Supreme Court Omnicare Ruling Addresses Company Opinion Statements

The U.S. Supreme Court Tuesday issued a decision that will affect the landscape for securities class actions.

In the unanimous ruling, which focused on opinions expressed in documents filed with the U.S. Securities and Exchange Commission, the high court said investors can sue if those documents omit important facts.

Still, as Bloomberg’s Greg Stohr reported, the justices rejected a federal appeals court’s conclusion that investors can sue if an opinion contained in SEC filings is later found to be wrong.

That provision “does not allow investors to second-guess inherently subjective and uncertain assessments,” Justice Elena Kagan wrote for the court.

The case stemmed from statements included in a 2005 registration statement for a stock offering by Omnicare Inc. Investors had accused the company of misleading purchasers by saying it complied with laws and regulations in its filings.

A federal appeals court ruling would have required Omnicare to defend the lawsuit, but the court’s decision sends the case back to the lower courts to assess whether Omnicare omitted any material facts in its filing.

“A reasonable investor may, depending on the circumstances, understand an opinion statement to convey facts about how the speaker has formed the opinion — or, otherwise put, about the speaker’s basis for holding that view,” Kagan wrote for the court. “And if the real facts are otherwise, but not provided, the opinion statement will mislead its audience.”

Omnicare has since reached a series of settlements with state and federal officials to resolve allegations involving illegal kickbacks. In 2009, the company agreed to pay $98 million to settle government accusations it paid kickbacks to obtain business and received them for recommending drugs. The agreement didn’t include any finding of wrongdoing by the Covington, Kentucky-based company.

The case is Omnicare v. Laborers District Council Construction Industry Pension Fund, 13-435.