Parmalat Suits Against Grant Thornton Again Revived by U.S. Appeals Court
Stock Chart for Parmalat SpA (PLT)
The U.S. Court of Appeals in New York said U.S. District Judge Lewis Kaplan should have abstained from ruling on the cases because of bankruptcy-related proceedings and because he lacked jurisdiction. The appeals court today said the cases should be sent to federal court in Illinois so they can be referred an Illinois state court.
The cases have gone to the federal appeals court and back to Kaplan before. In January 2011, the appellate judges revived the suits after Kaplan dismissed them, ruling that he applied the wrong standard in determining whether he had jurisdiction.
The court told Kaplan to determine whether he was required by federal law to abstain from taking the cases and to leave the decisions to the Illinois courts. Kaplan, saying he was applying a rule set by the New York appeals court, decided in August that he had authority over the proceedings. He later dismissed both suits.
Parmalat, a dairy company based in Collecchio, Italy, collapsed in December 2003 in the country’s largest bankruptcy. It disclosed more than 14 billion euros ($20.1 billion) of debt, about eight times the amount reported by its former management. Parmalat exited bankruptcy and returned to the stock market in 2005.
“We are very pleased with the decision, which reaffirms the decision that we thought at the outset of the case, namely, that this matter belonged in the Illinois state courts,” Kathleen M. Sullivan, a partner at law firm Quinn Emanuel Urquhart & Sullivan LLP who represents Parmalat, said in a telephone interview.
The two cases were originally filed by Parmalat and its Parmalat Capital Finance Ltd. unit in Illinois state court in 2004, sent to federal court in Illinois and then to federal court in Manhattan where Kaplan was overseeing multiple Parmalat lawsuits. Kaplan first dismissed the suits in 2009 and Parmalat appealed, resulting in the first ruling by the federal appeals court.
Enrico Bondi, who was appointed to oversee the Parmalat bankruptcy, sued Chicago-based Grant Thornton claiming it aided in the fraud that led to the company’s collapse. Parmalat Capital also sued the firm.
“The Second Circuit’s decision today is about which court should resolve the case -- not about how it should ultimately be resolved,” Michele Mazur, a spokeswoman for Grant Thornton, said in an e-mail.
She said the firm is “confident” the Illinois courts will dismiss the case as Kaplan did “after years of exhaustive discovery.”
Grant Thornton LLP never served as Parmalat’s auditor and is in no way responsible for Parmalat’s fraud, she said.
The case is In re Parmalat Securities Litigation, 04-cv- 1653, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Patricia Hurtado in New York at email@example.com
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org
Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.