Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund

135 S. Ct. 1318 (2015)

Facts

D is the nation’s largest provider of pharmacy services for residents of nursing homes. Its registration statement contained in part the analysis of the effects of various federal and state laws on its business model, including its acceptance of rebates from pharmaceutical manufacturers. The registration statement contained two statements expressing the company's opinion that it was in compliance with federal and state laws. Those opinions also included some caveats. D mentioned several state-initiated “enforcement actions against pharmaceutical manufacturers” for offering payments to pharmacies that dispensed their products; it then cautioned that the laws relating to that practice might “be interpreted in the future in a manner inconsistent with our interpretation and application.” D also noted that the Federal Government had expressed “significant concerns” about some manufacturers’ rebates to pharmacies and warned that business might suffer “if these price concessions were no longer provided.” Ps purchased D stock and brought suit alleging that D’s two opinion statements about legal compliance give rise to liability under §11. Ps claim that D made “materially false” representations about legal compliance in that D “omitted to state [material] facts necessary” to make its representations not misleading. Ps made clear that in light of §11’s strict liability standard, they chose to “exclude and disclaim any allegation that could be construed as alleging fraud or intentional or reckless misconduct.” The District Court granted D’s motion to dismiss. It held that “statements regarding a company’s belief as to its legal compliance are considered ‘soft’ information” and are actionable only if those who made them “knew [they] were untrue at the time.” It concluded that Ps’ complaint failed to meet that standard because it nowhere claimed that “the company’s officers knew they were violating the law.” The Court of Appeals reversed. It held, the Funds had to allege only that the stated belief was “objectively false”; they did not need to contend that anyone at D “disbelieved [the opinion] at the time it was expressed.” The Supreme Court granted certiorari.