In the decision granting the motion to dismiss, Judge Cote (who was recently assigned the case after Judge Sullivan was elevated to the Second Circuit), agreed with Weils arguments that the trustees claims were barred by the in pari delicto
defense, which prohibits the trustee from pursuing claims against third parties such as Morgan Stanley when the trustee alleges that the company itself through its management and directors engaged in the very wrongdoing that caused Tribune to fall into bankruptcy.
The Supreme Court applied the concept of 'in pari delicto
.' This Latin term connotes that if the two parties to a controversy are equally culpable or at fault, they have no action against each other.
A college whose financial aid director committed fraud could sue its auditor under the doctrine of in pari delicto
, the Supreme Judicial Court has ruled, finding that because the employee was not a member of senior management, her conduct could not be imputed to the school.
* Clients Barred from Blaming Lawyer for Consequences of Clients' Illegal, Immoral or Wrongful Conduct: North Carolina Court of Appeals Reaffirms In Pari Delicto
Defense in Legal Malpractice Actions by William Graebe and Dan Zureich (September 2017)
Fraud and Other Tort Claims and the In Pari Delicto
Q: Is the doctrine of in pari delicto
applicable in this ejectment case?
CRIMINAL LAW--Second Circuit Applies Defense of in Pari Delicto
to Racketeer Influence Corrupt Organization Act Claim--Republic of Iraq v.
Under the doctrine of in pari delicto
("in equal fault"), an auditor cannot lie held liable for negligently failing lo detect wrongdoing or lor even participating in die wrongdoing if the corporation also participated at least equally.
The district court dismissed the plaintiffs' complaint with prejudice for failure to state a claim, holding that even if the NCAA ticket distribution system was an illegal lottery under Indiana law, the doctrine of in pari delicto
barred the claim because the plaintiffs were aware of the essential features of the ticket distribution process when they applied, and they knowingly participated in the disputed process (George, 2009).
Finally, courts have invoked the market power model when holding that dealers or consumers can challenge unlawful agreements they have themselves entered and enforced, contrary to the common law doctrine of in pari delicto
("in equal fault").
Shielding the Auditor from Corporate Fraud Liability: Recent Decisions and Rationale for the in Pari Delicto
Defense, by Sandra S.
To apply in pari delicto
, the illegal transaction must have been entered voluntarily and the fault apportioned equally.