Firefighters' Ret. Sys. v. EisnerAmper, L.L.P.
898 F.3d 553
5th Cir.2018Background
- In 2008 three Louisiana public pension funds bought $100 million in FIA Leveraged Fund shares; by 2014 the fund was bankrupt and the shares were largely worthless.
- Offering documents promised 10–15% returns and granted Plaintiffs redemption rights that would prioritize or automatically redeem their shares under certain collateral declines.
- EisnerAmper LLP (Eisner) was retained in 2010 to audit the fund; the audit was never completed. Plaintiffs allege an audit would have revealed improper investments and triggered their redemption rights, and that Eisner participated in a scheme to induce Plaintiffs to waive those rights.
- Plaintiffs sued Eisner in Louisiana state court in 2014 on theories including fraud, negligence, negligent misrepresentation, breach of contract (third-party beneficiary), and violations of state securities and unfair trade laws; Eisner removed to federal court.
- The magistrate judge and then the district court concluded Plaintiffs’ suit was premature because they had not sought pre-suit review from Louisiana’s public accountant review panel (La. Rev. Stat. § 37:105); appeal followed on that issue and Eisner cross-appealed seeking dismissal with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether La. Rev. Stat. § 37:105 required pre-suit review before filing | § 37:105 inapplicable because Eisner’s LA CPA license lapsed by the time of the motion to dismiss | § 37:105 applies because Eisner was a certified public accountant when the suit was filed | Dismissal as premature affirmed: § 37:105 bars commencing suit against a CPA before review when CPA was licensed at time suit was filed |
| Whether judicial estoppel prevents Eisner from invoking the panel requirement | Estoppel: Eisner took inconsistent positions on jurisdiction vs. panel requirement | Eisner’s positions were not plainly inconsistent and district court did not adopt any inconsistent prior position | Judicial estoppel not available; Plaintiffs forfeited argument and failed to show elements of estoppel |
| Whether Eisner waived the right to panel review by raising jurisdiction/venue defenses | § 37:108 implies Eisner waived panel defense by raising jurisdiction/venue | § 37:108 permits accountants to raise § 9:5604 defenses at any time and does not bar invoking panel requirement; Eisner raised both defenses in same motion | Waiver not established; § 37:108 does not foreclose invoking panel requirement and Eisner timely asserted it |
| Whether dismissal should be with prejudice (peremptory) | Dismissal without prejudice was correct; peremption not established | Eisner contends Plaintiffs’ claims are perempted and dismissal should be with prejudice | Dismissal was based on precondition to merits and therefore without prejudice; remanded for district court to decide peremption and whether any claims require dismissal with prejudice |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading must state a plausible claim)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard)
- Costello v. United States, 365 U.S. 265 (pre-merits dismissals for failure to satisfy a prerequisite are without prejudice)
- Shady Grove Orthopedic Assocs. v. Allstate Ins. Co., 559 U.S. 393 (apply state substantive law in diversity cases)
- In re Katrina Canal Breaches Litig., 495 F.3d 191 (Erie-guess guidance)
- Firefighters' Ret. Sys. v. Grant Thornton, L.L.P., 894 F.3d 665 (applying Louisiana law in accountant-related litigation)
- Flagg v. Stryker Corp., 819 F.3d 132 (medical-review-panel analog on mandatory pre-suit panel dismissals)
- Reed v. City of Arlington, 650 F.3d 571 (judicial estoppel applied flexibly)