A state appellate court affirmed a ruling that 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.

The three-judge panel approved the dismissal of the lawsuit by ruling that investment decisions are "discretionary activity which should not be the subject of scrutiny and second-guessing by a coordinate branch of government.”

Attorney Stuart Gasner, who represented the county and former treasurer-tax collector Lee Buffington, called the decision affirmation of his argument all along.

"The treasurer cannot be sued for making complex investment decisions or for failing to predict Lehman's collapse,” Gasner said in a prepared statement.

The appeal was of a November 2011 affirmation of an earlier tentative ruling that the county and Buffington were immune from civil suits like this one alleging negligence and breach of fiduciary duty. The judge also ruled that the suit wasn't brought in a timely manner and wasn't specific enough about how the county allegedly breached its contract.

The school districts' lawsuit 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.

The county has 24 public school districts of which 12 were named in the claim along with the San Mateo County Superintendent of Schools: the San Mateo Union High School District, Menlo Park City Elementary School District, Belmont-Redwood Shores Elementary School District, Cabrillo Unified School District, Burlingame Elementary School District, Ravenswood City Elementary School District, San Bruno Park Elementary School District, San Carlos Elementary School District, Las Lomitas Elementary School District, Portola Valley Elementary School District and Woodside Elementary School District.

The San Mateo County Community College District also lost an estimated $25 million itself but did not join the suit.

The county investment pool is a collection of 1,050 different accounts from cities, school districts and special agencies, some of which are obligated to invest. Following the bankruptcy, a new treasurer-tax collector was elected and the county rewrote its investment pool policy and went on the legal attack against Lehman and its executives for allegedly defrauding investors.