New York’s Top Court Endorses Broad Scope For In Pari Delicto Defense When Outside Professionals Are Sued In Connection With Corporate Frauds.

In a much-awaited decision, New York’s highest court on October 21, 2010 gave a broad scope to the in pari delicto doctrine that is often used as a defense when a company’s outside professionals are sued on behalf of the company for their roles in connection with management-led wrongdoing at the company. In a 4-3 ruling in two consolidated cases, Kirschner v. KPMG LLP and Teachers’ Retirement System of Louisiana v. PricewaterhouseCoopers LLP (Nos. 151 & 152, Oct. 21, 2010), the New York Court of Appeals— addressing questions certified to it by the U.S. Court of Appeals for the Second Circuit and the Delaware Supreme Court — narrowly confined the circumstances in which the company could invoke the so-called “adverse interest” exception that sometimes can block the in pari delicto defense. http://www.chadbourne.com/files/Publication/abb4a007-242b-457e-8ed5-fc6e44a01207/Presentation/PublicationAttachment/a57ec463-37c6-4cda-96d2-02c98f15d9e8/Comm%27l%20Litigation-%20Kirschner%20v%20KPMG%20ca.pdf