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PJT Partners Wins Complete Dismissal of Fraud Lawsuit Based on the Conduct of a Rogue Employee
- Client News
- December 3, 2019
Practices
Representing PJT Partners Inc. and Park Hill Group LLC before the New York Appellate Division, First Department, Paul, Weiss secured the dismissal of the last remaining claim in a fraud lawsuit brought by billionaire Louis Bacon’s private foundation.
The lawsuit, filed in 2017 in New York state court, arose from a fraudulent scheme perpetrated by Andrew W.W. Caspersen, a former Park Hill partner, against his family members and close friends. One of those friends worked at Bacon’s hedge fund, Moore Capital, and arranged an investment by the Moore Charitable Foundation. Caspersen pled guilty in 2016 to creating fake investment opportunities and using the proceeds for speculative personal securities trading. Plaintiffs alleged that PJT and Park Hill were liable for Caspersen’s fraud under theories of respondeat superior, apparent authority, negligent supervision, and conversion. Plaintiffs sought approximately $17 million in damages, plus interest.
In August 2018, Justice O. Peter Sherwood of the NY State Supreme Court, Commercial Division, dismissed all claims against PJT and Park Hill except the claim for apparent authority. Plaintiffs appealed the dismissal of their negligent supervision and respondeat superior claims, and PJT and Park Hill cross-appealed the non-dismissal of the apparent authority claim.
The First Department modified the judgment to dismiss all claims against PJT and Park Hill. As to apparent authority, the First Department held that plaintiffs failed to allege words or conduct by PJT and Park Hill that gave rise to an appearance that Caspersen had the authority to enter into the fraudulent transaction on PJT and Park Hill’s behalf. The First Department also agreed with the Commercial Division that PJT and Park Hill were not liable for respondeat superior and negligent supervision because Caspersen acted “solely for personal gain” and because PJT and Park Hill were not aware of Caspersen’s propensity to commit fraud. The First Department also held that the negligent supervision claim should be dismissed for the additional reason that plaintiffs were not “customers” of PJT and Park Hill.
The Paul, Weiss team included litigation partner Aidan Synnott, who argued the appeal, and counsel Amy Barton.