For purposes of 15 U.S.C.S. § 77k(a), 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. If the issuer made the statement in the face of its lawyers’ contrary advice, or with knowledge that the Federal Government was taking the opposite view, the investor again has cause to complain: He expects not just that the issuer believes the opinion (however irrationally), but that it fairly aligns with the information in the issuer’s possession at the time.
Petitioner Omnicare, Inc. (Omnicare), a pharmacy services company, filed a registration statement in connection with a public offering of common stock. In addition to the required disclosures, the registration statement contained two statements expressing the company's opinion that it was in compliance with federal and state laws. After the Federal Government filed suit against Omnicare for allegedly receiving kickbacks from pharmaceutical manufacturers, respondents, pension funds that purchased Omnicare stock (hereinafter Funds), sued Omnicare under § 11. They claimed that Omnicare's legal-compliance statements constituted untrue statements of material fact and that Omnicare omitted to state material facts necessary to make those statements not misleading. The District Court granted Omnicare's motion to dismiss. Because the Funds had not alleged that Omnicare's officers knew they were violating the law, the court found that the Funds had failed to state a §11 claim. The Sixth Circuit reversed. Acknowledging that the statements at issue expressed opinions, the court held that no showing of subjective disbelief was required. In the court's view, the Funds' allegations that Omnicare's legal-compliance opinions were objectively false sufficed to support their claim.
Does Omnicare’s opinion, which alleged that the company was in compliance with federal and state law, constitute an untrue statement of material fact when it has been later proven that the opinion was incorrect?
The Court ruled that a statement of opinion does not constitute an untrue statement of fact simply because the stated opinion ultimately proves incorrect. According to the Court, a statement of fact expresses certainty about a thing, whereas a statement of opinion conveys only an uncertain view as to that thing. Because a statement of opinion admits the possibility of error, such a statement remains true - and thus is not an untrue statement of fact - even if the opinion turns out to have been wrong. The Court, however, posited that opinion statements are not wholly immune from liability under §11s first clause: a statement of opinion qualifies as an untrue statement of fact if the opinion expressed was not sincerely held. In the case at bar, Omnicare's sincerity is not contested, thus, it is held that the statements at issue are pure opinion statements; therefore, the Funds cannot establish liability under §11s first clause.