Walters v. JD Palatine, L.L.C., 1:15-cv-00850

Plaintiff Mark Walters alleges JD Palatine, LLC provided an inaccurate criminal background report that caused him to be denied a consulting contract in June 2015.
Walters sent a written dispute and requested a reinvestigation; Palatine’s VP of Operations (Tim Planz) told him he would "look into the matter and get back as soon as possible" and was familiar with the FCRA.
Walters contends Palatine failed to complete the reinvestigation within 30 days as required by the FCRA, and he amended his complaint to add fraud and negligent misrepresentation claims based on Palatine’s statement.
Palatine moved to dismiss Walters’s fraud and misrepresentation claims for failure to meet Rule 9(b)’s heightened pleading standard; the court previously recommended dismissal but allowed Walters to amend.
After Walters amended again, Palatine renewed its motion to dismiss the fraud claim under Rule 12(b)(6) for failure to plead fraud with particularity.
The Magistrate Judge found the second amended complaint sufficiently alleged the who, what, when, and where of the alleged fraudulent statement and recommended denying the motion to dismiss the fraud claim.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Walters pleaded fraud with the particularity required by Fed. R. Civ. P. 9(b)	Walters identified speaker (Planz), date and content of statement, medium, that statement was material, and that he relied and was injured	Palatine argued the amended complaint still fails Rule 9(b): lacks specifics on knowledge, recklessness, intent	Court: Allegations meet Rule 9(b); mental state (knowledge/intent) may be pled generally, so dismissal is not warranted

Flaherty & Crumrine Preferred Income Fund, Inc. v. TXU Corp., 565 F.3d 200 (5th Cir. 2009) (Rule 9(b) requires specifying who, what, when, where of alleged fraud)
Williams v. WMX Techs., Inc., 112 F.3d 175 (5th Cir. 1997) (describing the who, what, when, where pleading requirement for fraud)
In re FirstMerit Bank, N.A., 52 S.W.3d 749 (Tex. 2001) (elements of fraud under Texas law)
Battle v. United States Parole Comm’n, 834 F.2d 419 (5th Cir. 1987) (standards for objections to magistrate judge reports)
Thomas v. Arn, 474 U.S. 140 (U.S. 1985) (effects of failing to timely object to magistrate recommendations)
Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415 (5th Cir. 1996) (procedural consequences for failing to object to magistrate reports)