel told him that the company had substantial assets 
in this district.  One counsel also told the Court that the parties had 
stipulated to consolidate the PG&E matter with the SCE matter, though the 
Court did not say whether he would order consolidation.

    Impression of Judge:  This was my first time observing Judge Lew.  He 
seems extremely strict, straightforward and no-nonsense.  He seemed very well 
prepared on the substance and not at all shy about ruling on the merits.  In 
the SCE matter and preceding non-related matters, the Judge frequently 
cut-off counsel's arguments to focus on narrow issues of law, and made 
counsel either answer very specific questions or stop talking completely.  
Here, the Judge acknowledged this case's importance and said he does not take 
this matter lightly.