Court Opinion

ID: 9488475
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:46:54.561686+00
Date Added: 2024-06-11T17:52:55.158529
License: Public Domain

ROVNER, Circuit Judge,
dissenting in part.
I join the majority’s opinion in all but one respect. When Glasser and the other defendants represented in 1991 that they expected future disposition gains to remain “high,” they knew from the company’s internal budget that disposition gains were in fact projected to fall dramatically beginning in 1992. Searls v. Glasser, 1994 WL 523712, at *12 (N.D.Ill. Sept. 21, 1994). The district court thought that the representations were not misleading because even if the projected drop of $24 million in disposition gains between 1991 and 1992 were taken into account, “it would [still] be fair to characterize disposition gains as an important stream of income.” Id. In a somewhat similar vein, my colleagues reason that the term “high” is so vague that a reasonable investor would place no reliance on it. Ante at 1067-68.
Although I agree that in the abstract, the word “high” “is of no help to the investor,” (ante at 1067), placed in context I believe it reasonably connoted disposition gains akin to those the company had seen in prior years. GATX’s annual disposition gains had exceeded the $20-million mark for nearly a decade. Indeed, the company’s 1990 annual report (released in March, 1991) included a graph reflecting a steady increase in gains from just over $20 million in 1987 to just under $50 million in 1990. At these levels, disposition gains had come to represent a significant share of the company’s net income—nearly 40 percent in 1990. Against this backdrop, assurances that future gains would remain “high” suggests a continuation of the trend GATX had seen in recent years. Different investors, I agree, might come up with different numbers if pressed to predict exactly how “high” disposition gains would be in 1992—the figure might be above, level with, or even slightly below recent figures and still be consistent with the company’s prediction. But common sense suggests that few, if any, investors would anticipate from the company’s confident predictions the tumble to $14 million that GATX itself expected. Thus, I believe it mistaken to declare, as a matter of law, that the company’s projections amounted to no more than “loose predictions” (ante at 1067); that determination should have been left to a jury.
The majority also suggests that the record lacks sufficient evidence that the defendants either deliberately or recklessly misrepresented the level of future disposition gains, asserting that “plaintiffs’ argument attaches too much significance to the five-year budget.” Ante at 1067. On this point I disagree as well. Granted, in Panter v. Marshall Field & Co., 646 F.2d 271, 292-93 (7th Cir.), cert. denied, 454 U.S. 1092, 102 S.Ct. 658, 70 L.Ed.2d 631 (1981), a divided panel of this court found the earnings estimates contained in the defendant’s five-year plan too tentative to impose a duty to qualify the more rosy forecast which had been given to the public. But the internal projections at issue in Pan-ter were described by the court as “hastily updated,” “highly tentative,” and at odds with the forecast of the defendant’s own in*1070vestment bankers. Id. at 292. It is far from clear that GATX’s estimates of future disposition gains are of a like character. Indeed, when GATX finally disclosed the projected earnings decline in October of 1991, the first reason it cited for the drop was “fewer assets coming off lease which in turn will generate lower disposition gains.” The number of assets available for sale at the conclusion of their leased terms would seem to me to be a readily quantifiable figure rather than a vagary of the market-place. At the very least, the reliability of the company’s internal projections, and in turn the defendants’ scienter as to the more optimistic forecasts presented to the public, present a question for the jury to resolve. See Folger Adam Co. v. PMI Indus., Inc., 938 F.2d 1529, 1534-35 & n. 8 (2d Cir.), cert. denied, 502 U.S. 983, 112 S.Ct. 587, 116 L.Ed.2d 612 (1991).