Supreme Court’s Omnicare Decision Follows Middle Path Advocated by Lane Powell and WLF
Lane Powell Shareholders Doug Greene and Claire Davis co-authored a March 25 Washington Legal Foundation (WLF) The Legal Pulse blog post titled “Supreme Court’s Omnicare Decision Follows Middle Path Advocated by Lane Powell and WLF.” The article discussed the March 24 opinion issued in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund in which the Supreme Court rejected the two extremes advocated by the parties regarding how the truth or falsity of statements of opinion should be considered under the securities laws, and instead adopted the middle path advocated in the amicus brief filed by Lane Powell on behalf of the WLF. In doing so, the Court also laid out a blueprint for examining claims of falsity under the securities laws, which Greene and Davis believe will do for falsity analysis what Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007), did for scienter analysis.
The Court could have taken many wrong turns in rejecting these two opposing viewpoints, running the risk of further confusing the law not only regarding the truth or falsity of opinions, but also muddling the law of scienter and materiality. However, the Court successfully navigated these potential pitfalls, and it adopted an analytically sound approach that is consistent with its previous securities rulings, holding that: 1) a statement of opinion is only “false” under the securities laws if it is not genuinely believed by the speaker; and 2) like any other kind of statement, a statement of opinion may be “misleading” if, when considered in context, it creates a false impression in the mind of a reasonable investor.
Davis was also quoted in a March 24 Law360 article titled “Supreme Court Sets High Bar for Challenging Exec Opinions” regarding the Omnicare decision.