One month ago, US District Judge Lewis Kaplan sent a shock wave through the auditing world by ruling that a securities class action could proceed against Deloitte & Touche Tohmatsu and Deloitte & Touche LLP for the actions of Deloitte & Touche SpA, which served as Parmalat's auditor in Italy. The two Deloitte entities argued that they did not have control over Deloitte Italy, but Judge Kaplan held that this issue was one that would have to be decided at trial.

On Wednesday of this week, Judge Kaplan once again ruled against an auditing firm in the Parmalat case, denying the motions for summary judgment of Grant Thornton International (GTI) and Grant Thornton LLP (GT US). Similar to the case against Deloitte, plaintiffs' claims against GTI and GT US rested on the premise that those defendants were vicariously liable for the alleged fraud of GT Italy, one of Parmalat's former auditors. Looking closely at the facts concerning GTI and GT US' control over GT Italy, however, Judge Kaplan found that

The beauty of the Bayeaux tapestry or the genius of a Bach concerto cannot be appreciated by looking only at individual stitches on the fabric or by listening only to the B flats. Just so here. The question whether GT US controlled GTI cannot or, at least, need not be resolved by looking at each individual piece of evidence.

In the last analysis, the question before the Court is whether the evidence as a whole is sufficient to permit - not compel - a rational jury to conclude that GT US controlled GTI. Considering all of the evidence as a whole, the Court holds that it is. That is not to say that the points advanced by GT US lack force. It is to say only that it is beyond the Court's proper function to resolve the conflicting inferences and conclusions that may be drawn from evidence that, in the Court's view, quite plainly cuts in different directions.

Accordingly, Judge Kaplan denied the defendants' motions for summary judgment.

Read the Court's opinion (via American Lawyer)