Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund
Issues
Does Section 11 of the Securities Act of 1933 require a showing that an opinion contained in a registration statement was objectively wrong and subjectively false?
The Supreme Court will decide whether, in a Section 11 claim, an opinion itself can be a misleading or untrue material fact if objectively wrong, or if a plaintiff must also show that the speaker did not subjectively believe the stated opinion. While Omnicare argues that an opinion is actionable only when subjectively wrong, Laborers District Counsel Construction Industry Pension Fund contends that an objectively wrong statement qualifies as misleading under Section 11 of the Securities Act of 1933. This decision will affect the liability stock issuers have in connection with public offerings and could potentially affect underwriters’ willingness to finance securities.
Questions as Framed for the Court by the Parties
Section 11 of the Securities Act of 1933, 15 U.S.C. § 77k, provides a private remedy for 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.” Against that statutory backdrop, this case presents the following question:
For purposes of a Section 11 claim, may a plaintiff plead that a statement of opinion was “untrue” merely by alleging that the opinion itself was objectively wrong, as the Sixth Circuit has concluded, or must the plaintiff also allege that the statement was subjectively false—requiring allegations that the speaker’s actual opinion was different from the one expressed—as the Second, Third, and Ninth Circuits have held?
Petitioner Omnicare is a large pharmaceutical care services provider operating in Canada and the United States. See Ind. State Dist. Council, et al. v. Omnicare, Inc., et al., 719 F.3d 498, 500 (6th Cir. 2013). Omnicare engaged in a public offering of securities on December 15, 2005 where it offered 12.8 million shares of common stock.
Written by
Edited by
The authors would like to thank Professor Charles K. Whitehead for his advice and assistance with this preview.
Additional Resources
Kevin LaCroix: U.S. Supreme Court Takes Up Yet Another Securities Case: To Support a Section 11 Claim, Must an Opinion Be Subjectively False?, The D&O Diary (Mar. 4, 2014).