Jeffrey Jacobs worked as a sales and marketing director for four Universal Development residential developments. He alleged that Universal fired him for his opposition to that illegal practice, in violation of public policy. The Superior Court entered summary judgment in favor of Universal on its in pari delicto defense. The Court of Appeal reversed. In pari delicto means of equal fault.
Courts apply the defense to avoid lending their aid to the enforcement of an illegal agreement.
For example, a court may properly dismiss an employee's claim to enforce an employment contract, if the purpose of the contract was to defraud the employer's creditors. However, courts should not apply the doctrine blindly to every case that involves some illegality. It should not apply if its application will unjustly enrich the defendant, or where the defendant has greater moral fault. The Court of Appeal said that Jacobs had merely acquiesced in the illegal rebate program. That was not as reprehensible as Universal's adherence to the practice.