Barron’s D.C. man assesses the Supreme Court’s upcoming term

Jim McTague‘s latest “D.C. Current” column for Barron’s probes some interesting business-related cases on the docket for the new term of the U.S. Supreme Court.

Snore-der in the court! The Supreme Court October 2014 term has a business case docket so boring that Washington lawyer John Elwood of Vinson & Elkins compares it to “watching C-Span 3 after watching Fast & Furious 6.” Nevertheless, some of these snoozers potentially could become doozers with impacts on your portfolio.

The case of Omnicare (ticker: OCR) v. the Laborers District Council Construction Industry Pension Fund and the Cement Masons Local 526 Combined Funds could increase class-action lawsuits against public companies if the justices side with the investors. The plaintiffs bought Omnicare stock in a December 2005 public offering. Then in 2006, Omnicare was hit with whistleblower suits, alleging that it was receiving kickbacks for promoting specific drugs for off-label uses and submitting false claims to Medicaid and Medicare. Omnicare, which had said in a registration filing that it operated within the law, ended up paying the federal government more than $150 million in fines.

The unions sued Omnicare under Section 11 of the Securities Act of 1933, which provides an express remedy to investors if an SEC registration contains misstatements of material fact. The Second, Third, and Ninth Circuit Courts of Appeals have held that plaintiffs must have proof that management intentionally lied in the filings. But the Sixth Circuit concluded that, if an opinion turns out to be wrong, a Section 11 action can be brought by investors, even if a corporate statement wasn’t knowingly false.

In an amicus brief, the Washington Legal Foundation notes that opinions are “ubiquitous in corporate communications” and “crucial to investors, providing them with unique information and insight.” If the Supreme Court were to uphold the Sixth Circuit’s decision, it says, this information might dry up.

THE CASE OF INTEGRITY STAFFING SOLUTIONS v. Jesse Busk could affect retailers and companies that force employees to undergo security screening to the tune of $100 million, by one industry estimate.