Searching For A Safe Harbor

Although a few execs wiggled out on their motions to dismiss, Plaintiffs can claim victory in the Washington Mutual securities class action. Lots to read here, but if you’re looking for an in-depth analysis of the safe harbor defense, Judge John C. Coughenour (W.D. Wash.) has written just the opinion for you. In it, Judge Coughenour uncovers what he believes could be “possibly the most important way in which the safe harbor is curtailed.” How? He offers the observation that “the PSLRA safe harbor operates in a way similar to hearsay rules, which forbid the admission of certain statements for the truth of the matter asserted, but allow those statements to be admitted for their corollary value.” This results in the possibility that “a single statement may communicate many different meanings, some of which may render the statement actionable.”

You can read South Ferry v. Washington Mutual, issued November 17, 2005, at 2005 U.S. Dist. LEXIS 29390.

Nugget: “The question of whether statements actionable as representations of current expectations are also actionable in their capacity as forward-looking statements must be answered through a full safe harbor analysis.”