PricewaterhouseCoopers Prevails In Decision On AIG “In Pari Delicto” Case

PricewaterhouseCoopers Prevails In Decision On AIG “In Pari Delicto” Case

The Supreme Court of the State of Delaware issued an opinion on January 3rd, 2011 affirming the dismissal of claims against PricewaterhouseCoopers (PwC) in the Teachers Retirement System of Louisiana derivative suit.  This suit, as described further below, relates to an earlier fraud case at AIG.

...The New York Court of Appeals accepted the certified question, and issued an opinion holding that the in pari delicto doctrine would bar such a derivative claim.3

4) In their supplemental briefing, Derivative Plaintiffs argued that the Kirschner decision is not binding on the issue of imputation of wrongdoing, which, they claim, is a question of Delaware law.

5) We reject this argument for two reasons. First, Derivative Plaintiffs acknowledged in their Opening Brief that, under the facts of this case, imputation is a question of New York law. Second, in our certification request, this Court sought resolution of a "determinative question[] of New York law . . . ."4

The Kirschner decision provided a determinative answer, which this Court must follow....

1A.I.G., Inc. v. Greenberg, 965 A.2d 763 (Del. Ch. 2009).

2Teachers' Retirement System of Louisiana v. PricewaterhouseCoopers LLP, 998 A.2d 280, 282-3

(Del. 2010).

3 Kirschner v. KPMG LLP et al., 2010 WL 4116609 at *14 (N.Y.).

A PwC spokesperson provided this comment on the decision to me:

"In affirming the dismissal of these claims, the Delaware Supreme Court followed the definitive statement of law already issued by New York's highest court.  In October, the New York court rejected calls to alter 200 years of legal precedent to bring about the expansion of third-party liability sought by derivative plaintiffs. The Delaware Supreme Court considered that advice and affirmed the dismissal of the derivative claims."

Read this article in its entirety at the re: The Auditors, a blog by Francine McKenna.