The Washington Examiner highlights on a U.S. Supreme Court ruling that favors common sense over the trial-lawyer lobby.
For the Supreme Court to issue a unanimous opinion, legal minds as vastly different as Antonin Scalia and Ruth Bader Ginsburg, must find agreement, as well as everyone in between.
That rarely happens on contentious or unclear issues. Unanimity on the court usually signals that the resulting opinion is a simple application of common sense with which no reasonable person could disagree. This has occurred many times at the Obama administration’s expense, but this week the court issued a unanimous opinion that instead puts a key White House ally — the trial lawyer lobby — on the spot.
In Omnicare v. Laborers District Council, all nine justices agreed that when shareholders sue a corporation for making false statements of opinion in their filings, they must establish that the statements were knowingly false. This may seem like a minor or obscure matter, but the decision nibbles around the edges of an increasingly lucrative (for trial lawyers) field of lawsuits — those brought by aggrieved shareholders, often as class-action cases, when their stock loses value.
In financial markets whose existence depends on everyone’s ability to win or to lose money, it isn’t hard to understand how enough frivolous lawsuits of this kind could result in disaster. If they become too common, companies will hesitate to go public at all.
More to the point, such suits are frequently filed as a nuisance — a form of legal extortion — in the knowledge that most companies would rather settle than fight. In many cases, they are filed by investors as leverage. A shareholder lawsuit can delay large merger and acquisition deals. The companies being sued can be forced to pay out settlements as ransom so that they can move forward with multibillion-dollar deals.
In this context, fair procedural curbs on such lawsuits make sense — and all nine justices agreed that this curb does.
One might call this ruling an example of advocacy for justice … much like tort reform.
