Opinion ID: 760113
Heading Depth: 2
Heading Rank: 2

Heading: Duty To Correct And Duty To Update

Text: 34 Plaintiffs argue that even if IBM's statements were true when made, the company had a duty to correct the dividend statements at issue because its position on the dividend materially changed on November 25, 1992, when Metz revealed to representatives of the Michigan Pension Fund that IBM's dividend was, as appellants put it, vulnerable and likely to be cut. Defendants argue that Metz never stated that the dividend was likely to be cut and that he only said that he was personally less confident about the dividend. Because we are reviewing the district court's grant of summary judgment, we will assume that plaintiffs' allegations are true and presume that Metz made the challenged assertion. 35 Although plaintiffs phrase their claim as a duty to correct, we believe plaintiffs are alleging a violation of a duty to update. The duty to correct applies when a company makes a historical statement that at the time made, the company believed to be true, but as revealed by subsequently discovered information actually was not. Stransky v. Cummins Engine Co., 51 F.3d 1329, 1331 (7th Cir.1995). Thus, if and when a speaker learns that a prior statement was misleading when made, a duty to correct arises. Here, however, IBM's statements were not misleading when made and therefore we reject any claim by plaintiffs that IBM was under a duty to correct them. 36 A duty to update may exist when a statement, reasonable at the time it is made, becomes misleading because of a subsequent event. See Time Warner, 9 F.3d at 267; In re Burlington Coat Factory Secs. Litig., 114 F.3d 1410, 1431 (3d Cir.1997). However, there is no duty to update vague statements of optimism or expressions of opinion. See San Leandro, 75 F.3d at 811. There is also no need to update when the original statement was not forward looking and does not contain some factual representation that remains alive in the minds of investors as a continuing representation, see Burlington Coat Factory, 114 F.3d at 1432, or if the original statements are not material, see Hillson, 42 F.3d at 219. 37 The statements at issue here were not material and lack the sort of definite positive projections that might require later correction. Time Warner, 9 F.3d at 267; see also San Leandro, 75 F.3d at 811 (finding no duty to update subdued general comments of optimism). The challenged statements are vague expressions of opinion which are not sufficiently concrete, specific or material to impose a duty to update. 38 Further, these statements were true expressions of IBM's view at the time. On September 30, and October 15, 1992, IBM did not have a plan or need to alter the dividend. There was no representation of forward intent or any intimation that IBM would maintain its dividend indefinitely. Each statement was accompanied by qualifying language indicating that the speaker was only referring to the short term. As we discussed above, the September 30 statement explained that there was no short term problem and two of the October 15 statements indicated only that the company expected to cover its dividend in 1992 and maybe the first part of 1993. In light of the fact that IBM was fully able to cover its dividend at the stated level in the short term, the challenged statements remained precisely correct even though IBM subsequently cut its dividend in July 1993.