Broker-Dealer Litigation - Greenberg Traurig LLP

actual data collected by defendants was not forward-looking. Thus, the court found that the
alleged misstatements at issue dealt with verifiable facts and neither the safe harbor nor the
bespeaks caution doctrine applied. Accordingly, the court denied defendants’ motion to dismiss
with respect to these alleged misstatements.
In re Conventry Healthcare, Inc. Sec. Litig., 2011 WL 1230998 (D. Md. Mar. 30, 2011).
The district court denied defendants’ motion to dismiss a consolidated securities fraud
class action premised upon the healthcare insurance company’s purported failure to disclose
difficulty in processing claims under a new plan which expanded providers for Medicare-eligible
customers. Defendants argued that the statement that they were “pleased to confirm [their]
businesses continue[d] to perform well [“and were”] fundamentally sound” was a forwardlooking
statement shielded from liability by the Private Securities Litigation Reform Act of
1995’s safe harbor. The court noted that it could construe this statement as mere puffery or an
inactionable statement of future economic performance. However, the statement was not
accompanied by any cautionary language and plaintiffs had adequately alleged that when this
statement was made defendants knew about certain claims processing problems that were
expected to negatively impact their business. Defendants had also failed to disclose the risks
associated with the claims processing issue in their regulatory filings and, thus, reference to
cautionary language contained in their filings was inadequate to warn investors about the risks at
issue. Accordingly, the court found that the safe harbor did not apply and denied defendants’
motion to dismiss.
City of Ann Arbor Employees’ Ret. Sys. v. Sonoco Prod. Co., 2011 WL 5041367 (D.S.C. Oct. 19,
2011).
In a putative securities fraud class action, the district court denied defendants’ motion for
summary judgment with respect to claims that defendants attempted to hide declining revenue by
artificially inflating projected productivity gains to offset losses. Defendants argued that their
revenue forecasts were forward-looking statements shielded from liability by the Private
Securities Litigation Reform Act of 1995’s safe harbor. The court held that a genuine issue of
material fact existed regarding whether cautionary language cited by defendants was sufficiently
meaningful in light of evidence proffered by the plaintiff that defendants knew price concessions
and lost customers were negatively impacting their projections but failed to warn investors. The
court further held that a factual dispute existed with respect to whether the defendants knew the
forecasts were false when they were made, as evidenced by defendants’ use of estimated
productivity gains that exceeded prior productivity gains. Accordingly, the court denied
defendants’ motion for summary judgment.
D.3
D.3
198