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Second Major Victory in $20 Million Suit Over Lehman Bankruptcy

San Mateo Daily Journal

A dozen San Mateo County school districts do not have the authority to sue the county and its former treasurer for a collective $20 million loss caused when the Lehman Brothers bankruptcy leeched at least five times that amount from the county investment pool, according to San Francisco Superior Court Judge Richard Kramer.

Judge Kramer on Thursday affirmed an earlier tentative ruling that San Mateo County and former treasurer-tax collector Lee Buffington are immune from civil suits. The ruling essentially dismisses the case but the districts plan to appeal.

Keker & Van Nest Partner Michael Celio said an appeal was always expected and the dismissal saves time and money because a trial is not first needed on the merits. Instead, the case heads straight to the higher court for a decision on the standing. If Neuman prevails, the case will return to San Francisco Superior Court for trial.

“It is definitely an advantage,” Celio said. “We’re pleased that our legal theories were right and we’re happy to move on. 

In January, the districts and the superintendent of county schools sued the county and Buffington for $20 million plus interest. The suit argued the county and Buffington should have pulled investment pool funds prior to the Sept. 15, 2008 collapse of Lehman Brothers. The pool lost approximately $155 million from its collection of cities, agencies and districts.

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