James C. Sell v. Hon. gama/squire & Company

SUPREME COURT OF ARIZONA
En Banc

JAMES C. SELL, Trustee of the ) Arizona Supreme Court
Participating Trust established ) No. CV-12-0211-PR
under Debtors’ First Amended )
Joint Plan of Reorganization ) Court of Appeals
dated 7-7-06 in U.S. Bankruptcy ) Division One
Case No. 05-27993-PHX-GBN, on ) No. 1 CA-SA 12-0105
behalf of the Trust’s )
Participating Investors, ) Maricopa County
) Superior Court
Petitioner, ) No. CV2007-005734
)
v. )
)
THE HONORABLE J. RICHARD GAMA, ) O P I N I O N
JUDGE OF THE SUPERIOR COURT OF )
THE STATE OF ARIZONA, in and for )
the County of Maricopa, )
)
Respondent Judge, )
)
SQUIRE & COMPANY, PC, a )
Utah professional corporation; )
LYNN G. HILLSTEAD and JANE DOE )
HILLSTEAD, husband and wife; )
DWAYNE ASAY and JANE DOE ASAY, )
husband and wife; LEWIS AND ROCA, )
LLP, an Arizona limited )
liability partnership; KEITH )
BEAUCHAMP and JULIET LIM, )
husband and wife, )
)
Real Parties in Interest. )
__________________________________)

Appeal from the Superior Court in Maricopa County
The Honorable J. Richard Gama, Judge

AFFIRMED
________________________________________________________________

Order of the Court of Appeals Division One
Filed May 10, 2012
________________________________________________________________

SHERMAN & HOWARD LLC Phoenix
By Robert C. Hackett
Thomas M. Quigley
David W. Garbarino
Jamey G. Anderson
Attorneys for James C. Sell

PERKINS COIE LLP Phoenix
By H. Michael Clyde
Todd R. Kerr
Tony Caliendo
Attorneys for Squire & Company, PC, Lynn G. Hillstead,
Jane Doe Hillstead, Dwayne Asay, and Jane Doe Asay

OSBORN MALEDON PA Phoenix
By William J. Maledon
Geoffrey M. T. Sturr
Thomas L. Hudson
James K. Rogers
Attorneys for Lewis and Roca LLP, Keith Beauchamp, and
Juliet Lim

ARIZONA CORPORATION COMMISSION Phoenix
By Matthew J. Neubert
Julie A. Coleman
Attorneys for Amicus Curiae Arizona Corporation Commission

BEGAM & MARKS PA Phoenix
By Stanley J. Marks
Attorney for Amicus Curiae Public Justice, PC

MITCHELL & ASSOCIATES Phoenix
By Sarah K. Deutsch

And

TIFFANY & BOSCO PA Phoenix
By Richard G. Himelrick
Attorneys for Amicus Curiae Mortgages Ltd. Investors
________________________________________________________________

P E L A N D E R, Justice

¶1 We granted review to determine whether the Arizona

Securities Act (“ASA”), A.R.S. §§ 44-1801 to -2126, authorizes a

2

cause of action for secondary liability based on aiding and

abetting others’ primary securities fraud. More than three

decades ago, based on federal case law that has since changed,

we recognized such aiding and abetting claims. State v.

Superior Court (Davis), 123 Ariz. 324, 599 P.2d 777 (1979),

overruled in part on other grounds by State v. Gunnison, 127

Ariz. 110, 618 P.2d 604 (1980). But in light of Central Bank of

Denver v. First Interstate Bank of Denver, 511 U.S. 164 (1994),

and finding no compelling reason to depart from that case, we

hold that a separate claim for aiding and abetting does not

exist under the ASA, overruling Davis’s contrary holding.

I.

¶2 James C. Sell is the trustee of a trust created to

recover losses suffered by investors in an allegedly fraudulent

investment scheme known as Mathon Fund, LLC. Sell filed this

action under the ASA against various persons and entities that

directly participated in the scheme, as well as others who

allegedly assisted by rendering professional services. This

latter category of defendants included an accounting firm,

Squire and Company (“Squire”), the law firm of Lewis and Roca,

and several of those firms’ employees. Sell’s multi-count

complaint alleged that those professional defendants were

primarily liable for securities fraud under A.R.S. §§ 44-1991

and -2003 (Count One), and secondarily liable for aiding and

3

abetting others’ statutory violations (Count Two). 1

¶3 In 2008, Superior Court Judge Janet Barton dismissed

Count One against the Lewis and Roca defendants and both counts

against Squire, finding no legal basis for the Count Two claim

because the ASA does not expressly “create aiding and abetting

liability” for securities fraud, and because Central Bank

overturned the federal case law on which Davis had relied.

After Judge Barton rotated off the case and Superior Court Judge

Douglas Rayes was assigned, Sell moved for reconsideration.

Judge Rayes granted that motion as to Count Two, ruling that our

decision in Davis was still controlling law, even if Central

Bank called its reasoning into question.

¶4 In 2011, Squire, joined by Lewis and Roca, moved for

summary judgment on the aiding and abetting claim, arguing that

the ASA did not create such secondary liability. 2 Superior Court

Judge Richard Gama, who then presided over the case, granted the

motion. The judge acknowledged that Davis had not been

overruled, but found “nothing to suggest [that this Court] will

deviate from Central Bank when it does confront the issue.”

¶5 Without comment, the court of appeals declined

1
We refer throughout this opinion to Sell’s third-amended
complaint.
2
Squire has since settled with Sell and is no longer a party
to this action. Only the Lewis and Roca defendants remain in
the proceedings before us.

4

jurisdiction over Sell’s special action petition. Although the

case is in an interlocutory posture, we granted review because

whether aiding and abetting liability exists under the ASA is a

recurring legal question of statewide importance on which lower

courts are divided. We have jurisdiction under Article 6,

Section 5(3) of the Arizona Constitution and A.R.S. § 12-120.24.

II.

¶6 Enacted in 1951, the ASA makes it illegal for any

person, “directly or indirectly,” to commit any of the following

securities-related acts or omissions:

1. Employ any device, scheme or artifice to defraud.

2. Make any untrue statement of material fact, or
omit to state any material fact necessary in order to
make the statements made, in the light of the
circumstances under which they were made, not
misleading.

3. Engage in any transaction, practice or course of
business which operates or would operate as a fraud or
deceit.

A.R.S. § 44-1991(A).

¶7 That statute is “almost identical to the antifraud

provisions of the 1933 Securities Act [§ 17(a)], 15

U.S.C. § 77q.” Davis, 123 Ariz. at 331, 599 P.2d at 784. But

unlike the 1933 Act, which “contains no express private cause of

action,” “the ASA explicitly provides for a private cause of

action for violations of § 44-1991 in [A.R.S.] § 44-2001(A).”

Grand v. Nacchio, 225 Ariz. 171, 174 ¶ 12, 236 P.3d 398, 401

5

(2010). And Arizona’s private cause of action “may be pursued

against ‘any person, including any dealer, salesman or agent,

who made, participated in or induced the unlawful sale or

purchase.’” Id. ¶ 13 (quoting A.R.S. § 44-2003(A)). 3 The

federal act contains no such language.

¶8 “The legislature intended the ASA ‘as a remedial

measure’ for the ‘protection of the public’ and therefore

specified that the act be ‘liberally construed.’” Id. ¶ 16

(quoting 1951 Ariz. Sess. Laws, ch. 18, § 20 (1st Reg. Sess.)).

The ASA’s language “confirms a broad intent to sanction

wrongdoing in connection with the purchase or sale of

securities.” Id.

¶9 In Davis, 123 Ariz. at 331–32, 334, 599 P.2d at 784–

85, 787, we found actionable the plaintiffs’ claims that certain

defendants aided and abetted securities fraud under the ASA,

3
In 1996, the Arizona Legislature amended several sections
of the ASA and added to § 44-2003(A) the following exception,
which has no federal counterpart: “No person shall be deemed to
have participated in any sale or purchase solely by reason of
having acted in the ordinary course of that person’s
professional capacity in connection with that sale or purchase.”
A.R.S. § 44-2003(A); see 1996 Ariz. Sess. Laws, ch. 197, § 3
(2nd Reg. Sess.). The Lewis and Roca defendants suggest that
this exception applies to shield them from liability. We need
not address that argument, however, because we find not
actionable the aiding and abetting allegation in Count Two, the
only claim at issue here.

6

§ 44-1991. 4 We relied exclusively on two federal district court

decisions that had interpreted § 17(a) of the 1933 Securities

Act, 15 U.S.C. § 77q(a), and § 10(b) of the 1934 Securities

Exchange Act, 15 U.S.C. § 78j(b), to recognize some form of

aiding and abetting liability for securities fraud. Davis, 123

Ariz. at 331-32, 599 P.2d at 784-85 (citing SEC v. Nat’l Student

Mktg. Corp., 402 F. Supp. 641 (D.D.C. 1975); SEC v. Scott Taylor

& Co., 183 F. Supp. 904 (S.D.N.Y. 1959)).

¶10 Davis neither analyzed the federal cases it cited nor

evaluated whether § 44-1991 or any other section of the ASA

independently authorized aiding and abetting liability. Rather,

because the federal and state statutory schemes were “almost

identical,” and federal cases held that “[a] defendant who aids

and abets another’s violation respecting the use of manipulative

or deceptive devices in the sale of stock . . . [was] liable as

a principal,” we saw “no reason why one who aids and abets

another in violating A.R.S. § 44-1991 should not also be held

liable as a principal.” Id. at 331, 599 P.2d at 784.

¶11 A year later, we revisited and overruled Davis to the

extent it required scienter in an action under what is now § 44-

1991(A)(2). See Gunnison, 127 Ariz. at 112-13, 618 P.2d at 606-

07. We did so because, after Davis, the United States Supreme

4
In Davis, this Court referred to provisions now codified in
§ 44-1991(A).

7

Court held in Aaron v. SEC, 446 U.S. 680, 701-02 (1980), that

scienter is not an element for an action under § 17(a)(2) of the

1933 Act. Gunnison, 127 Ariz. at 113, 618 P.2d at 607.

¶12 In support of our holding in Gunnison, this Court

noted that “[u]nless there is a good reason for deviating from

the United States Supreme Court’s interpretation, we will follow

the reasoning of that court in interpreting sections of our

statutes which are identical or similar to federal securities

statutes.” Id. at 112–13, 618 P.2d at 606–07. Although not

required to do so, we nonetheless found it “helpful, for

consistency in the application of the law, to be harmonious with

the United States Supreme Court.” Id. at 112, 618 P.2d at 606.

¶13 Fifteen years after Davis, the United States Supreme

Court held in Central Bank that “a private plaintiff may not

maintain an aiding and abetting suit under § 10(b)” of the 1934

Act. 511 U.S. at 191. The Court found no express authorization

for such claims in the act itself and no good reason to

judicially imply potential liability for aiding and abetting

when Congress had not seen fit to do so. Id. at 175-90.

Rejecting the notion that “the phrase ‘directly or indirectly’

in the text of § 10(b) covers aiding and abetting,” the Court

pointed out that “aiding and abetting liability extends beyond

persons who engage, even indirectly, in a proscribed activity;

aiding and abetting liability reaches persons who do not engage

8

in the proscribed activities at all, but who give a degree of

aid to those who do.” Id. at 175-76.

¶14 In Central Bank, the Court found its “role limited

when the issue is the scope of conduct prohibited by the

statute,” and therefore “adhere[d] to the statutory text in

resolving it.” Id. at 187-88. And, the Court noted, the issue

“is not whether imposing private civil liability on aiders and

abettors is good policy but whether aiding and abetting is

covered by the statute.” Id. at 177. The statutory scheme, the

Court said, cannot be judicially amended “to create liability

for acts that are not themselves manipulative or deceptive

within the meaning of the statute,” and “[p]olicy considerations

cannot override” the statute’s text and structure. Id. at 177-

78, 188.

¶15 When the Arizona Legislature amended the ASA in 1996,

after both Davis and Central Bank, it expressly declined to

specify whether aiding and abetting liability exists under the

ASA. 1996 Ariz. Sess. Laws, ch. 197, § 11(B) (2nd Reg. Sess.)

(“Nothing in this act . . . determines whether or in what

circumstances aiding and abetting liability exists under Title

44, chapter 12, Arizona Revised Statutes.”). Thus, the

legislature neither approved nor rejected either case,

apparently deferring to the judiciary the question of whether a

cause of action for aiding and abetting a violation of the ASA

9

exists. This Court recently acknowledged, but did not decide,

that issue in Grand, 225 Ariz. at 177 ¶ 31, 236 P.3d at 404. It

is squarely before us now.

III.

¶16 “Our goal in interpreting statutes is to give effect

to the intent of the legislature.” Estate of Braden ex rel.

Gabaldon v. State, 228 Ariz. 323, 325 ¶ 8, 266 P.3d 349, 351

(2011) (internal quotation marks omitted). “When the plain text

of a statute is clear and unambiguous,” it controls unless an

absurdity or constitutional violation results. State v.

Christian, 205 Ariz. 64, 66 ¶ 6, 66 P.3d 1241, 1243 (2003). But

when, as here, the “text alone does not resolve the parties’

dispute,” we must “attempt to glean and give effect to the

legislature’s intent, considering the statute’s context, effects

and consequences, and spirit and purpose.” Am. Family Mut. Ins.

Co. v. Sharp, 229 Ariz. 487, 490-91 ¶ 10, 277 P.3d 192, 195-96

(2012).

¶17 As noted above, the legislature expressly intended to

omit from the ASA any mention of aiding and abetting liability.

Thus, the ASA does not expressly authorize such claims or

liability. Although the issue here does not require us to

delineate the precise boundaries of securities fraud under § 44-

1991(A), that statute’s text tracks the language of SEC Rule

10b-5, 17 C.F.R. § 240.10b-5, and of § 17(a) of the 1933 Act, 15

10

U.S.C. § 77q(a). See Grand, 225 Ariz. at 173–74 ¶ 11, 236 P.3d

at 400–01. Sell has not established any meaningful difference

between a claim under § 44-1991(A) and one under those federal

laws or under § 10(b) of the 1934 Act, the provision at issue in

Central Bank.

¶18 In interpreting a state statutory scheme such as the

ASA, this Court will give less weight and not necessarily defer

to federal case law that construes a parallel federal statute

when the state and federal statutory provisions or their

underlying policies materially differ. See Bunker’s Glass Co.

v. Pilkington PLC, 206 Ariz. 9, 12-13 ¶¶ 8, 13, 75 P.3d 99, 102-

03 (2003) (declining “to rigidly follow federal precedent on

every issue of antitrust law regardless of whether differing

concerns and interests exist in the state and federal systems,”

and because doing so would “thwart[] the [Arizona] legislative

intent” and would not necessarily achieve uniformity); cf.

Gunnison, 127 Ariz. at 112–13, 618 P.2d at 606–07. Because we

find no such substantial differences here, however, we will

interpret the ASA by following settled federal securities law

unless there is a good reason to depart from that authority.

Gunnison, 127 Ariz. at 112–13, 618 P.2d at 606–07. This

approach is consistent with the legislature’s intent, as

expressed in 1996, regarding judicial interpretation of the ASA.

1996 Ariz. Sess. Laws, ch. 197, § 11(C) (2nd Reg. Sess.) (“It is

11

the intent of the legislature that in construing the [ASA], the

courts may use as a guide the interpretations given by the . . .

federal or other courts in construing substantially similar

provisions in the federal securities laws of the United

States.”).

¶19 Although we are not bound by Central Bank in

determining an issue of state statutory law, we find that case

persuasive support for rejecting aiding and abetting liability

under the ASA. Much of the Supreme Court’s reasoning in Central

Bank regarding the federal statute and congressional intent

applies with equal force to the ASA and the Arizona

Legislature’s intent.

¶20 As noted above, the legislature did not expressly

authorize secondary liability for aiding and abetting in either

the sections setting forth the types of actionable fraudulent

practices under the Act, A.R.S. §§ 44-1991 to -2000, or the

sections prescribing the civil remedies and potential parties

who may be sued for securities fraud, id. §§ 44-2001 to -2005. 5

No ASA provision mentions the terms “aiding” or “abetting.” See

Cent. Bank, 511 U.S. at 177 (“If . . . Congress intended to

impose aiding and abetting liability, we presume it would have

5
As amicus curiae Arizona Corporation Commission
acknowledges: “The [ASA] does not expressly provide for a cause
of action against a secondary actor for aiding and abetting the
primary violation of the Act by another person.”

12

used the words ‘aid’ and ‘abet’ in the statutory text. But it

did not.”).

¶21 In contrast, the legislature has expressly recognized

aiding and abetting liability in other statutes. See, e.g.,

A.R.S. § 12-812 (aiding and abetting liability for violating

public nuisance obscenity statutes); id. § 20-463(A)(5)

(assisting and abetting insurance fraud); id. § 32-1055(D)(5)

(aiding and abetting liability for collection agencies); id.

§ 46-215(A)(3) (aiding and abetting welfare fraud). As the

Court in Central Bank remarked, Congress “has taken a statute-

by-statute approach to civil aiding and abetting liability” and

“has been quite explicit in imposing [such] liability in other

instances.” 511 U.S. at 182-83. The same can be said of the

Arizona Legislature which, like Congress, surely knows “how to

impose aiding and abetting liability when it [chooses] to do

so.” Id. at 176. As did the Court in Central Bank, we find it

“not plausible to interpret the statutory silence as tantamount

to an implicit [legislative] intent to impose . . . aiding and

abetting liability.” Id. at 185; cf. Estate of Braden, 228

Ariz. at 327-28 ¶ 16, 266 P.3d at 353-54 (explaining that when a

statute specifically limits those who may be held liable for the

statutorily proscribed conduct, liability cannot be extended

beyond the statutory categories).

¶22 Despite the notable absence in the ASA of express

13

authorization for aiding and abetting claims, Sell argues that

we should reject Central Bank’s reasoning and conclusion because

different policy objectives underlie the ASA and federal

securities laws. He correctly notes that, from its inception,

the ASA was intended to be remedial, protective of the public,

and liberally construed. See supra ¶ 8. In contrast, some

authority suggests that, although Congress crafted the 1933 and

1934 Acts to protect investors, the central purpose of those

acts is to ensure full disclosure and honest markets. Reves v.

Ernst & Young, 494 U.S. 56, 60 (1990); Ernst & Ernst v.

Hochfelder, 425 U.S. 185, 194–95 (1976).

¶23 But even if we accept Sell’s assertion that the

primary purposes of the ASA and the federal securities acts are

somehow different, his argument that we should depart from

Central Bank is unpersuasive. “A liberal construction is not

synonymous with a generous interpretation, and we will not

impose a burden or liability not within the terms or spirit of

the law.” Estate of Braden, 228 Ariz. at 325 ¶ 9, 266 P.3d at

351 (internal quotation marks, citations, and alterations

omitted). Because § 44-2001(A), unlike federal securities law,

expressly provides a private cause of action for violations of

§ 44-1991(A), Grand, 225 Ariz. at 174 ¶ 12, 236 P.3d at 401, the

legislature, not the courts, should define the scope of

liability under that statutory scheme. In short, we decline to

14

judicially recognize potential securities-related claims that

are not clearly established or necessarily implied by the ASA.

¶24 Sell also contends that § 44-2003’s language is broad

enough to include aiding and abetting liability, even though not

expressly stated. As he points out, that statute has no federal

counterpart and permits an action to be brought under § 44-2001

against “any person . . . who made, participated in or induced

the unlawful sale or purchase [of securities].” A.R.S. § 44-

2003(A) (emphasis added).

¶25 That language, however, supports a claim for primary

liability under § 44-1991; it does not create a separate cause

of action for, or secondary liability based on, aiding and

abetting. According to Sell, the Lewis and Roca defendants

“participated in” the alleged securities violations within the

meaning of § 44-2003(A). See Grand, 225 Ariz. at 175 ¶ 21, 236

P.3d at 402 (citing Standard Chartered PLC v. Price Waterhouse,

190 Ariz. 6, 21–22, 945 P.2d 317, 332–33 (App. 1996)). If so,

Sell’s claim is for primary liability under § 44-1991, 6 arguably

rendering his aiding and abetting claim superfluous — a point

Sell conceded at oral argument but which we need not decide.

¶26 Sell also argues that even though the ASA does not

6
Although the superior court dismissed Sell’s Count One
claim for primary liability, that ruling apparently has not been
reduced to a final judgment and is not at issue before us.

15

expressly authorize an aiding and abetting claim, we should

apply common law principles to recognize one. Although the

ASA’s remedy provisions do not limit “any statutory or common

law right of any person in any court for any act involved in the

sale of securities,” A.R.S. § 44-2005, Sell would have us

superimpose a common law aiding and abetting claim on the ASA’s

purely statutory provisions. We decline to do so.

¶27 Aiding and abetting liability perhaps is most commonly

applied under Arizona’s criminal code. See A.R.S. §§ 13-301 to

-304. Our courts have also recognized certain forms of civil

liability for aiding and abetting in torts. For example, we

have noted that “Arizona recognizes aiding and abetting as

embodied in Restatement [(Second) of Torts] § 876(b),” and “a

person who aids and abets a tortfeasor is himself liable for the

resulting harm to a third person.” Wells Fargo Bank v. Ariz.

Laborers, Teamsters & Cement Masons Local No. 395 Pension Trust

Fund, 201 Ariz. 474, 485 ¶ 31, 38 P.3d 12, 23 (2002). Thus, as

a matter of common law, our courts have recognized aiding and

abetting liability in various tort-related contexts. Chalpin v.

Snyder, 220 Ariz. 413, 417 ¶¶ 13-14, 424 ¶ 45, 207 P.3d 666,

670, 677 (App. 2008) (multiple tort claims against an attorney);

Sec. Title Agency, Inc. v. Pope, 219 Ariz. 480, 491 ¶¶ 44–46,

200 P.3d 977, 988 (App. 2008) (breach of fiduciary duty); Dawson

v. Withycombe, 216 Ariz. 84, 102 ¶¶ 49-50, 163 P.3d 1034, 1052

16

(App. 2007) (fraud).

¶28 But those decisions do not persuade, let alone compel,

us to extend common law aiding and abetting liability to the

ASA. As discussed above, unlike § 17(a) and § 10(b) of the

federal securities acts, the ASA, § 44-2001(A), expressly

authorizes a private cause of action for violations of § 44-

1991(A). Grand, 225 Ariz. at 174 ¶ 12, 236 P.3d at 401; cf.

Cent. Bank, 511 U.S. at 179 (“From the fact that Congress did

not attach private aiding and abetting liability to any of the

express causes of action in the securities Acts, we can infer

that Congress likely would not have attached aiding and abetting

liability to § 10(b) had it provided a private § 10(b) cause of

action.”). In addition, the ASA prescribes the available

remedies and categories of potential defendants, and articulates

the “elements of securities fraud.” Aaron v. Fromkin, 196 Ariz.

224, 227 ¶ 13, 994 P.2d 1039, 1042 (App. 2000) (citing A.R.S.

§ 44-1991(A)(2)).

¶29 Accordingly, it would be inappropriate to anchor a

finding of aiding and abetting liability under the ASA on common

law tort principles. See Cent. Bank, 511 U.S. at 177, 184; cf.

Mann v. GTCR Golder Rauner, L.L.C., 483 F. Supp. 2d 884, 919 (D.

Ariz. 2007) (declining to extend aiding and abetting liability

found under Restatement § 876(b) to statutory violations of

Arizona’s Uniform Fraudulent Transfer Act). Instead, we think

17

it is more appropriate for the legislature, if it chooses, to

expressly provide for any such claim. Cf. State ex rel. Horne

v. Autozone, Inc., 229 Ariz. 358, 363 ¶ 22, 273 P.3d 1278, 1283

(2012) (when a statutory scheme includes certain remedies, a

remedy not included “should not be read by the courts into the

existing statute”). In that regard, the various policy

arguments advanced by Sell and certain amici for preserving

aiding and abetting liability under the ASA are better directed

to the legislature. See Cent. Bank, 511 U.S. at 177, 188-89

(noting competing policy arguments for and against aiding and

abetting liability under the federal securities acts, but

framing the issue as whether such liability is covered by the

statute, not whether it is good policy).

¶30 We are mindful of the importance of stare decisis, and

how that doctrine demands caution in overruling a prior

decision, especially given the high burden of departing from

previous interpretations of a statute. State v. Hickman, 205

Ariz. 192, 201 ¶ 38, 68 P.3d 418, 427 (2003). But, adhering to

the approach set forth in Gunnison and approved in the 1996

legislation, we find sufficient justification to follow Central

Bank and overrule Davis, which was based solely on federal case

law that has since changed. 7

7
After Central Bank, the two federal district courts whose
decisions we followed in Davis rejected aiding and abetting

18

¶31 Finally, we note that the superior court erred by

anticipating that we would revisit and overrule Davis after

Central Bank. The lower courts are bound by our decisions, and

this Court alone is responsible for modifying that precedent.

State v. Smyers, 207 Ariz. 314, 318 ¶ 15 n.4, 86 P.3d 370, 374

n.4 (2004); see also McKay v. Indus. Comm’n, 103 Ariz. 191, 193,

438 P.2d 757, 759 (1968) (“Whether prior decisions of the

highest court in a state are to be disaffirmed is a question for

the court which makes the decisions. Any other rule would lead

to chaos in our judicial system.”). Trial courts are required

to follow the decisions of a higher court, and the superior

court here failed to abide by that fundamental principle. We

therefore caution lower courts not to depart from binding

precedent anticipating that we will overrule existing case law.

IV.

¶32 For the reasons stated above, we overrule Davis to the

extent that it recognizes a cause of action for aiding and

claims under federal securities laws. In re Parmalat Sec.
Litig., 383 F. Supp. 2d 616, 624 (S.D.N.Y. 2005); Lindblom v.
Mobile Telecomms. Techs. Corp., 985 F. Supp. 161, 163 (D.D.C.
1997). Other courts have also refused to judicially imply
aiding and abetting claims under state securities laws when the
relevant statutes do not expressly authorize such liability.
See, e.g., Conn. Nat. Bank v. Giacomi, 659 A.2d 1166, 1177
(Conn. 1995); Atlanta Skin & Cancer Clinic, P.C. v. Hallmark
Gen. Partners, Inc., 463 S.E.2d 600, 604 (S.C. 1995); cf. State
ex rel. Goettsch v. Diacide Distribs., Inc., 561 N.W.2d 369, 374
(Iowa 1997) (recognizing aiding and abetting liability based on
express statutory provisions).

19

abetting liability under the ASA. We therefore affirm the

superior court’s summary judgment in favor of the Lewis and Roca

defendants on Count Two of Sell’s complaint.

__________________________________
A. John Pelander, Justice

CONCURRING:

__________________________________
Rebecca White Berch, Chief Justice

__________________________________
Robert M. Brutinel, Justice

__________________________________
Peter J. Eckerstrom, Judge*

__________________________________
Garye L. Vásquez, Judge *

*
Pursuant to Article 6, Section 3 of the Arizona
Constitution, the Honorable Peter J. Eckerstrom and the
Honorable Garye L. Vásquez, Judges of the Arizona Court of
Appeals, Division Two, were designated to sit in this matter.

20