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Limitations on Omissions Liability for Opinions Following 'Omnicare'
The late Senator Daniel Patrick Moynihan famously wrote, "Everyone is entitled to his own opinion, but not his own facts." The Supreme Court has applied this maxim to the securities laws, holding in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 575 U.S. 175 (2015), that while statements of opinion generally are not actionable, there are some narrow circumstances in which such statements entail or imply false or misleading assertions of fact. The lower courts have since adopted inconsistent approaches to statements of opinion, some of which are out‑of‑step with the Supreme Court's guidance. Here, we offer some proposed limitations on one kind of opinion liability under Omnicare — liability for the omission of material facts — with the goal of confining such claims to the narrow boundaries outlined by the Supreme Court.
In Omnicare, the Supreme Court held that statements of opinion may be actionable as false or misleading under the federal securities laws only if: 1) the speaker does not actually hold the stated belief; 2) the statement contains a false embedded statement of fact; or 3) the statement omits material facts about the speaker's inquiry into or knowledge concerning the statement and those facts conflict with what a reasonable investor would take from the statement. The third of these categories has presented a challenge to lower courts. The Supreme Court clarified in Omnicare that "a statement of opinion is not misleading just because external facts show the opinion to be incorrect," but also observed that a statement of opinion may be false or misleading if it does not "fairly align[] with the information in the issuer's possession at the time." Some plaintiffs and their counsel have seized upon the latter statement in an effort to broaden the scope of potential liability for statements of opinion.
Applying Omincare
The Second and Ninth Circuits have come the closest to articulating a cogent and comprehensive framework for applying the third Omnicare category, but more clarity is needed. In Tongue v. Sanofi, 816 F.3d 199 (2d Cir. 2016), the Second Circuit affirmed dismissal of claims against a pharmaceutical company who, the plaintiffs alleged, had expressed overconfidence in prompt FDA approval of a new drug in the face of skeptical feedback from the FDA. In doing so, the court emphasized the absence of allegations that the FDA's statements actually "conflicted" with the opinions, and that the defendants were not obliged to disclose the FDA feedback "merely because it tended to cut against their projections."
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