Opinion ID: 2189591
Heading Depth: 1
Heading Rank: 11

Heading: Fraud Exception Requires Particularization

Text: In her original and amended derivative complaints, the plaintiff attempted to plead facts sufficient to bring her claims within the first exception to the general rule of Lewis v. Anderson , the so-called fraud exception. In Lewis v. Anderson , this Court held that the fraud exception is applicable where the merger itself is the subject of a claim of fraud. [38] The plaintiff argues that the Court of Chancery incorrectly applied the heightened pleading standards of Court of Chancery Rule 9(b) to her allegations that the Kinross Merger was fraudulent. Although subsequent cases have paraphrased this Court's language in Lewis v. Anderson , the substance remains the same  a complaint seeking to invoke the fraud exception must demonstrate that the merger was fraudulent and done merely to eliminate derivative claims. [39] Therefore, the particularized pleading requirement of Rule 9(b) [40] must be satisfied by a derivative complaint that seeks to invoke the fraud exception in Lewis v. Anderson . Accordingly, the Court of Chancery correctly concluded that the plaintiff was required to plead particularlized facts invoking the fraud exception to Lewis v. Anderson in order to avoid dismissal. [41]