Summarized by:

  • Court: United States Supreme Court
  • Area(s) of Law: Civil Law
  • Date Filed: March 24, 2015
  • Case #: 13–435
  • Judge(s)/Court Below: Kagan, J., delivered the opinion of the Court, in which Roberts, C. J., Kennedy, Ginsburg, Breyer, Alito, and Sotomayor, JJ., joined. Scalia, J., filed an opinion concurring in part and concurring in the judgment. Thomas, J., filed an opinion concurring in the judgment.
  • Full Text Opinion

A statement in connection with a public stock offering is not an untrue statement of fact strictly because it is incorrect, but rather it also needs to be misleading.

Petitioners, a pharmacy services company, filed a registration statement in connection with a public offering of common stock. Respondents, pension funds that purchased Petitioner’s stock, sued Petitioners under section 11 of the Securities Act.

Section 11 of the Securities Act of 1933 creates two ways to hold issuers of securities liable for the contents of their registration statements; a purchaser of securities may sue when a registration statement contains an untrue statement of a material fact or if the statement omits to state a material fact necessary to make the statements therein not misleading. Respondents alleged that Petitioner’s statements that Petitioner believes that their contracts with other healthcare providers are in compliance with applicable laws violates section 11. At trial, the district court granted Petitioner’s motion to dismiss because Respondent failed to state a Section 11 claim.

Respondent appealed and the Sixth Circuit Court of Appeals reversed, holding that a section 11 only required that Respondents prove that the statement was objectively false.

Respondent appealed and the United States Supreme Court granted certiorari to resolve whether section 11 pertains to statements of opinion.

The Supreme Court vacated the decision of the Sixth Circuit Court of Appeals because they applied the wrong standard. The Court held that a statement of opinion does not constitute an untrue statement of fact simply because the stated opinion ultimately proves incorrect, and remanded the decision for further analysis of whether Petitioner’s statements are misleading.

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