In die last four years, live major court decisions have addressed die auditor's use of in pari delicto lo defend against liability.
A Delaware court applied New York law in dismissing a case againsl an auditor asserting in pari delicto.
In a New Jersey lawsuit brought by shareholders, in pari delicto could not be used by auditors who participated in the alleged Wrongdoing out of fairness in innocent shareholders' who were not in a position to know of or prevent die wrongdoing.
A federal conn in Pennsylvania recognized in pari delicto, but examined whether die adverse interest exception prevented imputation of the wrongdoing.
The first ease in California in which an auditor asserted the in pari delicto defense began in 2011.
Therefore, in pari delicto could not he used against innocent parties.
Could in pari delicto be successfully used if the firm is sued?
Based on the recent case decisions described above, in pari delicto would not be successful in New York.
While Midtown's in pari delicto defense would likely be rejected in New Jersey.
Lexis 5711 (2006), the court provided an excellent summation of the concept: "The doctrine of in pari delicto is an equitable doctrine that states 'a plaintiff who has participated in wrongdoing may not recover damages resulting from the wrongdoing.
1979) ("when both parties are in pari delicto the court will leave them to settle their disputes without the aid of the court").