292 P.3d 525
Or.2012Background
- State sues Marsh & McLennan for about $10 million losses from open-market MMC stock via Oregon Securities Law ORS 59.135, 59.137.
- Open-market MMC purchases by state totaling over $15 million in 2003–2004 on NYSE, with alleged misrepresentations and market impact.
- Trial court granted Marsh summary judgment, requiring reliance and rejecting fraud-on-the-market; Dormant Commerce Clause issue noted but unresolved.
- Court of Appeals affirmed reliance must be proven and rejected fraud-on-the-market for open-market purchasers; remanded for further proceedings.
- Oregon Supreme Court reverses, holds reliance is required but may be proven via fraud-on-the-market presumption for open-market purchasers; leaves scienter and constitutional issues for remand and future proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does ORS 59.137 require reliance? | State argues no reliance element is in ORS 59.137. | Marsh argues reliance is required by ORS 59.137. | Yes, reliance is required, but can be shown via fraud-on-the-market presumption. |
| Can fraud-on-the-market establish reliance under ORS 59.137 for open-market purchases? | State contends presumption applies to open-market purchases. | Marsh contends no such presumption under Oregon law. | Yes; fraud-on-the-market presumption applies to open-market purchasers. |
| Should contextual provisions (ORS 59.135, 59.115) defeat or displace reliance requirement under ORS 59.137? | Text and context support no reliance requirement. | Context supports separate elements; reliance not implied. | Context does not negate reliance; ORS 59.137 requires reliance. |
| Is the omission theory a separate basis under ORS 59.137? | OMISSION theory potentially supports reliance. | Omission was not the focus; not decided here. | Not decided; remand to address omission case when properly presented. |
| Did legislative history support fraud-on-the-market adoption for ORS 59.137? | History shows intent to extend open-market fraud-on-the-market claims. | History unclear or not dispositive. | Legislative history supports fraud-on-the-market adoption. |
Key Cases Cited
- Basic Inc. v. Levinson, 485 U.S. 224 (U.S. Supreme Court, 1988) (establishes fraud-on-the-market reliance in open-market stock claims)
- Ernst & Ernst v. Hochfelder, 425 U.S. 185 (U.S. Supreme Court, 1976) (recognizes reliance as an element in securities fraud)
- Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (U.S. Supreme Court, 2005) (reaffirms reliance and causation concepts in securities actions)
- State v. Gaines, 346 Or 160 (Or. 2009) (state contemporaneous statutory interpretation guidance; Oregon law context)
- PGE v. Bureau of Labor and Industries, 317 Or 606 (Or. 1993) (statutory interpretation framework for Oregon statutes)