June 18, 2009

Foreign Corporation Not Liable for Punitive Damages Against U.S. Affiliate

Earlier this week, a trial judge in Miami ruled that BDO International, a Brussels-based corporation, cannot be liable for a $351 million punitive damages award against its U.S. affiliate, BDO Seidman.

The punitive damages were awarded in a lawsuit by a Portugese bank that accused BDO Seidman of bungling the audits of the bank's subsidiary. The jury awarded $170 million in compensatory damages and $351 in punitive damages, for a total verdict of $521 million, the largest verdict ever against a U.S. accounting firm. BDO Seidman appealed. The bank then sued BDO Seidman's parent company, BDO International, seeking to hold them liable for the punitive damages award, but Miami-Dade circuit judge John Schelsinger issued a directed verdict in favor of the defendant.

Am Law Litigation Daily has more details.

This case has a California connection. The plaintiffs' lawyer, Steven W. Thomas, has a small firm in Venice. Coincidentally, my daughter went to preschool with his child a few years ago, but I never met Steve. His wife told me he was off trying some big case in Miami. I had no idea it was this big.

UPDATE (6/18/09 at 6:13 pm): After the trial court ruled that BDO International was not liable for the punitive damages award against BDO Seidman, the court allowed the jury to decide BDO International's liability for the compensatory damages. According to the Legalizer, the jury today ruled in favor of BDO International, finding it not liable for the compensatory damages award.