Under the Federal Rules of Civil Procedure, a party must allege fraud with particularity. FRCP 9(b). When a party alleges fraud upon information and belief, that is generally insufficient to meet the standards under FCRP 9(b) absent additional allegations that demonstrate the origin of the information and belief. This is a nuanced difference from the particularity requirement for claims that are not alleged upon information and belief. This subtle difference is discussed in the cases Exergen Corp. v. Wal-Mart Stores, Inc. 575 F.3d 1312 (Fed Cir. 2009) and Munro v. Lucy Activewear, Inc., 899 F.3d 585 (8th Cir. 2018).

In Exergen, the Court found that where deceptive intent was plead on information and belief and the Plaintiff did not plead either information on which it relied on or any plausible reasons for its belief, the pleading was insufficient. The Court further stated that the circumstances Plaintiff did allege do not plausibly lay out the elements required for a claim of deceptive intent. Similarly in Munro, where the Plaintiff’s allegations are based on information and belief and the Plaintiff’s complaint did not set forth any supporting facts showing that Defendant intended to defraud him, the Court found the Plaintiff did not adequately allege fraud under Minnesota law.

This rule is applied in multiple jurisdictions and one to consider carefully when pleading allegations on “information and belief.” (Mikityanskiy v. Podee, Inc., 2011 U.S. Dist. LEXIS 55746 (S.D.N.Y 2011) (a complaint that was made up entirely of allegations made on “information and belief” was not sufficient especially when some allegations were made of readily available facts) Easton Tech. Prods. v. FeraDyne Outdoors, LLC 2019 U.S. Dist. LEXIS 60313 (D. Del 2019) (pleading was not sufficient under Rule 9(b) standard because there were no allegations of underlying facts to support the allegations made on “information and belief”); Gamevice, Inc. v. Nintendo Co., Ltd 2018 U.S. Dist. LEXIS 221777 (N.D. Cal. 2018) (allegation of prosecution laches is insufficient when the complaint does not plead the specifics of which of the five patents at issue unreasonably delayed prosecution).

Tags: Commercial Litigation