Securities Law | Expert Legal Commentary
May 19, 2008
Laperriere v. Vesta Insurance Case Defines the Scope of Controlling Party Liability
Kittie Laperriere, et al. v. Vesta Insurance Group, Inc., et al.
By
Joel B. Ginsberg
In the precedent-setting case of Laperriere et al v. Vesta Ins. Group, et al, ____ F.3d ____, 2008 WL 1883482 (11th Cir. 2008), the 11th Circuit harmonized the proportionate liability scheme of the Private Securities Litigation Reform Act of 1995 (PSLRA) with the provisions of the Securities Exchange Act of 1934 (the “Act”) that provide for derivative liability of controlling persons. In this case of first impression, the Vesta court set forth a test for litigants and courts to apply to determine whether a controlling person has any liability for the acts of someone he controls, and, if so, whether proportionate or joint and several liability should apply.
To continue reading this article, subscribe now
It's FREE and only takes seconds
1The Court does note that a plaintiff has other remedies besides the provisions of Section 20(a) of the Act. The common law theory of respondeat superior is available to plaintiffs in addition to the Section 20(a) theory of liability. Vesta, Slip op. p. 16. Therefore, in the face of a viable good faith defense, plaintiffs can rely, in the alternative on common law agency theories, which don’t have that defense. As noted, however, common law agency theories reach fewer possible defendants than Section 20(a).
