Asher v. Baxter International, Inc. (United States Supreme Court) 

NELF joined with two other amici—the American Society of Corporate Secretaries and the National Investor Relations Group—in support of the petition for certiorari that Baxter International, Incorporated (“Baxter’) filed seeking review of a recent decision by the Seventh Circuit. In amici’s view the Court of Appeals had eviscerated the “safe harbor” provision of the Public Securities Litigation Reform Act of 1995 (“PSLRA”). That provision requires dismissal, before any discovery is permitted, of a lawsuit based on forward-looking business projections, so long as the projections were identified as forward looking and were accompanied by “meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statements.” 15 U.S.C. § 77Z-2(c)(1)(A)(i). The “safe harbor” does not require that the issuer list all factors that might affect its actual results or even the factors that actually affected the results; nor does the safe harbor provision permit inquiry into the issuer’s intent. Nevertheless, in this putative securities class-action the Court of Appeals denied Baxter’s motion to dismiss and allowed discovery to proceed to determine whether, as plaintiffs allege, Baxter had omitted actual major risks contained in its internal estimates from the cautionary language that accompanied its projections. It was the amici’s position that, in effect, the Seventh Circuit’s decision erroneously injects an examination of the issuer’s intent into the safe harbor analysis. In March, 2005, the Supreme Court denied Baxter’s petition for certiorari in this matter.