Safron Capital Corporation, et al. v. Elanco Animal Health Inc., et al.

Sections 11 and 12(a)(2) of the Securities Act of 1933 (the “Securities Act”), 15 U.S.C. §§ 77k, 77l(a)(2), require companies to prepare and file with the Securities and Exchange Commission (the “SEC”) a prospectus and registration statement providing detailed information about the company’s business and financial health prior to initiating a public sale of their stock so prospective buyers may fairly assess whether to invest. The two sections, respectively, prohibit companies’ registration statements and prospectuses from making materially false or misleading statements or omitting to state a required material fact necessary to ensure the statements therein are not misleading. In the federal securities law context, the issue of materiality requires delicate assessments of the inferences a reasonable shareholder would draw from a given set of facts and the significance of those inferences, which are uniquely suited to determination by the trier of fact. Against this backdrop, this case presents the following question: When, if ever, can the issue of materiality in an action alleging violations of the federal securities laws be determined by a court as a matter of law without findings of fact by the trier of fact?