Bily v. Arthur Young & Co.
Supreme Court of California
834 P.2d 745 (1992)
Osborne Computer Company hired Arthur Young & Company (defendant) to audit its finances, and Young issued clean audit opinions for two years that allegedly understated Osborne's liabilities by $3 million. Bily and other investors (plaintiffs), who were not Young's clients, invested in Osborne relying on those audits. They sued Young for negligence, and the trial court instructed the jury on ordinary negligence rather than a narrower standard. The jury found for the investors, and Young appealed.
Whether a supplier of information, such as an auditor, is liable in negligence to a third party only if the supplier intended the information to benefit that specific third party in an identified transaction.