In re Parmalat Securities Litigation

Maria Martellini (defendant) was a citizen and resident of Italy. Martellini, who was a university economics professor in Italy, served as a minority shareholder representative on the board of statutory auditors (statutory board) of Parmalat’s parent company, Parmalat Finanziaria S.p.A. (Parmalat) until approximately April 2002. Parmalat shareholders (shareholders) (plaintiffs) sued Martellini and others for fraud in the aftermath of the public revelation of Parmalat’s financial scandal. According to the shareholders, Martellini failed properly to discharge her statutory-board duties because Martellini allegedly (1) did not investigate misconduct claims that certain shareholders raised in 2003, (2) did not investigate concerns that Italy’s securities regulator raised about Parmalat in September 2002, and (3) participated in the statutory board’s insufficient response to questions that Parmalat’s auditors raised about Parmalat’s Argentina subsidiary. The shareholders’ complaint did not allege that the statutory board was informed of any specific facts regarding the Argentina subsidiary. In addition, the shareholders asserted that the court should infer that Martellini acted with scienter, i.e., an intent to deceive or defraud, because Martellini did not review or confirm information that she had a duty to monitor. The shareholders did not identify any obvious fraud or suspicious conduct that Martellini allegedly ignored or cite any report that contradicted Parmalat’s publicly disclosed financial information. Martellini moved to dismiss the complaint.