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Joseph D. Masterson quoted in article “Lawyers Weigh In On High Court’s Omnicare Decision”


Following is an excerpt:

On Tuesday, the Supreme Court reversed and remanded a Sixth Circuit ruling that executives can be held responsible for opinions expressed to investors that later turned out to be false. Here, attorneys tell Law360 why the decision in Omnicare Inc. et al. v. Laborers District Council Construction Industry Pension Fund et al. is significant.

“Some of the key questions concern what an issuer is understood to be saying when it makes a statement of opinion. If the issuer's president and 60 percent of the directors sincerely believe opinion X to be true while the general counsel and the remaining directors do not, can it say ‘We believe X is true’? Even if the opinion is unanimously held, how much subjective confidence (slight preponderance v. near certainty) is required? Related but even more critical may be how the lower courts apply the principle that even a sincere opinion may [be] misleading based on the implied level of inquiry or knowledge on which it is based. The due diligence defense already protect officers and directors (but not issuers) from careful but erroneous statements in most contexts: how much institutional certainty statements of opinion are held to imply may determine how often Omnicare may allow issuers to avoid liability.”