Articles Posted in Litigation

The success of litigation depends not only on the facts of a case, but also how a case is pleaded. A seemingly meritorious claim can be dismissed where the claim is not carefully and deliberately plead to the court. This is especially true where a plaintiff’s claim involves an element of intent or fraud. The 7th Circuit reinforced the importance of meeting Federal pleading standards when it dismissed a recent Illinois case for failure to properly allege intent and fraud.

Jefferies LLC is a securities and investment banking firm that was looking to get into the trading of precious metals futures. Webb v. Frawley, No. 18-1607 (7th Cir. 2018) at 2.  In 2010, Defendant Frawley left his job as a precious metal trader at Newedge USA, LLC, to become the global head of metals trading at Jefferies. Id. Frawley convinced two other Newedge employees, Beversdorf and Webb, to leave and join him at Jefferies. Id. After they did so, Newedge sued Jefferies for poaching its employees. Id. at 3. Soon after receiving notice of the suit, Jefferies issued a policy stating that no precious metal futures would be traded while Newedge’s lawsuit was pending. Id. Frawley knew of this policy, but nevertheless he instructed Webb and Beversdorf to continue trading iron ore futures without informing them that Jefferies would not fulfill their trades under to its new policy. Id. at 4. Webb and Beversdorf eventually found out that none of their trades for iron ore futures were being fulfilled by Jefferies. Id. But it was too late, and both Beversdorf and Webb were fired due to their “poor performance and lack of production.” Id. at 5.

Both Beversdorf and Webb brought claims for tortious interference with contract and common-law fraud claims against Frawley. Frawley removed both suits from Illinois state court to the Northern District of Illinois. Id. at 6. The court eventually dismissed Beversdorf’s claim, finding that he had signed a form which compelled arbitration. Id. at 7. However, Webb did not sign an equivalent form, and thus his claim was allowed to proceed. Id. Frawley then moved to dismiss Webb’s claims. Id. The district court granted Frawley’s motion to dismiss, finding that Webb failed to state a claim for tortious interference with contract under Rule 12(b)(6), and that Webb’s common-law-fraud claims did not meet the heightened pleading standards for fraud under Rule 9(b). Id. Plaintiff appealed on both claims.