Weiss v. Priceline.com, Inc.
Docket: No. 08-0035-cv
Court: Court of Appeals for the Second Circuit; May 22, 2009; Federal Appellate Court
Plaintiffs-Appellants appeal a judgment from the United States District Court for the District of Connecticut that dismissed their securities fraud claims against Defendant-Appellee Deloitte & Touche, related to Deloitte's unqualified audit opinion of Priceline.com, Inc.'s fiscal year 1999 financial statements. The court affirms the district court's decision, stating that even if the facts alleged by the Plaintiffs-Appellants are accepted as true, the implication of Deloitte's intent to commit fraud is less compelling than the alternative inference of nonfraudulent intent. The Plaintiffs-Appellants argue that Deloitte’s national experts had advised line auditors that Priceline.com should not recognize the value of a warrant from WebHouse as revenue due to future performance obligations. However, the line auditors ultimately disregarded this advice based on their understanding from discussions with Priceline's executives, believing the warrant was a “sign-on bonus” not tied to future obligations. Deloitte sought clarification from the parties and received post-audit representations stating the warrant was solely an inducement for entering a relationship with WebHouse and not contingent on future services. The court finds that the Plaintiffs-Appellants failed to present sufficient facts to suggest that Deloitte's auditors knowingly accepted misleading information from Priceline's management about the warrant's consideration. Instead, the court infers that Deloitte acted professionally based on the information provided by its client. Additionally, the detailed discussion of the warrant's accounting treatment in Priceline.com's financial statement further negates any implication of intent to mislead the public. The court concludes by affirming the district court's dismissal of the claims against Deloitte, finding all other contentions by the Plaintiffs-Appellants to be without merit.