In Re FirstEnergy Corp. Securities Litigation: Where Macquarie Meets Affiliated Ute

The central question this Article seeks to address is whether there is any world in which the Affiliated Ute presumption can still apply to cases under Rule 10b-5(b) after the Supreme Court’s decision in Macquarie? Put differently, if only half-truths and affirmative misrepresentations remain actionable under Rule 10b-5(b), is the Basic presumption the only pathway left for securities plaintiffs? The U.S. Court of Appeals for the Sixth Circuit will likely be the first court to address this issue in In re FirstEnergy Corp. Securities Litigation. The case will test the availability of the Affiliated Ute presumption post-Macquarie in cases based on half-truths under Rule 10b-5(b).

If the Sixth Circuit affirms the decision of the lower court, it will drive a further wedge between it and other federal appellate courts—the majority of which have determined that only the Basic presumption can apply to cases based on half-truths. Those circuit courts have reasoned that the problems of proof that plagued plaintiffs in omissions cases do not apply in instances where the defendant has spoken, even if the statements are incomplete. The circuit split could prompt Supreme Court intervention to resolve the question of whether the Affiliated Ute presumption can apply to half-truth cases. Significantly, the answer to this question could signal a paradigmatic shift in the securities fraud class action landscape.