Misrepresentation Fraud

News & Analysis as of

Insurance Recovery Law - January 2016

Despite Finding Policy Application Misrepresentation, Jury Rules Against Policy Rescission - Why it matters: A federal jury concluded that Starr Surplus Lines Insurance Company did not have a valid basis to rescind the...more

The North Carolina Supreme Court Weighs in Again on Reliance

We begin 2016 by studying a new decision on a familiar issue: the degree of reliance required in a claim under N.C. Gen. Stat. § 75-1.1. North Carolina law now holds that a plaintiff who makes a 75-1.1 claim based on a...more

Delaware Court of Chancery Holds Anti-Reliance Clause May Bar Fraud Claims Premised on Representations Outside of Agreement

Delaware's Chancery Court rejected a buyer's fraud claims premised on misrepresentations and omissions other than the statements the contract identified as the seller's "sole and exclusive representations" in a recent...more

Court Of Chancery Explains Anti-Reliance Clause

This is an important decision because it explains so well the effect of an anti-reliance clause in the agreement for the sale of a business. The clause will bar fraud claims based on misrepresentations outside the terms of...more

Court Of Chancery Explains Jurisdiction For Veil-Piercing

This is an interesting decision for its discussion on what must be pled to obtain Chancery jurisdiction in a claim seeking to pierce the corporate veil. It is not enough to just allege the entity was used to defraud. Rather,...more

The FCA Impact Of DOJ’s Increased Focus on Small Business

In 2014, the Small Business Administration reported that almost a quarter of approximately $367 billion of eligible funding for small business contracting, or roughly $91.7 billion, was awarded to small businesses as prime...more

This Week In Securities Litigation

The SEC prevailed on two summary judgment motions. One centered on a manipulation action. The other was against an attorney who facilitated a prime bank fraud. The Commission also filed: An action against UBS tied to its...more

Complaint Fails To Overcome Heightened Pleading Standard For Fraud Relating To Reporting Of Reinsurer’s Losses

The Southern District of New York granted Amtrust Financial Services’ motion to dismiss after finding that the plaintiff failed to specifically allege misstatements or omissions necessary to prove scienter in claims related...more

Class Certification, Unfair Trade Practices, and Governing Standards

In Bumpers v. Community Bank of Northern Virginia, the North Carolina Supreme Court held that when a plaintiff alleges a violation of N.C. Gen. Stat. § 75-1.1 based on a misrepresentation, the plaintiff must prove actual and...more

Third Circuit Decision Could Have Broad Implications For Sentencing In Federal Fraud Cases

Last week, the Third Circuit issued a decision that could have major ramifications for sentencing in federal fraud cases. United States v. Nagle dealt with a fraud perpetrated against the Department of Transportation’s...more

Court Denies CIFG’s Attempt to Refile CDO Suit Against J.P. Morgan

On September 23, Justice Marcy S. Friedman of the New York Supreme Court for New York County denied CIFG’s motion to amend its complaint against J.P. Morgan in a case the Court previously dismissed in June. CIFG had...more

Alleging Fraud in a Financial Crisis: The Second Circuit Articulates a Less Stringent Pleading Standard for Loss Causation

Loss causation has emerged as a central obstacle to post-financial-crisis fraud cases. The loss causation element of a fraud claim requires plaintiffs to show, in addition to detrimental reliance, that the facts or...more

Judge Dismisses FCA Claim Against City of Chicago; Concludes that “Subsequent Nonperformance of a Future Commitment” Was Not a...

On September 16, 2015, the U.S. District Court for the Northern District of Chicago dismissed a False Claims Act (FCA) case against the City of Chicago, because the qui tam complaint did not satisfy the relevant pleading...more

This Week In Securities Litigation

In a burst of post-Labor Day energy, the SEC filed a number of significant actions. Those include a series of actions arising out of the audit failure by BDO; actions centered on a financial fraud at an on-line lender; cases...more

SEC Charges Three RMBS Traders With Lying To Clients

The SEC and the U.S. Attorney’s Office for the District of Connecticut charged three senior traders with fraud by misrepresenting pricing information to clients regarding securities traded in opaque markets. In those markets...more

California Federal Court Is Unpersuaded By A Recent Fourth Circuit False Advertising Decision In Reconsidering Its Ruling On A...

The Honorable John A. Kronstadt for United States Federal District for the Central District of California, denied a Defendant’s motion to reconsider his previous ruling on a motion to dismiss based upon a subsequent Fourth...more

SDNY Dismisses Manufacturing and Fraud Claims in Fertility Drug Case, But Conflates and Confuses the Rest

By all rights, it should be Sullivan writing about the Sullivan case. But John is taking a well-deserved vacation. We do not know if Sullivan’s travels more closely approximate a Bexis expedition, which involves long hikes...more

Blog: Class Action Charges Misrepresentation In Policies And Disclosures Regarding Slave Labor In Supply Chain

As discussed in this Bloomberg article, Costco and some of its suppliers are facing class action litigation alleging that Costco misled consumers about the use of slave labor and human trafficking in its supply chain for the...more

Fourth Circuit Affirms Dismissal of FCA Complaint Alleging Contracting Fraud

In an unpublished decision issued on Thursday, August 13, 2015, the Fourth Circuit Court of Appeals reemphasized Federal Rule of Civil Procedure 9(b)’s “stringent particularity requirement” when it affirmed a lower court’s...more

Add-On Products Continue To Present Litigation Risks For Lenders

The Consumer Financial Protection Bureau’s recent action against two credit card vendors regarding credit monitoring and identity theft protection services is a reminder of the legal risks associated with certain add-on...more

FTC Takes Its First Action Against Crowdfunding Site

As the Federal Trade Commission (FTC) targets more FinTech (new and emerging financial technology) under the banner of protecting consumers from deceptive trade practices, the Commission finally turned its attention to the...more

The Elephant in the Room in Alabama

Six months ago, we praised two Alabama federal court decisions for refraining from extending the poorly reasoned decisions in Weeks—that is, Wyeth, Inc. v. Weeks, 2013 WL 135753 (Ala. Jan. 11, 2013) (withdrawn and...more

FTC Eyes Kickstarter Campaigns for Consumer Protection

Most Kickstarter projects never reach the funding threshold, so funders never pay anything into the venture. However, as shown by recent enforcement action, agencies such as the FTC (Federal Trade Commission) have become...more

Consumer Food Fraud Claim Sinks in Arkansas Safe Harbor

On this date in 1896 the Dutch completed the harbor at IJmuiden. (That capital J is not a mistake. The I and J go together as a digraph, and they form a ligature that effectively makes up a single letter in the Dutch...more

D.C. Circuit Interprets the First-to-File Rule Narrowly

A decision this week from the D.C. Circuit shed light on three important issues. United States ex rel. Heath v. AT&T, Inc., No. 14-7094 (D.C. Cir. June 23, 2015). In 2008, the appellant, Todd Heath, filed an FCA qui tam...more

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