Ninth Circuit Modifies Presumption of Reliance Opinion

The Ninth Circuit Court of Appeals has modified its March 30, 1999 decision in Binder v. Gillespie, which held, among other things, that plaintiffs are not entitled to a presumption of reliance when they base their federal securities fraud allegations on both omissions and affirmative misrepresentations of material facts. The initial decision limited the presumption of reliance established by the United States Supreme Court in Affiliated Ute Citizens v. United States, 406 U.S. 128 (1972), to securities fraud cases based solely on omissions of material facts. In its modified opinion, the Ninth Circuit broadened application of the Affiliated Ute presumption of reliance by holding that it "should not be applied to cases that allege both misstatements and omissions unless the case can be characterized as one that primarily alleges omissions." As in its original opinion, the Ninth Circuit affirmed the district court's decision not to extend the presumption of reliance to plaintiffs on the facts alleged. *

Binder v. Gillespie, 172 F.3d 649 (9th Cir.), op. withdrawn and superceded, 184 F.3d 1059 (9th Cir. 1999).