Citation. Harris v. Ivax Corp., 182 F.3d 799, Fed. Sec. L. Rep. (CCH) P90,528, 12 Fla. L. Weekly Fed. C 1111 (11th Cir. Fla. July 27, 1999)
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Brief Fact Summary.
Ivax Corp. (Defendant) issued multiple press releases including forward-looking statements.
Synopsis of Rule of Law.
When the elements underlying a prediction or economic estimate include both suppositions and declarations of known fact, the complete list is regarded as a forward-looking statement.
In early August, Ivax Corp. issued a press release that mirrored optimism about the future while also recognizing business problems. On September 30, the final day of the quarter, in a press release Ivax broadcast that it anticipated a $43 billion loss. This press release included a list of elements that related to Ivax business affecting third quarter outcomes. The statement included forward looking statements and also factual ones. In early Novemeber, Ivax broadcast a multi-million dollar loss in the third quarter, over one hundred million of which was a decrease in the carrying value of the goodwill attributed to specific Ivax businesses. Neither of the previous press releases cited the probability of a goodwill meltdown. The price of Ivax stock plunged. Investors (Plaintiff) brought suit claiming Ivax press releases included deceitful statements. Investors representative of a class of recent buyers of Ivax stock sued for fraud and negligent misrepresentation. The district court dismissed the complaint.
Are mixed statements protected under the safe harbor provision for forward-looking statements?
(Cox, J.) Yes. Forward-looking statements are usually comprised of historical observation and assumptions regarding the future. Therefore, treating the mixed statement in the September 30 press release as a forward-statement is consistent with congressional objective to relax the â€œmuzzling effectâ€ of possible liability for forward-looking statements. This objective is at the core of the safe harbor stipulation. Affirmed.
The Private Securities Litigation Reform Act of 1995(PSLRA) attached the safe harbor stipulation for forward-looking statements to the Securities Exchange Act of 1934. The year after the PSLRA’s creation, there was a noticeable upsurge in the quantity of firms proffering financial predictions, with the largest increase among the chancier firms.