CLIENT PUBLICATION
LITIGATION | March 7, 2016
Second Circuit’s First Published Opinion Applying
Omnicare Adopts Strong Contextual Approach to Opinion
Statement Liability
In Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund , 135 S.Ct. 1318 (2015)
(“Omnicare”), the Supreme Court pronounced the standard for determining whether a statem ent of opinion is
actionable under Section 11 of the Securities Act of 1933 (the “Securities Act”). T he Second Circuit’s first published
opinion applying Omnicare, In re Sanofi Securities Litigation, AG Funds, L.P. v. Sanofi, Nos. 15-588-cv, 15-623-cv
(2d Cir. Mar. 4, 2016) (“Sanofi”), applies Omnicare to claims challenging statements of opinion under Section 10(b)
of the Securities Exchange Act of 1934 (“Exchange Act”) , and reflects a rigorous, context-focused application of
Omnicare that underscores the hurdles to pleading federal securities law claims based on omissions in connection
with a statement of opinion. Concluding that the omitted facts did not, in context, r ender defendants’ statements of
opinion materially misleading, the Second Circuit affirmed the dismissal of claims under Sections 11 and 12 of the
Securities Act and Section 10(b) of the Exchange Act.
Background
In Omnicare, the Supreme Court held that even a sincerely held opinion could be actionable under Section 11’s
“omissions rendering an affirmative statement materially misleading” prong if the investor could identify “particular
(and material) facts going to the basis for the issuer’s opinion … whose omission makes the opinion statement at
1
issue misleading to a reasonable person reading the statement fairly and in context. ” This holding modified the
standard for opinion liability in the Second Circuit, which previously had required proof of subjective falsity for all
2
forms of opinion liability.
Sanofi is the first published opinion from the Second Circuit addressing Omnicare’s newly recognized form of
opinion liability. The Sanofi case concerns defendants’ multiple sclerosis treatment drug Lemtrada. In April 2011,
Sanofi acquired Genzyme, the biotechnology company that owned Lemtrada. As part of that acquisition, Sanofi
issued contingent value rights (“CVRs”) to Genzyme shareholders. The CVRs, which were publicly traded, entitled
the holder to cash payouts if certain milestones, such as FDA approval of Lemtrada, were met. Between 2011 and
2013, Sanofi made statements in the offering materials for the CVRs, and subsequently to the market as a whole,
to the effect that it expected the FDA to approve Lemtrada and that the clinical trials were progressing well.
Privately, the FDA had repeatedly expressed to Sanofi and Genzyme a “major concern” about the lack of
double-blind studies in the Lemtrada clinical trials. The FDA had noted, however, that if the single-blind studies
1 Omnicare, 135 S. Ct. at 1331.
2 See Fait v. Regions Fin. Corp., 655 F.3d 105 (2d Cir. 2011). The Ninth Circuit too had required proof of subjective falsity. See Rubke v. Capitol
Bancorp Ltd., 551 F.3d 1156 (9th Cir. 2009).
