To plead fraudulent concealment under Delaware law, a plaintiff must plead an affirmative act of concealment by a defendant. This decision from the Court of Chancery demonstrates that group pleading concealment by all defendants will not satisfy this standard.
Here, the plaintiff asserted a claim for fraudulent concealment arising from its purchase of a healthcare technology company. Specifically, the plaintiff asserted the fraudulent concealment claim against three defendants: the company’s former CEO, an entity the former CEO used as investment vehicle, and the former CEO’s spouse. The alleged act of concealment was the former CEO paying hush money and hiring a hitman to conceal his past misdeeds in defrauding a similarly situated investor. The former CEO, who is in prison for the murder-for-hire, did not respond to the Complaint. The remaining defendants appeared and moved to dismiss the fraudulent concealment claim, as to them.
They argued that the plaintiff failed to allege any specific act of concealment by the spouse or investment vehicle. Rather, according to the remaining defendants, the concealment allegations all centered on acts taken by the former CEO: paying hush money and hiring a hitman to murder the similarly situated investor who could have revealed the prior misdeeds. The Court found that plaintiff had engaged in impermissible group pleading, ascribing the alleged acts of concealment to all defendants without delineating the specific acts undertaken by the spouse or investment vehicle. Accordingly, the Court dismissed the claims against the spouse and investment vehicle.
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