The U.S. District Court for the Southern District of New York dismissed a class action complaint asserting, among others, claims under Section 10(b) of the Securities Exchange Act and Rule 10b-5 arising from the defendants’ allegedly false and misleading statements about its prospective earnings and problems with its travel-related businesses. With respect to the earnings projections, the Court found that because they were couched with “specific cautionary language” and accompanied by disclosures of various risk factors (including those most likely to cause actual results to vary from the projections), they were “inactionable” under the Private Securities Litigation Reform Act’s safe harbor exception for forward-looking statements and the “bespeaks caution” doctrine.

With respect to the disclosures regarding the health of defendants’ travel businesses, the Court ruled that plaintiffs failed to plead fraud with the particularity required by Fed.R.Civ.P. 9(b) and the PSLRA, which requires plaintiffs to demonstrate with specificity how and why allegedly false statements are fraudulent. For example, the Court found the Complaint to contain “no facts” to support the allegation that defendants affirmatively misrepresented the company’s lack of long-term contracts with airlines.

Similarly, the Court found the allegations of “bad business practices” relating to the defendant company’s relationships with its hotel suppliers – which allegations were based upon information attributed to anonymous former employees – to have been asserted “in the most general of terms” without any “names, dates, places or other information that might help the Court evaluate whether these employees were actually in a position to know” about the allegedly bad business practices. (In re IAC/InterActiveCorp Securities Litigation, No. 04 Civ. 7447 (RJH), 2007 WL 853021 (S.D.N.Y. Mar. 21, 2007))