Opinion ID: 202483
Heading Depth: 2
Heading Rank: 2

Heading: The In Pari Delicto Doctrine.

Text: 23 In pari delicto is both an affirmative defense and an equitable defense. Broadly speaking, the defense prohibits plaintiffs from recovering damages resulting from their own wrongdoing. See Terlecky v. Hurd (In re Dublin Sec.), 133 F.3d 377, 380 (6th Cir. 1997). The label derives from the Latin phrase in pari delicto potior est conditio possidentis, which admonishes that [i]n a case of equal or mutual fault ... the condition of the [defending party] is the better one. Black's Law Dictionary 791 (6th ed. 1990). 24 The doctrine is grounded on twin premises. The first is that courts should not lend their good offices to mediating disputes among wrongdoers. Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299, 306, 105 S.Ct. 2622, 86 L.Ed.2d 215 (1985). The second is that denying judicial relief to an admitted wrongdoer is an effective means of deterring illegality. Id. 25 The in pari delicto defense has long been woven into the fabric of federal law. See id. at 307, 105 S.Ct. 2622 (discussing the doctrine's historical development); see also Fleming v. Lind-Waldock & Co., 922 F.2d 20, 28 (1st Cir. 1990); Duncan v. Me. Cent. R. Co., 113 F. 508, 509 (C.C.D.Me. 1902). It does not make a difference that some of the trustee's claims are premised on state law. Those claims invoke the law of Massachusetts—and the Massachusetts courts, like the federal courts, have warmly embraced the in pari delicto defense. See, e.g., Council v. Cohen, 303 Mass. 348, 21 N.E.2d 967, 970 (1939); Choquette v. Isacoff, 65 Mass.App.Ct. 1, 836 N.E.2d 329, 332 (2005). 26 As originally conceived, the in pari delicto doctrine forged a defense of limited utility. Over time, however, courts expanded the doctrine's sweep, deploying it as a basis for dismissing suits whenever a plaintiff had played any role—no matter how modest—in the harm-producing activity. See Bateman Eichler, 472 U.S. at 307, 105 S.Ct. 2622. Deploring this overly commodious construction, the Supreme Court later reined in the doctrine and returned it to its classic contours. See Pinter v. Dahl, 486 U.S. 622, 635, 108 S.Ct. 2063, 100 L.Ed.2d 658 (1988); Bateman Eichler, 472 U.S. at 310-11, 105 S.Ct. 2622. This retrenchment, which governs here, restricts the application of the in pari delicto doctrine to those situations in which (i) the plaintiff, as compared to the defendant, bears at least substantially equal responsibility for the wrong he seeks to redress and (ii) preclusion of the suit would not interfere with the purposes of the underlying law or otherwise contravene the public interest. See Bateman Eichler, 472 U.S. at 311, 105 S.Ct. 2622 (discussing the doctrine's application to federal securities laws); see also Edwards, 437 F.3d at 1154. Recent Massachusetts case law mirrors these refinements. See, e.g., Choquette, 836 N.E.2d at 332-33. 27 While the application of this binary paradigm may vary slightly depending on the nature of the particular claim asserted, courts nonetheless speak of a single doctrine. This is because the analysis ordinarily will be the same across a spectrum of different causes of action. See Official Comm. of Unsecured Creditors v. R.F. Lafferty & Co., 267 F.3d 340, 345-46 (3d Cir. 2001); see also Coopers & Lybrand, 322 F.3d at 160. 28 The court below adopted this one-size-fits-all approach in addressing the in pari delicto defense; it neither distinguished among the various counts nor differentiated between federal and state law. The trustee has not objected to this approach, so he has waived any argument either that a claim-by-claim analysis is obligatory or that some material differences exist between applicable federal and state law. See Domegan v. Fair, 859 F.2d 1059, 1065 (1st Cir. 1988) (It is too familiar to warrant string citation that we will not consider arguments which could have been, but were not, advanced below.). Consequently, we employ the same generic strain of the in pari delicto doctrine throughout our review.