Broker-Dealer Litigation - Greenberg Traurig LLP

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Hopson v. MetroPCS Commc’ns, Inc., 2011 WL 1119727 (N.D. Tex. Mar. 25, 2011).
In a putative securities fraud class action, the district court granted defendants’ motion to
dismiss because the plaintiff class failed to adequately allege scienter. Defendants argued that
certain allegedly false and misleading statements were shielded from liability by the Private
Securities Litigation Reform Act of 1995’s safe harbor provision. Specifically, plaintiffs alleged
that defendants made false and misleading statements concerning earning guidance, the strength
of the defendant company’s business model, the impact of increased competition, and the
relationship between subscriber growth and churn. The court found that plaintiffs failed to
adequately allege scienter and, thus, had not established that defendants made any of the
forward-looking statements at issue with actual knowledge of their falsity. Accordingly, the
court found that the safe harbor would shield the forward-looking statements from liability and
granted defendants’ motion to dismiss.
Int’l Brotherhood of Elec. Workers Local 697 Pension Fund v. Ltd. Brands, Inc., 788 F. Supp.2d
609 (S.D. Ohio 2011).
In a securities fraud class action, the district court granted defendants’ motion to dismiss
claims related to an alleged scheme to mislead investors about development of a new system of
internet sales of defendants’ Victoria’s Secret brand. Plaintiffs alleged that defendants touted a
new distribution center and attendant technology as a key initiative that would increase sales but
failed to disclose known problems with the system that caused the company to abandon the new
platform. Defendants argued that some of the statements at issue were forward-looking
statements shielded from liability by the Private Securities Litigation Reform Act of 1995’s safe
harbor provisions or mere non-actionable corporate puffery. The court found that each of the
allegedly misleading and overly optimistic statements were couched as forward-looking and
accompanied by cautionary language which adequately disclosed specific risks associated with
the retail and fashion industry. Accordingly, the court found that the safe harbor applied and
granted defendants’ motion to dismiss with respect to the forward-looking statements at issue.
Garden City Employees’ Ret. Sys. v. Psychiatric Solutions, Inc., 2011 WL 1335803 (M.D. Tenn.
Mar. 31, 2011).
In a putative securities fraud class action, the district court denied defendants’ motion to
dismiss claims premised on alleged misstatements related to the defendant medical provider’s
performance, accounting, and compliance with regulatory rules in the wake of disclosure of
nationwide occurrences of patient harm, neglect, and sexual and physical violence. Plaintiffs
alleged that defendants engaged in a scheme to artificially inflate the company’s stock through
overly optimistic, false, and misleading statements in 10-Ks, press releases, and other public
statements by corporate representatives. Defendants asserted that many of the alleged
misstatements were “soft” statements of a nonfactual nature and/or forward-looking statements
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