United States Sixth Circuit

In a class action suit alleging defendants failed to disclose that defendant-health care corporation was making illegal payments to a former state senator in violation of securities laws, dismissal of the complaint is affirmed where: 1) defendant's statements in its SEC filings were not material statements since they were "loosely optimistic" statements that were not the type to be relied on by investors; 2) defendant's failure to disclose the potential consequences of the payments to the senator was not actionable since the consequences of the failure to disclose turned on decisions made by actors outside of defendant's control; and 3) knowledge of the payments, the termination of an employee who subsequently filed a whistleblower action, and the potential for investigation, did not give rise to a "probability" of impairment under the GAAP in order to determine whether disclosure was necessary.

Appellate Information

• Decided 05/27/2008
• Published 05/27/2008

Judges

• Before:  COLE, GIBBONS, and ROGERS, Circuit Judges.

Court

• United States Sixth Circuit

Counsel

• For Appellees:
  
• ARGUED:  John M. Lambros, Law Office of John M. Lambros, New York, New York, for Appellants.  Laurie J. Michelson, Butzel Long, Detroit, Michigan, Richard E. Zuckerman, Honigman, Miller, Schwartz & Cohn, Detroit, Michigan, for Appellees.   ON BRIEF:  John M. Lambros, Law Office of John M. Lambros, New York, New York, for Appellants.  Laurie J. Michelson, David F. DuMouchel, Butzel Long, Detroit, Michigan, Michael Francis Smith, Butzel Long, Washington, D.C., Richard E. Zuckerman, Douglas Cory Salzenstein, Honigman, Miller, Schwartz & Cohn, Detroit, Michigan, Lara Fetsco Phillip, Honigman, Miller, Schwartz & Cohn, Bloomfield Hills, Michigan, for Appellees.