Rigas, J. v. Deloitte & Touche LLP
1311 EDA 2016
| Pa. Super. Ct. | Oct 27, 2017Background
- Adelphia Communications collapsed in 2002; plaintiffs (Rigas family members, Zito I, Zito Media) sued Deloitte & Touche LLP alleging negligent accounting/advice about co-borrowing and related-party disclosures that contributed to Adelphia’s failure.
- Deloitte removed the suit to bankruptcy court; the JPML transferred it into MDL in SDNY. The District Court dismissed most claims and remanded the few remaining claims (three by Zito Media) to the Philadelphia Court of Common Pleas.
- After remand, the Court of Common Pleas granted summary judgment for Deloitte on Zito Media’s remaining claims on the ground that Zito Media’s damages expert gave only aggregate valuations and not a Zito-specific damages figure.
- The Superior Court consolidated nine appeals: eight challenging the District Court’s dismissal/remand rulings, and one (Zito Media) challenging the state-court summary judgment on damages.
- The Superior Court held it lacked jurisdiction over the appeals contesting the District Court’s dismissal orders because under City of Waco and its progeny such orders (preceding a remand) were appealable only to the federal circuit (here, the Second Circuit) and the plaintiffs failed to appeal there.
- The Superior Court reversed the state-court summary judgment for Zito Media, holding the expert’s methodology (aggregate valuation then apportionment to Zito Media) was a reasonable damages calculation to submit to a jury.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Superior Court may review District Court dismissal orders entered during MDL before remand | Plaintiffs: state appellate review is permissible after remand and post-remand state-court proceedings | Deloitte: City of Waco rule makes such orders immediately appealable only to the federal court of appeals; plaintiffs failed to appeal to Second Circuit, so Superior Court lacks jurisdiction | Quashed appeals — Superior Court lacks jurisdiction; plaintiffs should have appealed to the Second Circuit under City of Waco doctrine |
| Effect of District Court remand under 28 U.S.C. §1452(b) on appealability of prior dismissals | Plaintiffs: remand ends federal involvement so state appeal is proper after remand | Deloitte: remand makes the prior dismissal final for federal purposes and triggers immediate federal-appeal right | Remand does not revive state-court review where a dismissing order was collateral to remand; federal appellate review was the proper avenue under City of Waco/Kircher |
| Standing of Zito I to pursue assigned claims (as successor in interest) | Zito I: claims were validly assigned from predecessors; thus it has standing | Deloitte: asserted lack of constitutional standing and parol/evidence-rule barriers to proofs of assignment | Superior Court quashed appellate challenges to dismissal/standing rulings for lack of jurisdiction (no merits decision on standing by this court) |
| Whether Zito Media’s damages expert provided a sufficiently reliable, non-speculative damages calculation | Zito Media: expert used industry valuation methods to value the Managed Entities then apportioned value to Coudersport (Zito Media); provided Zito-specific ranges | Deloitte: expert’s aggregation renders damages speculative; reliance on Mulcahey (an Adelphia insider) makes data unreliable | Reversed summary judgment; expert’s methodology (aggregate valuation + allocation) was reasonable and created jury issues as to damages; remanded for trial |
Key Cases Cited
- City of Waco v. United States Fidelity & Guaranty Co., 293 U.S. 140 (1934) (district-court dismissals preceding remand may be appealed to the federal court of appeals)
- Kircher v. Putnam Funds Trust, 547 U.S. 633 (2006) (clarifies when orders collateral to remand are separable and appealable)
- Gelboim v. Bank of Am. Corp., 135 S. Ct. 897 (2015) (orders disposing of discrete cases in MDL are immediately appealable)
- Summers v. Certainteed Corp., 997 A.2d 1152 (Pa. 2010) (summary-judgment standard and deference to opposing expert conclusions)
- Delehanty v. First Pennsylvania Bank, N.A., 464 A.2d 1243 (Pa. Super. 1983) (plaintiff need only supply a reasonable basis from which factfinder can estimate damages)
- Reading Radio, Inc. v. Fink, 833 A.2d 199 (Pa. Super. 2003) (approves package valuation with allocation to individual asset/station when industry practice supports combined valuation)