Why "Or" Really Means "Or": In Defense of the Plain Meaning of the Private Securities Litigation Reform Act's Safe Harbor Provision

Abstract

Structural features of the class action securities litigation system have allowed plaintiffs’ attorneys to extort settlements from risk-averse corporations. The Private Securities Litigation Reform Act (“PSLRA”) of 1995 attempted to address these structural failings by implementing wideranging reforms. Perhaps most significantly, the PSLRA created a safe harbor provision to immunize the type of statements typically used as ammunition in these frivolous litigations—forward-looking statements. The plain language of the safe harbor provision renders inactionable statements that are not made with actual knowledge of their falsity, or are accompanied by meaningful cautionary language. Although many courts have read this provision literally and thus determined that a forwardlooking statement is immunized if it meets either of these two prongs, a minority of courts have looked beyond the plain language and determined that a statement is only immunized if it meets both prongs of the provision. This Note argues that the text, legislative history, and conceptual framework of the safe harbor provision necessitate a literal reading of its text: “or” means “or.” Additionally, it counters the chief criticism of such an approach, specifically that a literal reading produces absurd or internally inconsistent results.