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Judge Tosses $20 Million Suit Against County

School districts including Cabrillo Unified said officials were negligent in losing millions in Lehman Brothers collapse.

A filed against the county in January by several Peninsula school districts, including the Cabrillo Unified School District, was thrown out last week by a superior court judge.

A dozen districts, along with the county Office of Education, had banded together in a lawsuit filed in San Francisco Superior Court claiming that San Mateo County and its former treasurer, Lee Buffington, were negligent in managing the county’s finances prior to the economic collapse of 2008.

Specifically, the suit claimed that the county had too much of its money invested in one place – Lehman Brothers – causing it to lose an inordinate amount during the crash. San Mateo County lost about $155 million in pooled investment funds, including $20 million in school district money – more than any other county – when Lehman Brothers went bankrupt in September 2008.

The lawsuit claimed that the county and Buffington “failed in multiple respects to manage (school investments) prudently and competently,” and that they gouged the districts by charging $3 million a year for less-than-satisfactory investment services.

But last Thursday, Judge Richard Kramer ruled that the districts cannot the county due to limitations in state law allowing such suits. The plaintiffs have a month to respond to the judge’s ruling.

The 12 school districts that elected to join the suit are:

Cid June 21, 2011 at 02:17 PM
Take it out of Lee Buffington's retirement.

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