FIH, LLC v. Foundation Capital Partners, LLC, No. 18-357 (2d Cir. 2019)Annotate this Case
Standing alone, a general disclaimer (still less a general merger clause) is not sufficient as a matter of law to preclude reasonable reliance on material factual misrepresentations, even by a sophisticated investor. FIH appealed the district court's grant of summary judgment dismissing federal securities law claims against defendants. The district court concluded as a matter of law that FIH could not have reasonably relied on the alleged misrepresentations, because such reliance was precluded by a general merger clause in Foundation's agreement, incorporated by reference into the subscription agreements by which FIH had invested in Foundation. However, the Second Circuit held that the merger clause did not as a matter of law preclude FIH's reasonable reliance on the alleged misrepresentations. The court also held that the district court did not err nor abuse its discretion in excluding as untimely an expert report. Accordingly, the court vacated the judgment and remanded for further proceedings.