Litigation Alert: Supreme Court Clarifies Scope of Section 11 Liability for “False Opinions” in Omnicare Decision

Summary: On Tuesday, March 24, 2015, the US Supreme Court issued a decision providing guidance on the scope of liability for “false opinions” in offering materials under Section 11 of the Securities Act of 1933. In Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund, the Supreme Court clarified that Section 11 does not provide strict liability for sincerely held statements of pure opinion and that a plaintiff must plead more than simply that an opinion turned out in retrospect to be incorrect. However, the Supreme Court stopped short of providing absolute immunity for opinions and held that defendants may face claims for opinion statements where a plaintiff establishes that the opinion was not sincerely or reasonably held at the time or where the opinion includes embedded facts that are false. In addition, the Supreme Court held that opinions may serve as the basis for actionable omission claims under Section 11, where the omitted information is material and renders the opinion misleading. This decision will have important implications for issuers when considering if and how to disclose opinions in their offering materials.