486 U. S. 622
June 15, 1988
Pinter sold unregistered securities to Dahl. Dahl successfully urged friends and family to also buy securities from Pinter. But the venture failed, and Dahl and his friends sued Pinter for selling them fraudulent securities. Pinter countered that Dahl had fraudulently induced the selling, and that the doctrine of in pari delicto (i.e. ‘you’re just as much at fault!’) barred a successful claim. Additionally, Pinter said that Dahl was also a seller with respect to the securities sold to the friends and family.
The Supreme Court gave a collective shrug, and remanded the case 7-1 after clearing up some of the worst legal muddles (Kennedy did not participate). Blackmun started out by asserting that in pari delicto defenses could, according to Court precedent, be asserted in securities lawsuits. But the defense would only hold if the plaintiff was at least equally at fault, and if the defense would not frustrate the broader purposes of securities law. Blackmun said the record was too sparse to determine whether Dahl was really equally at fault because of his assurances to Pinter that the sale would be a good one.
On the issue of whether Dahl was a seller, Blackmun said that securities law did allow a mere solicitor, rather than a titleholder, to be regarded as a seller. Nonetheless, he took issue with the contention of lower courts that any inducement to third parties, no matter how disinterested or gratuitous, could count as solicitation. Such tests ran afoul with the actual statutory text of securities law. Once again though, the facts behind Dahl’s inducements to his friends and family were too murky, so a remand was given.
Stevens, in dissent, had the decency to offer some answers instead of more questions. Examining all the lower court proceedings, he found no reason to believe that Dahl could possibly be equally at fault, so the in pari delicto claim was no good. On the question of Dahl’s status as a seller, Stevens though the Court was being advisory. Stevens addressed the issue anyway, and wrote that Dahl should not be held liable as a seller because he received no money as a result of any purchases he induced.
For finality and clarity, if nothing else, I would have joined the Stevens dissent. The last thing an overly complex case like this needs is a remand to determine a bunch of probably unanswerable factual questions.