Clifford Chance

U.S. Supreme Court Clarifies When Opinions Can Be Actionable Under Federal Securities Laws

25 March 2015

Court finds the Securities Act of 1933 is not "an invitation to Monday morning quarterback an issuer's opinions" but leaves open the possibility of liability for opinions.

In a highly anticipated decision, the Supreme Court addressed when, and under what circumstances, opinions of issuers may be actionable under federal securities laws.  In a case captioned Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, the Supreme Court reviewed a Sixth Circuit decision involving claims brought under Section 11 of the Securities Act of 1933 (the "Securities Act").  The case challenges two opinions Omnicare included in a registration statement:  "We believe our contract arrangements with other healthcare providers, our pharmaceutical suppliers and our pharmacy practices are in compliance with applicable federal and state laws," and "We believe that our contracts with pharmaceutical manufacturers are legally and economically valid arrangements[.]"  Plaintiffs argued that these legal compliance opinions were actionable because the federal government later pressed lawsuits against Omnicare based on allegations of kickbacks from drug manufacturers.  The district court dismissed Plaintiffs' Section 11 claims, and the Sixth Circuit reversed, rejecting the Second Circuit's requirement in Fait v. Regions Financial Corp., 655 F.3d 105 (2d Cir. 2011) that an opinion can only be actionable under Section 11 if "the statement was both objectively false and disbelieved by the defendant at the time it was expressed."

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