With the close of the United States Supreme Court’s 2014-15 term, we offer this wrap up of the Court’s term, focusing on the Court’s most important business and commercial cases (excluding patent cases):
Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund: It is widely known that if the registration statement an issuer files with the SEC contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading, then a purchaser of securities sold pursuant to the registration statement may sue the issuer for damages. But what about statements of opinion that appear in a registration statement? In Omnicare, the Supreme Court held that a sincere statement of pure opinion — even if the issuer’s belief is ultimately proven wrong — is not actionable under Section 11 of the Securities Act, because the opinion expresses merely a view, not a certainty. That is good as far as it goes, but it’s not the end of the story. That’s because if, as the Court also held, an opinion is at odds with other information the issuer has, then omitting from the registration statement facts about that other information can create Section 11 liability. To steer clear of opinion liability under Section 11, then, an issuer should divulge the basis for its opinion or else make clear the real tentativeness of its belief so as not to mislead.
Tibble v. Edison Int’l: A fiduciary of a 401(k)/retirement plan has a duty not only to exercise prudence in selecting investments for inclusion in the plan but also to continually monitor those investments and remove imprudent ones. A claim for breach of that continuing duty will be deemed timely if it is filed within six years of the alleged breach — the statute of limitations for a breach of fiduciary duty under ERISA. The plaintiffs in Tibble filed their complaint in 2007, alleging that the fiduciaries of their company 401(k) plan acted imprudently by adding six retail-class mutual funds to the plan — three in 1999, the other three in 2002 — which had higher fees than their identical institutional-class counterparts. In a unanimous decision, the Supreme Court vacated the Ninth Circuit’s decision and held that the claims relating to the mutual funds added in 1999 were not automatically time-barred just because they were selected more than six years before the complaint was filed. On remand, the court was to determine whether the plaintiffs stated a viable claim for breach insofar as the defendants failed, at any time between 2001 and 2007, to conduct a regular review of the investment options in the plan.