News & Events

News & Events

8.23.2013

6th Circ. Took a Wrong Turn in Omnicare Case

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Lane Powell Shareholder Claire Loebs Davis authored an August 21 Law360 article titled “6th Circ. Took a Wrong Turn in Omnicare Case.” In the article, Davis discussed Indiana State District Council of Laborers v. Omnicare. The case created a split among circuit courts regarding the question of what is required to demonstrate that a statement of opinion is false or misleading in a securities class action case. In Indiana State District Council of Laborers v. Omnicare, the Sixth Circuit determined that plaintiffs did not need to prove that defendants knew their opinion was false. This decision diverges from numerous decisions previously made by other circuits, as well as many made by the Sixth Circuit itself.

When is an opinion a false or misleading statement? If a company official says “I think the deal is fair,” is it a false statement just because the deal is objectively unfair? Or only if the official also did not subjectively believe the deal was fair when he voiced that opinion?

With the Sixth Circuit’s opinion in Indiana State District Council of Laborers v. Omnicare, 719 F.3d 498 (6th Cir. 2013), a circuit split has developed around the question of what is required to demonstrate that a statement of opinion is false or misleading. This issue is key to many securities class actions, which often hinge upon the truth or falsity of opinions, not facts.

Read the article (PDF).