§ 6.1.2.2.1

• Jurisdiction: Arizona

§ 6.1.2.2.1 Before 2013: aiding and abetting as a separate claim

The phrase aid and abet is a legal doublet of paired synonyms that traces its origins to the Middle Ages and Renaissance when embellishing words with synonyms was common.¹⁸¹⁶

Civil liability for aiding and abetting evolved from common-law cases imposing liability for knowingly participating in fraud.¹⁸¹⁷ Aiding and abetting was one of many ways to knowingly participate.¹⁸¹⁸

Until 1994, aiding-and-abetting liability was an accepted part of Rule 10b-5 civil litigation. Every federal circuit in the country had recognized some form of aiding-and-abetting liability.¹⁸¹⁹ In 1994, though, the U.S. Supreme Court, in a five-to-four decision, eliminated aiding-and-abetting liability.¹⁸²⁰ The Supreme Court grounded its ruling upon the language of § 10(b) of the 1934 Act, which does not, by all accounts, expressly provide for aiding-and-abetting liability.¹⁸²¹ The Court also cited policy concerns about vexatious litigation and uncertain legal standards that in the Court's view weighed against recognizing aiding-and-abetting liability.¹⁸²²

Fifteen years before Central Bank, the Arizona Supreme Court addressed aiding-and-abetting securities violations and adopted a three-part test derived from Rule 10b-5 precedent.¹⁸²³ The decision seemed unremarkable at the time. After Central Bank, the decision was questioned,¹⁸²⁴ even though aiding-and-abetting liability had been a common feature of state-securities law since the early blue-sky statutes¹⁸²⁵ and remained so under modern statutes.¹⁸²⁶ A 1997 report to Congress by the SEC noted that 49 states recognized some form of aiding-and-abetting liability for securities violations.¹⁸²⁷

The Arizona legislature considered aiding and abetting with the 1996 amendments. The initial draft of Senate Bill 1383, which led to the final legislation, would have eliminated liability for aiding and abetting in civil-damage actions.¹⁸²⁸ The Corporation Commission lobbied against the change.¹⁸²⁹ In the final bill, this language was eliminated. As passed, the statutory note to the 1996 amendments provides that "[n]othing in this act . . . determines whether or in what circumstances aiding and abetting liability exists."¹⁸³⁰ The legislature thus left intact State v. Superior Court (Davis),¹⁸³¹ leaving it to the appellate courts to decide the viability of aiding-and-abetting liability.¹⁸³²

In Grubaugh v. DaCosta,¹⁸³³ a 1999 decision, the Court of Appeals reached the issue and held that Arizona does recognize civil liability for aiding and abetting securities fraud.¹⁸³⁴ Afterward, the Supreme Court ordered Grubaugh depublished.¹⁸³⁵ The depublication order was entered in response to a petition for review and motion requesting depublication because of a conflict of interest by one judge on the Court of Appeals panel.¹⁸³⁶ The briefing in the Supreme Court addressed only the conflict of interest.¹⁸³⁷ The merits were not addressed.¹⁸³⁸

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Notes:

^[1816]See Bryan A. Garner, Garner's Dictionary of Legal Usage 41 (3d ed. 2011); see also Mellinkoff, supra note 1712, at 122 (listing aid and abet as an example of coupled synonyms in old law French); id. at 43 ("The power of alliteration has also helped preserve in law tautologies such as . . . aid and abet . . . ."). But see Ramirez v. Chavez,71 Ariz. 239, 243, 226 P.2d 143, 146 (1951) (defining the words in a civil action for aiding and abetting an assault and battery as having separate meaning and stating: "The word 'abet' includes the element of knowledge of the wrongful purpose of the perpetrator and counsel and encouragement in the illegal act while the word 'aid' means to assist, to support the efforts of another."). For further discussion of doublets and synonym strings, see supra note 1712.

^[1817]See Prentice, Stoneridge, supra note 1632, at 623-30 (discussing the common-law cases); see also Robert A. Prentice, Scheme Liability: Does it Have a Future After Stoneridge?, 2009 Wis. L. Rev. 351, 375-76 (2009) [hereinafter Prentice, Scheme Liability] (explaining that under the common law in 1934, knowingly aiding and abetting was merely one of many ways to incur liability for knowingly participating in fraud).

^[1818]See Prentice, Stoneridge, supra note 1632, at 626 ("'[A]iding' or 'aiding and abetting' were simply examples of the types of participation that conferred joint tortfeasor status."); see also Prentice, Scheme Liability, supra note 1817, at 375-76.

^[1819]SeeCentral Bank v. First Interstate Bank, 511 U.S. 164, 192 & n.1 (1994) (Stevens, J., dissenting). Eleven of the federal courts of appeals had recognized a...