Scott+Scott LLP Takes Case Against Auditors to the Second Circuit
SIn May 2007, Scott+Scott reached an $80 million settlement against Priceline, Inc., on behalf of investors in the company. While that settlement disposed of the case against Priceline, a case against Priceline’s auditors, Deloitte & Touche LLP ("Deloitte"), continues as Scott+Scott has appealed the Connecticut District Court's recent decision to dismiss the case against Deloitte. While the appeal involves some technical legal jurisdictional questions, at its heart,
the appeal challenges whether an auditor can be held liable for its direct actions and representations to investors in a securities fraud case. Plaintiffs allege that Deloitte’s unqualified audit opinion to investors for Priceline’s 1999 financial statements, which was included in Priceline’s Form 10-K filed with the SEC on March 30, 2000, constituted a false statement that deceived Priceline investors. Plaintiffs allege that Deloitte violated Generally Accepted
Accounting Principles (“GAAP”) and also failed to comply with Generally Accepted Auditing Standards (“GAAS”) in conducting its audit of Priceline. Based on documents produced by Deloitte, the Plaintiffs’ complaint further details how Deloitte improperly and knowingly approved various accounting practices at the Company.
Despite this factual background, the complaint against Deloitte was dismissed on perceived legal technicalities. In appealing the dismissal, Scott+Scott hopes to recover for the Plaintiffs and the class against the auditors, as well as to establish strong precedent in the growing field of cases against auditors that enable their clients to defraud investors by not only participating in the alleged frauds, but also by making false and misleading statements to the market. The case has been fully briefed and awaits oral argument.