Omnicare v. Laborers District Council
The Supreme Court frequently agrees to hear cases in order to resolve circuit splits by creating a unified interpretation of the law which is then binding on all lower courts. For example, in Omnicare, Inc. v. Laborers District Council Industry Pension Fund, the Sixth Circuit Court of Appeal allowed a claim of securities fraud under Section 11 of the Securities Act of 1933 based on allegations of an objectively wrong opinion in a registration statement; conversely, the Second, Third, and Ninth Circuits had previously required an allegation that the statement was subjectively false—that is, the author of the statement held an opinion different from the one expressed. [Read our Preview .] Justice Kagan, joined by Justices Kennedy, Ginsburg, Breyer, Alito, Sotomayor and the Chief Justice, held that a statement of opinion in a registration statement does not constitute an “untrue statement of . . . fact” for Section 11 purposes just because it ultimately proves to be false. The Court explained that the Sixth Circuit’s contrary holding impermissibly conflated facts and opinions. This ruling was in line with the conclusion previously reached by the other circuits: for Section 11 liability to attach to an untrue statement or opinion, the person giving the opinion in the registration statement must not sincerely hold that opinion. With the circuit split resolved, all federal courts will now apply the same pleading standard to these kinds of claims.