Omnicare: Old and New Standards for Section 11 Opinion Liability

On March 24, 2015, the U.S. Supreme Court issued a unanimous decision in Omnicare, Inc. v. Laborers District Council Const. Industry Pension Fund, and in doing so resolved a circuit split concerning liability under section 11 of the Securities Act of 1933 for statements of opinion made in an issuer’s registration statements. Both the securities plaintiffs and defense bars will likely claim the decision as a “victory.” On one hand, the Court turned back the Sixth Circuit’s attempted expansion of liability under section 11 by reaffirming the subjective falsity requirement in order to state a claim for an untrue statement of fact. On the other hand, the Court arguably created a new basis for opinion liability based on omissions by adopting a “reasonable investor” standard for determining whether an omission of facts supporting or negating a statement of opinion results in section 11 liability.