## Facts

- Alcoa Global Fasteners, Inc. agreed to purchase the stock of two fastener businesses from TransDigm-related sellers under a stock purchase agreement (SPA).
- One acquired business had a major customer, Airbus.
- Before signing, Airbus allegedly communicated an intent to reduce purchases from the business by about 50%.
- Before signing, the sellers allegedly offered, and Airbus accepted, a 5% price discount effective after closing.
- Alcoa alleged the sellers represented there were no customer disputes and failed to disclose the expected volume reduction and the agreed discount.
- The SPA included broad non-reliance language limiting Alcoa’s reliance to representations and warranties expressly contained in the SPA.
- After closing, Airbus-related adverse developments materialized; Alcoa claimed it overpaid due to the sellers’ misstatements and concealment.
- In the litigation, Alcoa asserted counterclaims for fraudulent concealment, fraudulent misrepresentation, negligent misrepresentation, and civil conspiracy.
- The sellers moved to dismiss these counterclaims based largely on the SPA’s anti-reliance provision and alleged pleading deficiencies.

## Issues

1. Whether an SPA’s broad anti-reliance clause requires dismissal of fraud-based claims premised on alleged concealment or misleading omissions.
2. Whether alleged contractual and due-diligence statements can be actionable as materially misleading “half-truths” when literally true but incomplete.
3. Whether the buyer adequately pleaded civil conspiracy among related seller entities in connection with the alleged nondisclosure scheme.

## Decision

- The court denied the motion to dismiss in substantial part, allowing the fraud-based counterclaims to proceed past the pleading stage.
- The court held the anti-reliance provision did not, at the pleading stage, categorically bar a claim alleging fraudulent concealment of material information.
- The court held Alcoa pleaded sufficient facts that the sellers’ statements and disclosures could constitute actionable partial disclosures or “half-truths.”
- The court held the civil conspiracy claim was adequately pleaded based on allegations of coordinated conduct among seller-related entities.

## Legal Principles

- Delaware courts generally enforce clear anti-reliance clauses in arm’s-length transactions between sophisticated parties to bar claims based on reliance on extra-contractual representations.
- A non-reliance clause does not necessarily defeat claims alleging that the seller knowingly concealed material facts or made statements that were misleading by omission.
- A representation may be actionable as fraud if it is materially misleading because it omits facts needed to make the statement not deceptive (the “half-truth” doctrine).
- At the motion-to-dismiss stage, well-pleaded allegations of intentional concealment of highly material information connected to a key customer relationship can support fraud-based claims notwithstanding contractual risk-allocation provisions.
- Civil conspiracy may be sufficiently pleaded where the claimant alleges an agreement among multiple entities, wrongful acts in furtherance of the agreement, and resulting harm.

## Conclusion

The court refused to dismiss Alcoa’s counterclaims where Alcoa plausibly alleged that the sellers knowingly concealed and partially disclosed material facts about a key customer’s expected volume reduction and post-closing price discount, and held that the SPA’s anti-reliance language did not provide a pleading-stage safe harbor for concealment or misleading half-truths.


TransDigm Inc. v. Alcoa Global Fasteners, Inc., 2013 Del. Ch. LEXIS 137 (Del. Ch. 2013)