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Experience:
Stanley Parzen focuses on complex litigation in federal and state courts and in arbitration, including trials and appeals. He devotes the majority of his practice to the defense of accounting firms and other professionals.
Stanley has represented accounting firms in connection with a wide variety of claims brought by clients and client successors, including trustees and liquidators, including claims relating to allegedly faulty audit work, often relating to failed banks, savings associations, or insurance companies; allegedly faulty computer systems design; and allegedly improper tax advice and tax return preparation. A variety of issues has arisen in these cases, including the auditor’s obligation with respect to alleged internal controls at an audit client, whether the knowledge and actions of the client’s officers and directors and shareholders should be attributed to the client, whether the deepening insolvency theory is an appropriate theory or measure of damages, accounting for subprime loans and securitizations, and whether the actions of the accountant had any causal relationship to the damages sought in the case.
In addition, he has provided representation to accounting firms in numerous federal securities and derivative actions brought by stockholders in diverse federal and state courts as well as other claims brought by third parties. A variety of issues has arisen in these cases including the propriety of the use of the fraud on the market theory, whether the plaintiffs had ever pleaded a claim for fraud under the applicable pleading standards, and whether the demand requirement for a derivative case to be filed had been satisfied. He has also represented a number of accounting firms in disputes with partners and retired partners, primarily relating to covenants not to compete and retirement benefits.
Stanley has also represented corporations and broker dealers in securities and derivative action litigation. Prior to joining Mayer Brown, he served as a Law Clerk to The Honorable Harrison L. Winter, US Court of Appeals for the Fourth Circuit, Maryland (1976-1977).
Notable Engagements:
Successfully briefed and argued motions to dismiss in litigation brought by purchasers of a series of affiliated mutual funds against Ernst & Young LLP; among other things, the district court held that purchasers of a close-ended mutual fund could not proceed on a fraud on the market theory because there was no market on which the mutual fund shares traded (In re Van Wagoner Funds, Inc. Securities Litigation, 382 F. Supp. 2d 1173 (ND Cal. 2004), Order of July 25, 2005).
Successfully argued to the Illinois Supreme Court that taxpayers of Cook County, Illinois. could not bring an action on behalf of the county under the common law against an accounting firm that had allegedly failed to determine that a municipal refinancing had involved yield burning (County of Cook ex rel Rifkin v. Bear Stearns & Co., 215 Ill. 2d 466, 831 N.E. 2d 563 (2005); see also Schachitti v. UBS Financial Services, et al., 215 Ill. 2d 484, 831 N.E. 2d 544 (2005)).
Successfully sought interlocutory review and obtained reversal of an order of the district court certifying a class of securities purchasers against Grant Thornton LLP; the United States Court of Appeals for the Fourth Circuit held that a defendant could challenge the efficiency of the market at the class certification stage when the plaintiffs sought to base the propriety of the class device upon the fraud on the market theory and that the plaintiffs had not shown sufficient indicia of an efficient market to permit class certification (Gariety et al. v. Grant Thornton LLP, 368 F.3d 356 (4th Cir. 2004)).
Successfully argued to the United States Court of Appeals for the Sixth Circuit that the fact that the alleged errors in the financial statements were large in magnitude and the fact that the accounting firm had been sued in other cases were both not germane in determining whether the complaint sufficiently alleged scienter against the accounting firm (Fidel v. Ernst & Young LLP, 392 F.3d 220 (6th Cir. 2004)).
Successfully opposed a preliminary injunction motion filed by a retired partner of Arthur Andersen LLP seeking to enjoin arbitration under the arbitration clause in the Arthur Andersen LLP partnership agreement (Viets v. Arthur Andersen LLP, 2003 WL 21525062, 31 Employee Benefits Cas. 1388 (SD Ind. 2003)).
Successfully defended Arthur Andersen LLP in connection with a request from retired partners for an injunction to enjoin the sale of certain of its practices after its indictment by the United States Government; the United States District Court for the Northern District of Illinois denied the request for injunctive relief.
Argued a number of other cases establishing important principles for accounting firms; for example, (1) the United States Court of Appeals for the Eighth Circuit upheld the right of an accounting firm to sue its audit client under RICO for defrauding the accounting firm in the course of its audit work (Alexander Grant & Company v. Tiffany Industries, 742 F.2d 408 (8th Cir. 1984)), (2) the Illinois appellate court held that a claim by an audit client was time barred because the books and records of the audit client reflected what was allegedly not told to the board of directors of the client (Illinois College of Optometry v. Grant Thornton, LLP, No. 1-98-0037, 746 N.E.2d 908 (1st Dist. Mar. 1, 1999)), and (3) the Illinois appellate court held that an accounting firm had been released from claims because the plaintiff had previously released other persons who had alleged breached a fiduciary duty to the plaintiff (Cherney v. Soldinger, 299 Ill. App. 3d 1066, 702 N.E.2d 231 (Ill. App. 1998)).
Tried a number of matters for accounting firms both in court and in arbitration; for example, (1) obtained a judgment for an accounting firm, after a two-week bench trial, in which the plaintiffs sued the accounting firm alleging negligence in the audit reports of an acquired firm (Pioneer Computer Group, Ltd. v. Grant Thornton, SD Cal.), (2) succeeded in having the Kansas appellate court overturn the trial court judgment (finding the accountants liable for failing to tell the trustee of a trust not to make certain investments) and enter judgment for the accountants holding they had no duty to speak (Gillespie v. Seymour, 876 P.2d 204 (Kan. App. 1994)).
Drafted and argued numerous other motions and appeals resulting in favorable decisions for accountants; for example, see Donnybrook Investments, Ltd. v. Arthur Andersen LLP, 2006 WL 1049588 (N.D.Ill. 2006); Courtney v. Halleran, 2005 WL 241471 (N.D.Ill. 2005) aff’d, 485 F.3d 942 (7th Cir. 2007). ; Baker O’Neal Holdings v. Ernst & Young LLP, 2004 WL 771230 (S.D. Ind. 2004); New England Health Care Employees Pension Fund v. Ernst & Young LLP, 336 F.3d 495 (6th Cir. 2003); and many others.
Participated in the briefing leading to other significant decisions in favor of accounting firms; see FDIC v. Ernst & Young LLP, 374 F.3d 579 (7th Cir. 2004); RTC v. Grant Thornton LLP, 41 F.3d 1539 (D.C. Cir.1994); Hendricks v. Grant Thornton, 973 S.W.2d 348 (Tex. Civ. App—Beaumont); and Hartman v. Blinder, 687 F. Supp. 938 (D. NJ 1987).
MDIF v. Grant Thornton, Maryland State Court, lawsuit brought by receiver of state-insured savings and loan.
FDIC v. Shah, et al., ND Cal., third-party claims brought by officers and directors of savings and loan; motion to dismiss granted.
FSLIC v. Wagner, E.D. Cal., third-party claim brought by officers and directors of savings and loan; voluntarily dismissed in response to motion to dismiss.
Comeau v. Rupp, 762 F. Supp. 1434, D. Kan., 1991, lawsuit by FDIC asserting claim on behalf of savings and loan.
Phelan v. First California Savings, CD Cal., lawsuit brought by stockholder of savings and loan; motion for summary judgment granted.
Washburn v. Brown, ND Ill., lawsuit brought by liquidator of insurance company.
Carrier Ins. Co. v. Alexander Grant & Company, SD Iowa, lawsuit brought by insurance company and its majority stockholder.
Harden v. Firstmark, SD Ind., lawsuit brought by stockholders of financial services and insurance company against Price Waterhouse alleging failure to issue a going concern qualification; court rejected fraud created the market theory.
RTC v. Arthur Andersen, ND Ill., alleged malpractice claim brought by RTC on behalf of failed financial institution.
RTC v. Grant Thornton, SD NY and D. NM, alleged malpractice claims brought by RTC on behalf of failed financial institutions.
Commissioner of Insurance, State of Michigan v. Ernst & Young, LLP, defense of claim brought on behalf of US estate of Canadian insurance company.
Gateway 2000 v. Ernst & Young LLP, claim relating to computer order system.
Education:
Harvard Law School, JD, cum laude, 1976; Harvard Law Review, Earlham College, BA, 1973. |
