Photo by Jeffrey Dorfman
On the continuum of condemnation there is, of course, some spread between intentional wrong-doing and negligence. And the law recognizes that simply being accused of serious wrong-doing — of intentional wrong-doing — can be more reputationally damaging than being accused of negligence. So the law gives allegations of intentional wrong-doing a bit more of a hard look at the very outset of civil litigation. The law pushes plaintiffs who claim others have committed fraud to back up those claims with more detail than other claims they might allege. Lawyers call this the requirement “to plead fraud with particularity.”
A company called AcceleDent worked with a company called Devicix, a designer of medical devices to design a new product, the AcceleDent Aura.
Apparently, the process was rocky and AcceleDent sued Devicix in U.S. District Court for the District of Minnesota on numerous counts, including fraud, fraudulent inducement, intentional misrepresentation, along with other claims (like breach of contract and negligence). The issue, apparently, is whether Devicix was to blame for this “rocky” process and, if so, was it an outright sham, negligence, or merely the ancient and revered doctrine of “sh*t happens.”
So, the threshold question for U.S. District Court Judge Donovan W. Frank (D. Minn.) was whether Acceledent’s allegations were pled with sufficient particularity or were Devicix’s alleged fraudulent statements or misleading omissions “mere puffing,” the kind of positive, enthusiastic, “can do” attitudes that simply go along with sales.
Judge Frank is letting the plaintiff’s fraud-based claims go forward. I think he is right. Keep in mind, he is NOT finding that any fraud was committed by Devicix. He is simply allowing the plaintiff to claim a fraud was committed. Who knows? Maybe Devicix did, maybe it didn’t. But Judge Frank’s ruled that Plaintiff has pled enough to at least do some discovery to bolster (or to rule out) the suspicion.