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Sixth Circuit Holds that Statements of Opinion Need Not be Knowingly False to be Actionably Misleading

May 23, 2013

The Sixth Circuit reversed dismissal of investors’ claims against Omnicare, Inc. and its top officers, with a precedential published opinion holding that investors asserting 1933 Act §11 claims need not plead facts showing that a registration statement’s misleading statements about the issuer’s purported legal compliance were knowingly false.  The court’s opinion expressly rejects the Second Circuit’s requirement, adopted in a 2011 decision, that statements of opinion cannot be deemed actionably misleading unless “both objectively false and disbelieved by the defendant.”  A concurring opinion adds that though the Sixth Circuit in a previous appeal affirmed dismissal of the plaintiffs’ 1934 Act §10(b) claims (which in contrast to 1933 Act claims do require a showing of knowing or reckless misconduct) the district court may nonetheless reinstate those claims on remand:  “If newly-found evidence in a PSLRA case supports a previously dismissed claim’s scienter (or materiality, or reliance, or loss causation) allegation, the district court could allow the claim to be revived.  District courts are charged with enforcing rules ‘to secure the just, speedy, and inexpensive determination’ of an action. Fed. R. Civ. P. 1.  There’s a reason that ‘just’ precedes ‘speedy.’”  

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