Brad S. Karp is chairman and partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP. This post is based on a Paul Weiss client memorandum by Mr. Karp, Charles E. Davidow, Daniel J. Kramer, Audra J. Soloway, Richard A. Rosen, and Andrew J. Ehrlich.
On March 4, 2016, in Tongue v. Sanofi, [1] the Second Circuit interpreted and applied for the first time the Supreme Court’s decision in Omnicare Inc. v. Laborers Dist. Council Const. Indus. Pension Fund, [2] which addressed the circumstances under which issuers can be liable for statements of opinion or projections. The Second Circuit acknowledged that the Omnicare ruling has altered the law in the Circuit, as set forth in Fait v. Regions Financial Corp., [3] which allowed for liability only if the opinion was both (1) objectively false and (2) the speaker did not believe the statement at the time it was made. The Second Circuit observed that, under Omnicare, a plaintiff can alternatively allege that an opinion statement is false by pleading that the speaker omitted information that would render the opinion misleading to a reasonable investor.
