Abessinio v. Ernst & Young LLP
On June 6, 2006, investors in Ernst & Young’s PICO tax shelter represented by Berger & Montague brought suit against Ernst & Young, among other defendants in a case captioned Abessinio v. Ernst & Young LLP, et al., 106 Civ. 02777 (LTS) (S.D.N.Y.).
Berger & Montague and Ernst & Young used a creative structure of a group settlement with confidential, individual arbitration awards to efficiently resolve this complex case. The claims against Deutsche Bank, the two law firms which provided tax opinions and an individual promoter were also settled.
In June 2007, the District Court confirmed the arbitration awards and granted a bar order to Ernst & Young, the first settling defendant. Facing defendants’ argument that arbitration was mandated because of individual contracts between the parties, a group settlement was achieved which satisfied all parties. The settlement funds agreed to between the parties were then allocated through the arbitration process to the individual group members.