NU Online News Service, March. 25, 12:26 p.m.EDT

Management liability insurers may smell trouble ahead in thewake of two U.S. Supreme Court rulings delivered on Tuesday—oneincreasing securities litigation potential and the other easing theprocess of bringing certain types of employment cases.

In the securities case, Matrixx Initiatives, Inc., et al. v.Siracusano, the court unanimously upheld a Ninth Circuitdecision finding that investors appropriately pled a case againstMatrixx alleging they were misled.

At issue was the question of whether Matrixx, the maker of ZicamCold Remedy, has withheld reports of a possible link between theproduct’s use and anosmia—loss of smell.

The Supreme Court said the adverse effects reported did not haveto be “statistically significant” in number.

“The question is whether a reasonable investor wouldhave viewed the non-disclosed information as having significantlyaltered the ‘total mix’ of information made available,” JusticeSonia Sotomayor writes, citing the “total mix” requirement formateriality in a prior case (Basic Inc. v. Levinson,1988).

“Something more than the mere existence of adverse event reportsis needed to satisfy that standard, but that something more is notlimited to statistical significance and can come from the source,content, and context of the reports.”

She notes that Matrixx received reports from medical experts andresearchers that plausibly indicated a reliable causal link betweenZicam and anosmia.

“Consumers likely would have viewed Zicam’s risk assubstantially outweighing its benefit,” she writes, concluding thatreasonable investors might also alter their views with suchinformation.

In the employment case, Kasten v. Saint-Gobain PerformancePlastics Corp., the court held in a 6-2 ruling that anemployee could bring a lawsuit alleging an employer illegallyretaliated against him with a negative employment action—in thiscase dismissal—even though the complaint about a wage-and-hour lawviolation was oral rather than written.

The court considered the anti-retaliation provision of the FairLabor Standards Act. The provision forbids employers “to dischargeor in any other manner discriminate against any employee becausesuch employee has filed any complaint” alleging an FLSAviolation.

In the underlying case, Kasten had complained about the illegalplacement of time clocks at the plastics company where he worked.In particular, he told his shift supervisor, the human resourcesmanager and others that the location of the clocks—between the areawhere workers put on and took off work-related protective gear andthe area where they carried out their assigned tasks—meant theywere not receiving credit for the time they spent donning anddoffing this gear, which would be a violation of the FLSA.

“Several functional considerations indicate that Congressintended the anti-retaliation provision to cover oral, as well aswritten, complaints,” writes Justice Stephen Breyer for themajority.

The Act’s anti-retaliation provision makes the enforcementscheme effective by preventing “fear of economic retaliation frominducing workers ‘quietly to accept substandard conditions,’” hewrites, quoting from a 1996 case (Mitchell v. Robert DeMarioJewelry, Inc.).

“Why would Congress want to limit the enforcement scheme’seffectiveness by inhibiting use of the Act’s complaint procedure bythose who would find it difficult to reduce their complaints towriting, particularly the illiterate, less educated, or overworkedworkers who were most in need of the Act’s help at the time ofpassage,” he writes.

“Limiting the provision’s scope to written complaints couldprevent Government agencies from using hotlines, interviews, andother oral methods to receive complaints.”