In a September 13, 2013 opinion, Venture Global Engineering, LLC v. Satyam Computer Services, Ltd., the US Court of Appeals for the Sixth Circuit held that the doctrine of wrongful concealment may defeat a claim preclusion defense. In so holding, the appeals court expressed skepticism whether a plaintiff asserting wrongful concealment must also plead its due diligence in uncovering the alleged fraud.

In 1998, Satyam Computer Services, Ltd. (Satyam) approached Venture Industries Australia, a company owned by The Larry J. Winget Living Trust (Trust), about forming a joint venture aimed at providing engineering services to the automotive industry. Satyam represented to the Trust that it was a publicly traded company and was audited, liquid and financially stable.

The Trust and Satyam eventually agreed to form a joint venture. The Trust formed Venture Global Engineering (VGE) as a separate legal entity and in 2000, VGE and Satyam formed Satyam Venture Engineering Services, Ltd. (SVES) under the laws of India. Each company received half of SVES's stock. Satyam's public and private representations regarding its financial stability were critical to the Trust's decision to form VGE and to partner with Satyam.

The relationship soured, and in July 2005, Satyam initiated arbitration against VGE. Satyam claimed that the bankruptcy of certain entities affiliated with VGE constituted an "Event of Default" under the shareholders agreement, permitting Satyam to purchase VGE's shares for their book value, which at the time was considerably less than their market value. The arbitrator ruled in favor of Satyam.

Four years later, in what was to become known as "India's Enron," news first broke of a massive fraud perpetrated by Satyam. For years, Satyam overstated its assets (at one point by $1.4 billion) and enlisted others to issue glowing but false audit reports. Ultimately, the Indian government exercised its authority to replace Satyam's board and take control of the company.

In 2010, the Trust sued Satyam in federal district court asserting violations of the federal RICO statute and various common law fraud claims. The Trust's complaint alleged that Satyam's fraud started before the formation of their joint venture. According to the Trust, but for Satyam's fraud, the joint venture would likely never have been formed and the 2005 arbitration either would not have occurred or would have produced a different result.

Satyam moved to dismiss the complaint on claim preclusion grounds, arguing that the Trust should have raised these arguments in the 2005 arbitration. The district court agreed and dismissed the action. The district court also ruled that the Trust could not avail itself of the "wrongful concealment" exception to claim preclusion because the Trust failed to plausibly allege due diligence in attempting to discover Satyam's fraud.

The Sixth Circuit reversed, holding that the Trust adequately pled the existence of wrongful concealment, namely that:

Importantly, the Sixth Circuit expressed skepticism whether the Trust needed to separately allege its due diligence in attempting to discover Satyam's fraud. Ultimately though, the appeals court found it unnecessary to rule on the issue because the Trust had "pled all that our due-diligence caselaw requires." Specifically, the Sixth Circuit found that the Trust's allegations plausibly suggested that a reasonable person in the Trust's position would not have suspected Satyam's systemic fraud, given the intricate cover-up efforts Satyam undertook to hide its scheme. Accordingly, the Trust was reasonable in not suspecting the fraud and had no duty to inquire into the fraud before discovering it in 2009.