Omnicare highlights a significant risk of the Sixth Circuit’s ruling: it would allow securities plaintiffs to challenge all opinion statements that, in hindsight, turn out to be false. “The Sixth Circuit’s approach flouts the presumption of consistency, which calls for the same language to be given the same meaning wherever it appears in a similar statutory provision. Neither the absence of a scienter requirement nor any other feature of Section 11 requires departing from the reasoning of Virginia Bankshares in this case.”
The Petitioners were not alone in their request to overturn the Sixth Circuit’s decision. They were joined by several amici, including the Securities Industry and Financial Markets Association (SIFMA), U.S. Chamber of Commerce and Business Roundtable, Washington Legal Foundation and the Center for Audit Quality, who each emphasized the precedent of Virginia Bankshares and the potential impact to U.S. capital markets if the Sixth Circuit’s opinion is affirmed.
The U.S. Department of Justice and U.S. Securities and Exchange Commission advocated for a middle ground, arguing that statements of opinions are actionable if either (1) the speaker did not subjectively hold that opinion or (2) “if [the statement of opinion] lacked a basis that was reasonable under the circumstances, even if it was sincerely held.” See Brief for the United States. This position may have some appeal, particularly for a practical court that may see requiring proof of subjective intent as gutting the strength of Section 11.
We will be hearing from the Respondents next month, so stay tuned.