The oral argument in Stoneridge is tomorrow and, in advance, we want to engage in some prognostication about the outcome of the case.  We confess that our prediction actually came from the utterances of Steve Bainbridge at UCLA and remarks he gave at aconference at Case Western (co- sponsored by the Federalist Society) on Stoneridge.  He noted that the Supreme Court's opinion in O'Hagan (the last big securities case) was a cut and paste job from the brief filed by the Solicitor General's Office and predicted that something similar would happen in Stoneridge.   

We agree.  We predict the Court will affirm the 8th Circuit but, consistent with the Solicitor General's brief, not do so on the basis of the 8th Circuit's reasoning.  The Solicitor General concluded that the 8th Circuit's attempt to limit the deceptive device language in Section 10(b) only to false disclosure was in error.  The Solicitor General, however, concluded that the case should be dismissed because of an absence of actual reliance on the behavior of the vendors.  We suspect that this is exactly how the Court will decide this case, that behavior can result in a deceptive act and violate Section 10(b) but that there needs to be actual reliance.  We shall see how precisely this reasoning tracks the actual language in the Government's brief.