In Omnicare, Supreme Court Clarifies the Scope of Liability for Statements of Opinion Under Section 11 of the Securities Act of 1933

Last week, in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, the Supreme Court addressed the scope of liability for statements of opinion under Section 11 of the Securities Act of 1933. In particular, the Court held that statements of opinion can be actionable as misstatements under Section 11 only if the plaintiff pleads and proves that the speaker did not actually hold the stated belief or if the statement of opinion contains explicit, supporting facts that are untrue. The Court further held that statements of opinion can be actionable as omissions under Section 11 if the speaker does not disclose the factual basis for the opinion, and if those facts conflict with what a reasonable investor would take from the statement itself. Importantly, the Court also rejected the position that a statement of opinion can be actionable if it simply turns out to be wrong. Taken together, these holdings are likely to shift litigation concerning statements of opinion under Section 11 towards issues concerning the basis for disclosed opinions, and may place increasing importance on other potential defenses to liability for those opinions (such as the bespeaks caution doctrine and the PSLRA’s safe harbor for forward-looking statements).