On an appeal from the district court’s dismissal of plaintiff’s securities fraud complaint, the U.S. Court of Appeals for the Second Circuit applied the “bespeaks caution” doctrine regarding forward-looking statements with differing results.

Plaintiff predicated its claim on two statements defendant made on the same day: a press release and a conference call, relating to a proposed favorable amendment to a key agreement defendant had with the U.S. Postal Service. Plaintiff alleged that defendant’s statements advised that an amendment was likely, and that defendant violated a duty to update the statements when it learned the amendment would not occur. In analyzing the statements, the court applied the “bespeaks caution” doctrine which renders certain forward-looking statements immaterial as a matter of law because “it cannot be said that any reasonable investor could consider them important in light of adequate cautionary language.”

The court ruled that the press release was non-actionable, but that the conference call could form a basis for securities fraud liability. The press release stated that the defendant believed it had reached an agreement in principle and anticipated the agreement would be completed shortly. In the conference call, the defendant stated that it hoped to have an agreement within weeks, that it had an agreement in principle and that it was “very confident” that the agreement would be signed “in the not too distant future.” The press release stated that there was “no guarantee” that agreement would be reached and thus the “bespeaks caution” doctrine insulated the statement from liability. However, in the conference call, the defendant indicated that the agreement was “imminent” and that in spite of boilerplate language warning that forward-looking statements were subject to risks and uncertainties, the defendant failed to adequately alert investors to the specific risk that the agreement would not materialize. (Illinois State Bd. of Investment v. Authentidate Holding Corp., 2010 WL 889294, No. 09 Civ. 1751 (2d Cir. 2010))