Volume 98 - No. 3 Minnesota Law Review

Particulars of Particularity: Alleging Scienter and the Proper Application of Rule 9(b) to Duty-Based Misrepresentations

Claims of negligent misrepresentation and fraud by omission are generally held to be derivatives of fraud. The appropriate pleading standard for fraud is clearly governed by Federal Rule of Civil Procedure 9(b)—fraud claims must be alleged with particularity. However, the circuits are divided when it comes to the proper pleading standard for negligent misrepresentation and fraud by omission claims. As a result, duty-based misrepresentation claims are routinely dismissed for failure to satisfy Rule 9(b)’s particularity requirements. There is an underlying rationale for this circuit split that has not been fleshed out by the courts—claims that sound in fraud should be held to Rule 9(b), while claims that are based in negligence need only meet Rule 8(a). Although courts have bandied the phrase ‘sounds in fraud’ about, none have laid out a coherent definition.

This Note proposes a logical, concise definition for this phrase that resolves the Circuit split and is both internally consistent and harmonious with a common sense approach to what this phrase implies—a claim sounds in fraud when it alleges scienter. The advantages of this solution are plentiful. It does not call for drastic changes to either court procedure or the analysis of misrepresentation claims. Instead, it illuminates the critical elements of misrepresentation claims and allows more plaintiffs to have their case heard on the merits rather than being dismissed through motion practice. The analysis also harmonizes with the historical justification of the particularity requirement for fraud claims and creates a rationally consistent framework for courts to use in their analyses of misrepresentation claims generally, and situates duty-based misrepresentation claims within that context.

:: View PDF

De Novo

  • Dan’s Flaw

    DAN’S [F]LAW: STATUTORY FAILURE TO ENFORCE ETHICAL BEHAVIOR IN CLINICAL DRUG TRIALS Noah Lewellen* I. INTRODUCTION Paul, a sophomore at the University of Minnesota, bursts into a lecture hall, loudly claims to see monsters sitting in the seats, and offers his services in slaying them. The police are called, and Paul is restrained and delivered […]

  • Case Comment: Bhogaita v. Altamonte

    EVERY DOG CAN HAVE HIS DAY IN COURT: THE USE OF ANIMALS AS DEMONSTRATIVE EXHIBITS Kyle R. Kroll, Volume 100, Online Managing Editor In Bhogaita v. Altamonte, the Eleventh Circuit recently decided whether to allow a dog in the courtroom as a demonstrative exhibit.[1] Although the case presented many serious issues regarding the Fair Housing […]

  • Revisiting Water Bankruptcy

    REVISITING WATER BANKRUPTCY IN CALIFORNIA’S FOURTH YEAR OF DROUGHT Olivia Moe, Volume 100, Managing Editor This spring, as “extreme” to “exceptional” drought stretched across most of California—indicating that a four-year streak of drought was not about to resolve itself[1]—Governor Jerry Brown issued an unprecedented order to reduce potable urban water usage by twenty-five percent.[2] In […]