C. Davis Quoted in Law360 Article About Omnicare Case
Lane Powell Shareholder Claire Davis was quoted in a March 3 Law360 article titled “Securities Defense Bar Has High Hopes Riding on Omnicare.” The article discussed Omnicare Inc. v. Laborers District Council Construction Industry Pension Fund, in which the Sixth Circuit found in its May 2013 decision that a defendant did not need to know that false statements were being made for plaintiffs to pursue fraud actions under Section 11 of the Securities Act of 1933. The securities defense bar argued that the decision would incorrectly allow plaintiffs to sue executives over statements of opinion that, even though believed to be true, actually turn out to be misleading or false. On March 3, the Supreme Court granted cert, which gives the court a chance to issue a corrective to the Sixth Circuit’s decision. Securities defense lawyers are cautiously optimistic that the court granted cert in order to clarify and affirm its guidance in the 1991 opinion in Virginia Bankshares Inc. v. Sandberg.
But if history is any guide, interpreting Virginia Bankshares is far from a simple task, said Claire Loebs Davis, a shareholder in Lane Powell PC’s Seattle office who wrote for Law360 in August an exclusive analysis critical of the Sixth Circuit decision.
“I think Virginia Bankshares is a difficult decision to interpret and it took a long time for it to trickle down and be understood by the circuit courts and the district courts as a result,” Davis told Law360 on Monday.
According to Davis, circuit courts were slow to apply the complicated opinion in Virginia Bankshares until the early 2000s, when a slew of them began citing the case for a general rule: that a statement of opinion is actionable only if it is both subjectively and objectively false or misleading. In other words, executives are only liable for false statements if those statements are objectively false and are known by the executives to be objectively false.
Davis was also quoted regarding the Omnicare case in a recent AM Law Litigation Daily article titled “High Court Takes Up New Securities Conundrum in Omnicare Case.”