Broker-Dealer Litigation - Greenberg Traurig LLP

subject to protection under the Private Securities Litigation Reform Act of 1995’s safe harbor.
The court found that most of the alleged misstatements related to objectively verifiable facts and,
thus, were not forward-looking statements eligible for safe harbor protection. In addition, the
court found that plaintiffs adequately alleged that defendants knew the forward-looking
statements were false when they were made and, thus, even the forward-looking statements were
not protected by the safe harbor. Accordingly, the court denied defendants’ motion to dismiss.
Plumbers and Pipefitters Local Union No. 630 Pension-Annuity Trust Fund v. Allscripts-Misys
Healthcare Solutions, Inc., 778 F. Supp. 2d 858 (N.D. Ill. 2011).
In a putative securities fraud class action, the district court granted defendants’ motion to
dismiss claims related to allegedly false and misleading financial forecasts and statements
regarding implementation of new software developed by the defendant company. Defendants
argued that statements related to these issues were forward-looking and accompanied by
meaningful cautionary language which shielded them from liability under the Private Securities
Litigation Reform Act of 1995’s safe harbor provisions. Plaintiffs argued that defendants’
cautionary language was not meaningful because it was not specific enough and defendants’
allegedly knew that the risks they were warning about were actually occurring. The court
rejected the former argument because cautionary language in the defendant company’s
regulatory filings which was incorporated by reference into the statements at issue discussed at
length twenty-five separate business-specific risk factors, including the very risks plaintiffs
alleged had caused the company’s underperformance. The court rejected the latter argument
because it found that defendants’ state of mind was irrelevant to whether forward-looking
statements qualify for protection under the first prong of the safe harbor. Accordingly, the court
found that safe harbor protection was warranted and granted defendants’ motion to dismiss.
St. Lucie Cty. Fire Dist. Fire-Fighters’ Pension Trust Fund v. Motorola, Inc., 2011 WL 814932
(N.D. Ill. Feb. 28, 2011).
In a putative securities fraud class action, the district court granted defendants’ motion to
dismiss claims related to allegedly false and misleading earnings per share forecasts.
Specifically, plaintiffs alleged that defendants engaged in “channel stuffing” and made various
false and misleading statements regarding the company’s financial performance as a result.
Defendants argued that its earnings per share forecasts were accurate and, even if they were not
accurate, then they were forward-looking statements shielded from liability by the Private
Securities Litigation Reform Act of 1995’s safe harbor provisions. The court first noted that
defendants’ forecasts appeared to be accurate once special charges that were specifically
excluded from the forecasts were considered. Next, to the extent that the projections were false
because they did not include the special charges, the court found that cautionary language cited
by defendants rendered the projections inactionable under the safe harbor because the warnings
addressed plaintiffs’ particular allegations in individualized terms. Accordingly, the court
granted defendants’ motion to dismiss.
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