The U.S. Supreme Court heard oral argument in the Emulex case this week. The question presented focused on the mental state for securities claims alleging a misstatement in connection with a tender offer under Section 14(e) of the Securities Exchange Act. While most circuits have found that the required mental state is scienter (i.e., fraudulent intent), the Ninth Circuit decision below concluded that a finding of negligence is sufficient. Much of the commentary, activity, and briefing in the case, however, was directed at a different issue. For many years, lower courts have found that there is an implied private right of action under Section 14(e). But is that correct under more recent Supreme Court precedents that have limited the creation of implied private rights of action? As highlighted at the oral argument, however, it is not clear that the Court will be willing to take on an issue that was barely raised below and not directly presented to the…
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