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On March 24, 2015, the Supreme Court decided Omnicare v. Laborers District Council Construction Industry Pension Fund. This case concerns Section 11 of the Securities Act of 1933, which authorizes suit by a purchaser of securities issued under a registration statement filed with the Securities and Exchange Commission if the registration statement “contained an untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary to make the statement therein not misleading.”

The question here is whether a Section 11 plaintiff may plead that a statement of opinion was “untrue” merely by alleging that the opinion itself was objectively wrong, as the Sixth Circuit concluded in this case, or whether the plaintiff also must allege that the statement was subjectively false – requiring allegations that the speaker’s genuinely held opinion was different from the one expressed – as the Second, Third, and Ninth Circuits have held.

By a vote of 9-0 the Court vacated the judgment of the Sixth Circuit and remanded the case. In an opinion delivered by Justice Kagan, the Court held that a statement of opinion does not constitute an “untrue statement of . . . fact” for purposes of Section 11 simply because the stated opinion ultimately proves incorrect. Even so, the Court allowed that an omission could make an expression of opinion misleading if a reasonable investor would find that the facts omitted could not be squared with a fair reading of the registration statement as a whole.  The Sixth Circuit must reassess plaintiff’s claim on remand applying this standard, the Court explained.

Justice Kagan's opinion was joined by the Chief Justice and Justices Kennedy, Ginsburg, Breyer, Alito, and Sotomayor. Justice Scalia filed an opinion concurring in part and concurring in the judgment.  Justice Thomas also filed an opinion concurring in the judgment.

To discuss the case, we have George Conway, who is a partner in the Litigation Department of Wachtell, Lipton, Rosen & Katz.

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