Stoneridge and the Supreme Court

For shareholders, the oral argument did not go well.  Reports indicate that Roberts, Scalia and Kennedy were hard on plaintiffs, with Alito leaning in their direction (Thomas, as is his custom, was silent).  This indicates that Roberts probably sold his shares and unrecused in order to ensure that those opposed to primary liability for vendors had a five justice majority.  Without his vote, it was likely to be only a plurality. 

Our prediction (or actually Steven Bainbridge's prediction) of a 5-3 outcome looks solid.  The oral argument, however, suggests that the majority might actually affirm on the basis of the 8th Circuit's opinion (that liability only extends to those who make a false disclosure or have a duty to disclose) and not the basis suggested by the government (that there was no reliance on the behavior of the vendor).  This difference is significant.  In at least some instances, there will be actual reliance on a vendor's behavior (say when the auditor questions a vendor about a transaction) so sometimes resulting in liability.  If the Court affirms on the basis of the 8th Circuit's opinion, there will be no liability irrespective of reliance or the deceptiveness of the vendor's behavior.