Studio 1220, Inc. v. Intralinks, Inc.

Background

Studio 1220 alleged that Intralinks was involved in the improper handling of Paycheck Protection Program loan applications submitted to Bank of America. Intralinks provided software that Bank of America used to process incoming applications. Studio 1220 asserted a claim for fraudulent concealment, which generally requires a defendant to have withheld material information despite a legal duty to disclose it.

The court had previously dismissed Studio 1220’s first amended complaint, finding that it did not adequately allege that Intralinks was involved in or responsible for the challenged conduct. The court allowed Studio 1220 to amend again, stating that it did so out of caution.

Reasons for the Ruling

Studio 1220’s second amended complaint added two allegations concerning Intralinks’ role.

First, Studio 1220 cited statements in a Form 10-K filed by Intralinks’ parent company, SS&C Technologies. Those statements described “Banking and Lending Solutions” and software that managed commercial loans from the initial request through final disposition. The court determined that the cited statements described Precision LM, software offered by SS&C Technologies, rather than Intralinks’ software. The court stated that Intralinks’ software was described as creating secure online data rooms for exchanging sensitive documents and information. The court therefore found that the Form 10-K statements did not support Studio 1220’s claim.

Second, Studio 1220 alleged that Intralinks was responsible for an April 6, 2020 email confirming receipt of Studio 1220’s loan application. The email was sent from an Intralinks address, displayed “Bank of America” as the sender, provided login information for Intralinks Exchange, and included information about Bank of America’s planned application-review process.

The court said that, even assuming the email came from Intralinks rather than Bank of America, it did not establish a fraudulent-concealment claim. Under the law applied by the court, a duty to disclose can arise from a fiduciary relationship, exclusive knowledge of material facts, active concealment, or partial representations that omit material facts. For the latter three circumstances, there must also be a relationship similar to a transaction, such as a seller-and-buyer, employer-and-prospective-employee, doctor-and-patient, or contractual relationship.

The court found that the email did not establish that kind of transactional relationship. The court stated that Bank of America—not Studio 1220—contracted with Intralinks to use Intralinks’ software, and that there was no relationship between Intralinks and the loan applicants, including Studio 1220.

Disposition

The court granted Intralinks’ motion to dismiss. It dismissed Studio 1220’s fraudulent-concealment claim with prejudice and dismissed the case with prejudice, finding that further amendment would be futile.

The opinion also states in a footnote that Intralinks’ request for judicial notice was granted. A final line in the provided text instead states, “Studio 1220’s request for judicial notice is granted.” The text does not explain this apparent inconsistency.