Appeals Court Reverses Dismissal of Securities Complaint Against Harman

The U.S. Court of Appeals for the D.C. Circuit reversed a lower court’s dismissal of a class-action shareholder complaint that alleged senior Harman International management “knowingly and recklessly propped up” the company’s stock price by overinflating Harman’s personal navigational devices (PNDs) business to make Harman a more attractive acquisition target. The U.S. District Court in D.C. “dismissed the complaint for failure to state a claim,” concluding that Harman’s alleged statements “fell within the statutory safe harbor for forward-looking statements,” said the appeals court opinion Tuesday. But the appeals court ruled otherwise, saying the complaint, filed by municipal employee pension plans in Arkansas and Florida, “plausibly alleges that those statements were not entitled to safe harbor protection because the accompanying cautionary statements were misleading insofar as they failed to account for historical facts about PNDs that would have been important to a reasonable investor,” the opinion said. In reversing the complaint’s dismissal, the appeals court remanded the case to the district court for “further proceedings,” it said. Representatives of Harman and the pension plans didn’t comment.