Judge Michael J. Davis for the U.S. District Court for the District of Minnesota recently issued an order granting a complete dismissal with prejudice of all claims asserted against our client, Deloitte & Touche LLP, in a putative class action lawsuit, Kamal v. Baker Tilly US, LLP. (View full order.)
From 2016, Deloitte served as auditor of Aspirity Holdings, a retail energy company that filed for bankruptcy in 2017. Aspirity’s unpaid noteholders brought a putative class action asserting claims of negligent misrepresentation, aiding and abetting fraud, and aiding and abetting breach of fiduciary duty against Deloitte and Aspirity’s prior auditor, Baker Tilly.
Judge Davis held that a plaintiff generally can’t base such a claim on unaudited quarterly financial statements. In dismissing plaintiffs’ negligent misrepresentation claim against Deloitte, Judge Davis specifically found that plaintiffs had failed to allege that Deloitte was the source of any false information in the unaudited quarterly financial statements. The Court’s ruling is generally consistent with the treatment of unaudited quarterly reports under federal securities laws.
Judge Davis also dismissed plaintiffs’ aiding and abetting claims against Deloitte, holding that these claims belonged to the audit client (not to investors). As the audit client was bankrupt in this case, only the bankruptcy trustee could pursue the claims. Judge Davis also dismissed plaintiffs’ aiding and abetting claims on merits, reaffirming the high bar for asserting such claims against auditors and other professionals.
Greene Espel was honored to represent Deloitte, and we are proud of the exceptional result for our client.