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Notice Pleading: Be Simple But Be Precise

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James Irving
BKK Business Law Newsletter
March 2010

The American concept of “notice pleading” arose when the Federal Rules of Civil Procedure were adopted in 1938. One of the goals of the new rules was to relax the common law tradition requiring exactitude and precision in pleading in compliance with procedural form. While certain claims - notably fraud - still require specificity, a complaint filed under the federal rules is sufficient if the claim for relief contains “a short and plain statement of the claim showing that the pleader is entitled to relief.” Such a claim will not be dismissed “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim.”

In a memorandum opinion issued on November 17, 2009, Judge Robert E. Payne of the U.S. District Court for the Eastern District of Virginia commented negatively on the quality of the Plaintiffs’ pleading but refused to dismiss several counts of the amended complaint in reliance on the notice pleading standards.

James River v. Kehoe et al. arose as complicated business tort litigation brought by way of a complaint and a twelve count amended complaint. Defendants moved to dismiss several counts of the Amended Complaint for inadequately pleading of the claims based upon the following facts:

In 2007, James River began searching for a strategic partner to acquire the company through merger. As a result, a company called Fortress investigated that possibility subject to a non- disclosure agreement that restricted Fortress’ use of any information gained during the due diligence period leading up to the proposed merger. Ultimately, the Fortress proposal fell through and a different company acquired James River. Thereafter, James River alleged, its former president, Michael Kehoe along with the managing director of Fortress, helped form Kinsale for the purpose of competing with James River, and improperly used James River material for that purpose.

The plaintiffs, three related companies collectively referred to as James River, sued three related corporations called “Kinsale” and six individuals involved with the formation of the Kinsale business group. James River contended that Kinsale and the individual defendants engaged in a “deceitful scheme and conspiracy” that “harmed James River through unlawful acts.” The twelve counts included the full litany of business torts claims without a great deal of specificity as to which defendant did what. In fact, Judge Payne observed that it was the scattershot pleading approach to the amended complaint that invited the defendants’ dismissal motion that was before the court.

Judge Payne’s opinion noted that his prior order permitting a limited amendment of the original complaint had been intended to achieve “clarity, precision and brevity” and that the Amended complaint left much to be desired. However after expressing his dissatisfaction with the plaintiffs’ pleading, he noted that under the federal rules “alleging plausible grounds ‘simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence’.”

Ultimately, the court dismissed the restitution/unjust enrichment count, but only because it was redundant. He dismissed the conversion count, but with leave to amend to specifically identify the basic information of what was converted by whom. Despite the sloppiness of the pleading and Judge Payne’s obvious impatience, James River’s claim will go forward. Whether the claims survive closer scrutiny at trial remains to be seen.