A defendant sued by a plaintiff whose cause of action is based on or arises from the plaintiff’s illegal conduct may assert the affirmative defense that the illegality of the plaintiff’s action bars the suit. The defense is expressed in the maxim, in pari delicto potior est conditio defendentis (where the parties are in equal guilt the position of the defendant is the stronger). The essential purpose of the in pari delicto rule is to prevent a lawbreaking plaintiff from enforcing rights or otherwise obtaining a remedy arising from her violation of the law. The maxim indicates that the defense is available even to a defendant that participated in or bears some blame for the illegal action, provided that the defendant’s degree of blame for breaking the law was less than the plaintiff’s. Although the literal wording of the maxim suggests that relative guilt is the crucial element, the analysis that courts apply to decide whether to allow the defense is infinitely more complex, and takes myriad other considerations into account, including the nature and extent of the illegality, the nature of the remedy sought, public policy, and the equities between the parties. In all but the most obvious of cases, the balancing of this array of factors presents a challenge to consistency and coherence. The search for the right disposition of the in pari delicto defense becomes even more difficult where the plaintiff is not the actual wrongdoer, but a principal to which the illegal action is imputed, or an official, such as a receiver or a bankruptcy trustee who has succeeded to the cause of action and pursues it for the benefit of victims of the illegal conduct. While there is much case law that deals with the in pari delicto rule, and some scholarly commentary that addresses its application in discrete settings, there is no comprehensive evaluation of the rule. This article attempts such an evaluation. It begins with a thorough exposition and analysis of the in pari delicto defense, as it applies to a suit by a lawbreaking plaintiff against a defendant who had some involvement in the illegal activity. It then proceeds to evaluate the courts’ application of the rule in situations in which allowing the defense precludes relief to innocent victims of the illegal conduct. In many, but not all cases, courts still apply principles of imputation to uphold the defense by a collaborator or enabler, even where the suit is brought to hold him accountable for loss suffered by innocent victims. This article argues that although the decisions of these courts may be supportable on purely doctrinal grounds, they overlook the underlying rationale of the in pari delicto rule and are hard to justify on policy grounds.
Blum, Brian A.
"Equity's Leaded Fleet in a Contest of Scoundrels: The Assertion of the In Pari Delicto Defense against a Lawbreaking Plaintiff and Innocent Successors,"
Hofstra Law Review: Vol. 44
, Article 9.
Available at: http://scholarlycommons.law.hofstra.edu/hlr/vol44/iss3/9