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ARTICLE · 27 AUGUST 2014

Auditors’ Liability To Third Parties: In Pari Delicto – Part II

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The application of the in pari delicto defence in the United States is subject to significant jurisdictional variability.

CanadaLitigation, Mediation & Arbitration
Lisa Munro
Lisa Munro
Eni Eski
Eni Eski
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The application of the in pari delicto defence in the United States is subject to significant jurisdictional variability. Case law reveals at least two different approaches to the scope of the defence: (i) a narrow application available to innocent but negligent (not complicit) defendants; and (ii) a broad application available to both negligent and complicit defendants in circumstances in which the plaintiff bears at least equal responsibility for the wrong alleged.

For example, in 2010, the Supreme Court of Pennsylvania applied in pari delicto narrowly in Official Committee of Unsecured Creditors of Allegheny Health Education and Research Foundation (AHERF) v. PricewaterhouseCoopers LLP, 607 F3d 346. The members of senior management of a non-profit corporation misstated financial results to conceal the corporation's financial difficulties. Following discovery of the fraud and the corporation's bankruptcy, a group of innocent unsecured creditors brought an action

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