Has Congress Learned Its Lesson? A Plain Meaning Analysis of the Private Securities Litigation Reform Act of 1995
Spencer, Steven J, St. John's Law Review
In the first congressional override of an executive veto since President Clinton took office,1 the 104th Congress officially enacted the Private Securities Litigation Reform Act of 1995 2 ("PSLRA" or "Act") on December 22, 1995.3 Criticism and support of the PSLRA are widespread. Some commentators consider the Act to be the "most comprehensive revision of private litigation under the federal securities laws since the New Deal."4 Others contend that it is little more than a fragile attempt by Congress to enact some measure of tort reform.5
The Joint Conference Committee ("Committee" or "Conference Committee") issued a report ("Conference Report") regarding the PSLRA, stating that the Act's general purpose was to curb perceived abuses in the area of private securities litigation.6 Specifically, the PSLRA was designed to discourage "serious injuries to innocent parties" including frivolous litigation, targeting of deep-pocket defendants, abuse of discovery, and manipulation of clients by class action lawyers.7 In an attempt to effect reform, Congress amended two fundamental pieces of securities legislation: the Securities Act of 1933 8 ("1933 Act") and the Securities Exchange Act of 1934 9 ("1934 Act").
The changes incorporated into federal securities law by the PSLRA, most notably a safe harbor for forward-looking statements,10 are intended to encourage companies to disclose information by limiting the rights of private parties to bring suit. By establishing a safe harbor, Congress enables those companies which meet the statutory criteria to escape potential private causes of action arising from forward-looking statements.
In its Conference Report, the Conference Committee extensively sets forth its legislative intent and its desired judicial interpretation. Whether the Committee's purposes and goals will be realized, however, has yet to be determined. It is unlikely that the Committee's lengthy explanation in its Conference Report will have the force intended, given the evolving trend of the United States Supreme Court to place primary emphasis on the language of a statute, all but ignoring legislative history and intent.11 Additionally, since the Act applies only to private lawsuits and does not cover actions initiated by the Securities and Exchange Commission ("SEC"), the Act will ultimately do little to encourage disclosure.12
This Note will use the PSLRA's safe harbor to illustrate13 how the Act, or at least the Conference Committee's stated intent, falls apart upon critical examination. Part I will consider the evolution of the Supreme Court's tendency to utilize a plain meaning approach when interpreting securities statutes. Part II will explore the Committee's explanation and intended interpretation of the changes which the PSLRA made to the 1933 and 1934 Acts, focusing on the safe harbor provisions. Part III will discuss the apparent ambiguities and problems with the PSLRA's safe harbor.
I. SUPREME COURT INTERPRETATION OF SECURITIES LAWS
In a movement championed by the "intellectually aggressive" Justice Antonin Scalia of the United States Supreme Court, the Court has been reconsidering the role of legislative history in statutory interpretation.14 Early in his tenure on the Court, Justice Scalia made it clear that he was a staunch supporter of the plain meaning approach to statutory interpretation when he refused to join a Court opinion because he felt it contained an irrelevant discussion of legislative history.15 Justice Scalia wrote, "th[e] doctrine [that a statute's plain meaning is less significant than legislative history] ... is to my mind an ill-advised deviation from the venerable principle that if the language of a statute is clear, that language must be given effect-at least in the absence of a patent absurdity."16
Justice Scalia's position on statutory interpretation, dubbed "the new textualism," suggests that the legislative history of a particular statute is immaterial when its language is clear and the Court has discerned its plain meaning.17 To emphasize a committee report, floor debate, or hearing testimony over the text of a statute elevates the view of a congressional subgroup above that of the entire Congress, which presumably voted not on the basis of a committee report, but rather on each member's "plain" interpretation of the statutory text.18 The new textualism approach suggests that courts interpret a statute through the use of accepted definitions, grammatical rules, statutory construction, related statutory provisions, and judicial canons.19
The idea that one universal "plain" meaning could exist in a statute if Congress would clearly draft securities legislation is an attractive one. Such an approach to statutory interpretation, however, incorporates numerous assumptions which, in turn, would require subsequent interpretation.
The problem with plain meaning interpretation is that meaning is seldom plain. As Justice Oliver Wendell Holmes once opined, "[a] word is not a crystal, transparent and unchanged, it is the skin of a living thought and may vary greatly in color and content according to the circumstances and the time in which it is used."20 For example, what is the accepted definition of a given word? Accepted by whom? If one concludes that the dictionary is the best place to look for a definition, the question remains which of the dictionary's several definitions to employ. The meaning of a given word may vary greatly, not only in general usage, but more so in a complicated statute that uses the word as a term of art. Should courts look for a word's meaning when the statute was enacted or when a case is litigated? Context may also be highly relevant. A word's meaning may not be plain without considering the context, and yet contextual analysis can lead a court to analyze the very materials that the plain meaning approach to statutory interpretation seeks to avoid.21 Similarly, judicial canons22 and rules of statutory construction tend to fall in and out of favor. When is a given rule or canon no longer appropriate? Interpretation utilizing related statutory provisions does not adequately address the issues of how to determine when a particular provision is actually related, and whether the prior interpretation of the plain meaning was correct. On a broader scale, the new textualism approach necessarily presumes that members of Congress, individually or collectively, weigh such considerations more than they would a committee report or a floor debate before voting on a given bill. For better or worse, because of Justice Scalia's staunch support of the plain meaning rule,23 the Court apparently has adopted it as the predominant method of interpreting securities laws.24
Beginning well before Justice Scalia joined the Court, and culminating in the 1994 decision of Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A.,25 the Court migrated toward a policy of strictly construing the federal securities laws.26 During this twenty year period, the Court began to focus on statutory language by criticizing all implied rights of action, refusing to recognize new implied rights of action, and restricting old implied rights of action.27
In Central Bank, the Court seized the opportunity to solidify further its policy of strictly interpreting securities legislation. In a five to four ruling that rejected decisions in nearly every circuit,28 the Court held that liability under section 10(b) of the 1934 Act does not extend to private causes of action against those who aid and abet a primary violation of section 10(b).29 Writing for the majority, Justice Kennedy30 determined that "the text of the statute controls [the Court's] decision."31
After determining that the text of the 1934 Act does not cover one who aids and abets a violation, the Court concluded that such a determination was sufficient to resolve the case.32 The Court wrote, "[i]t is inconsistent with settled methodology ... to extend liability beyond the scope of conduct prohibited by the statutory text."33 Evidently, the Court chose not to consider the legislative history surrounding the 1934 Act.
After establishing that the statutory language controls, however, the Court did in fact discuss legislative history, in part discrediting it, and in part explaining how the Court would have reached the same result had legislative history been a factor.34 Not surprisingly, the Court's explanation traces back to a Scalia dissent:
It does not follow ... that Congress' failure to overturn a statutory precedent is reason for this Court to adhere to it. It is `impossible to assert with any degree of assurance that congressional failure to act represents' affirmative congressional approval of the [courts'] statutory interpretation.... Congress may legislate, moreover, only through the passage of a bill which is approved by both Houses and signed by the President.... Congressional inaction cannot amend a duly enacted statute."35
The Court then cited precedent downplaying the role of inferences made from Congressional silence.36
The Court in Central Bank not only condemned the practice of legislative interpretation by subsequent Congresses,37 but also that of the production by Congress of a documented legislative history to accompany each bill.38 Critics of such an approach find it "confining" and claim that a complete disregard of legislative history "ignores the realities of the political process."39 Perhaps the ultimate goal of plain meaning interpretation is to teach Congress a lesson. By repeatedly interpreting statutes according to the generally accepted meaning of their words, the Court might "teach" Congress to compose its legislation carefully, covering various possibilities of potential conflict that may arise under each statute.40 In theory, such a lesson would be ideal for Congress to learn.
The Supreme Court's strong pronouncement in favor of strict statutory interpretation in the securities context suggests that the Court will give little weight to the lengthy Conference Report which accompanied the PSLRA. Adherence to the Central Bank rationale dictates that once a court determines that the legislation's text resolves the issue, any consideration of the legislative history would be unnecessary and improper, especially where the language is neither ambiguous nor patently absurd.41
Upon examining the text of the Act, various ambiguities and potential problems become apparent. Even proponents of the plain meaning approach recognize that when the text of a statute is vague or absurd on its face, it may be appropriate to consider legislative history.42 Unfortunately, resorting to the Conference Report to interpret the PSLRA is similar to resorting to a faulty dictionary to define a word. The Committee's proffered intent often differs significantly from the statute as written.
II. SAFE HARBOR PROVISION OF THE PRIVATE SECURITIES LITIGATION REFORM ACT: AN OVERVIEW
When the Private Securities Litigation Reform Act of 1995 became law on December 22, 1995, some attorneys believed the Act would have an immediate, profound impact on the daily workings of securities law. 43 Ultimately, however, such a prediction will be dissipated by the fact that the Act is a mere conglomeration of diverse measures, each reflecting concerns of various, often conflicting, constituencies.44 For illustrative purposes, this Note focuses on the safe harbor provisions for forward-looking statements,45 arguably the most important change to the federal securities laws,46 and the subject of most of the final legislative debate.47
The statutory safe harbor for forward-looking statements amends the securities law by adding a new section 27A to the 1933 Act and a new section 21E to the 1934 Act.48The Conference Committee maintains that the safe harbor provision helps to preserve the integrity of private securities litigation. Whether truly an epidemic or merely a conglomeration of one-sided anecdotal evidence, the threat of abusive securities litigation and fear of open-ended liability may have discouraged issuers from disseminating critical market information needed by investors to make educated business decisions. Alleged abusive practices which the Committee suggests Congress was responding to include:
(1) the routine filing of lawsuits against issuers of securities and others whenever there is a significant change in an issuer's stock price, without regard to any underlying culpability of the issuer, and with only faint hope that the discovery process might lead eventually to some plausible cause of action; (2) the targeting of deep pocket defendants, including accountants, underwriters, and individuals who may be covered by insurance, without regard to their actual culpability; (3) the abuse of the discovery process to impose costs so burdensome that it is often economical for the victimized party to settle; and (4) the manipulation by class action lawyers of the clients whom they purportedly represent.49
The Conference Committee posited that the PSLRA would have broad effects. Most notably, the Committee maintained that the Act would protect both investors and issuers from abusive securities litigation.50 In addition, it claimed that the PSLRA restricts liability to those individuals who knowingly violate securities laws and cause damage.51 This new protection afforded by the PSLRA to non-knowing individuals might encourage companies to provide more forward-looking information upon which investors may rely. Before disseminating any new information, however, an issuing company must first determine whether the disclosure would be encompassed by the Act. If so, the safe harbor protects the company from suit by private individuals.
First and foremost, the Act applies only to a "forwardlooking statement."52 To fit within the statutorily defined term of art, a statement must contain one of the following items: (1) a projection of revenues, income, earnings per share, or other forms of financial items; (2) management's future plans and objectives for operations; (3) future economic performance; (4) assumptions underlying or relating to the above; (5) a report from an outside reviewer assessing a forward-looking statement; or (6) some other projection or estimate that the SEC may later specify.53 After satisfying the definition of a forward-looking statement, however, the issuer or related individual54 must still overcome several hurdles in order to escape potential liability.
The identity of the speaker is necessary to determine if the forward-looking statement is covered by the Act. An individual who makes a forward-looking statement must either be an issuer subject to the reporting requirements of section 13(a) or section 15(d) of the 1934 Act, someone acting on behalf of the issuer (i.e. an officer, director, or employee), an outside reviewer retained by the issuer making a statement on the issuer's behalf, or an underwriter with respect to information provided either directly or indirectly by the issuer.55
The safe harbor also has certain exclusions. It does not apply to forward-looking statements made in conjunction with particular documents, including certified financial statements prepared in accordance with generally accepted accounting principles, initial public offering registration statements, and beneficial ownership filings.56 Further, the safe harbor is not applicable to forward-looking statements issued in connection with several types of transactions including tender offers, roll-up transactions, and going private transactions.57 Lastly, if the issuer has been convicted of securities fraud or the subject of an SEC administrative order within the three years prior to the statement, such statement is not covered by the Act.58
After avoiding the numerous exclusions, a forward-looking statement must then fit within one of two prongs of the Act's bifurcated analysis: "(A) the forward-looking statement is ... [identified and] accompanied by meaningful cautionary statements ... or ... [is] immaterial; or (B) the plaintiff fails to prove that the forward-looking statement ... was made with actual knowledge ... that the statement was false or misleading."59 If either prong is satisfied, the maker of the statement is protected from private litigation under both the 1933 Act and the 1934 Act.60 Such a flexible safe harbor was designed to cover a broad class of issuers who seek to take advantage of the safe harbor's protection.61 This statutory protection, however, may actually create numerous problems and extensive litigation, as discussed below.62
The first prong protects the maker of a written or oral"3 forward-looking statement from private liability when the statement is "immaterial," or is identified as forward-looking and is accompanied by "meaningful cautionary statements identifying important factors that could cause actual results to differ materially" from those predicted in the statement.64 The Conference Committee maintains that under this prong, mere "boilerplate warnings will not suffice."65 A meaningful cautionary statement, according to the Committee, is one which conveys substantive information regarding factors that "realistically could cause results to differ materially from those projected."66 The Committee classifies as "important" those factors that are relevant to the projections and that are of such a nature that they could affect whether those projections do in fact occur.67
The Committee notes that while it expects cautionary statements to identify important factors that could cause materially different results from those predicted, it does not intend the Act to require identification of all such factors.68 Thus, a cautionary statement is not removed from safe harbor protection merely because it fails to identify the particular factor which ultimately prevents the statement from reaching its projected result.69 Additionally, the first prong makes no mention of the issuer's intent. Therefore, the Committee maintains that a court may decide a motion to dismiss by considering the cautionary statement and the forward-looking statement without considering the defendant's state of mind.70 Further, an immaterial forward-looking statement is not actionable.71
Alternatively, the forward-looking statement may fall within the second prong, which requires courts to consider the state of mind of its maker.72 This "actual knowledge" prong protects the speaker from liability if the plaintiff does not meet the burden of proving that the statement was made with actual knowledge that it was false or misleading.73 The Act also provides that when a statement is made by a business entity, the plaintiff must prove that the statement was made by or with the approval of an executive officer of the entity, and that such executive officer had actual knowledge that the statement was false or misleading.74 Significantly, the Committee also notes that the Act itself provides no duty to update forward-looking statements.75
III. A PLAIN MEANING APPROACH-AMBIGUITIES AND POTENTIAL PROBLEMS
If the Supreme Court has been trying to teach Congress a lesson, it has all but been ignored. The PSLRA is far from being a clear expression of legislation drafted in such a way that the reader may employ common definitions to understand the Act. 76 The Conference Report, if it accurately reflects Congress' intent, is at times inconsistent with the Act itself. Remaining focused on the safe harbor, the Act leaves open several important questions which, if answered according to the Supreme Court's trend in statutory interpretation, may have significantly different results from those which the Committee stated that it intended.
Even President Clinton, in his veto message, indicated his support for the language of the Act creating the safe harbor, but not for the explanation given to the provision by the Conference Committee.77 Without pin-pointing a specific section, the President indicated that the Conference Report weakened the cautionary language required for a forward-looking statement to be protected by the safe harbor.78 President Clinton's concerns may prove to be unwarranted. If lower courts and, ultimately, the Supreme Court continue the trend of strictly interpreting securities legislation, the Committee's language will prove to be mere surplusage.
The application of a plain meaning analysis to the PSLRA highlights certain important ambiguities. Most notably, the Act calls for "meaningful" disclosure of "important" factors.79 Included within the safe harbor are statements identified as forward-looking and accompanied by meaningful cautionary language.80 The Act is unclear as to whether the speaker must identify the factors that are most likely to cause actual results to differ from projected ones, or if it is enough that only some "important" factors are identified.81 Between these alternatives lies an enormous range of possibilities yet to be determined. Absent further guidance, a company will undertake great risk by testing the waters of the safe harbor. Over time, either through a series of litigation or through SEC promulgated rules, a standard will likely develop defining what is "important" and how much of this "important" information must be disclosed. For the moment, one can only hypothesize, and would be wise to proceed with caution in relying upon anything more than a conservative interpretation.
For the brave issuers willing to risk possible private liability, ample space exists to remain arguably within the safe harbor. A strict examination of the statutory language of this first prong suggests that an issuer potentially could retain its protected status by disclosing only a few of several important factors that could cause a material difference between the actual and predicted results.82 Even deliberate omission of one or more important factors appears not to subject the issuer to private liability, since some important factors would still be identified, just not all of them.83 Apparently, an issuer could even omit the most likely factors and still be protected, provided that the factors which the issuer does state are important.84
Similarly, the Act does not explicitly require that the issuer identify the factor which ultimately causes a material difference between projected and actual results.85 This is reasonable, since when a company makes a forward-looking statement it often will not know what later will become the ultimate causing factor. The ultimate causing factor of a material difference, however, would seem to fit well within the common definition of the word "important." In such a case, the causing factor would be important and yet, as discussed above, since not all important factors need be identified, the issuer could still deliberately fail to disclose even a known causing factor. Upon engaging in such analysis, one begins to see how the Act's plain meaning is not so plain.
To complicate matters further, a cautionary statement may not be "meaningful," as the word is commonly defined, if the statement does not include the ultimate causing factor or at least the most likely factors. Also unclear under the Act is the result of identifying a factor in the forward-looking statement, but not mentioning that its potential risk is known to be substantial.86 The Act seemingly affords safe harbor protection to the mere mention of a known substantial risk. What actually constitutes meaningful disclosure of important factors remains uncertain, particularly since the trend of the Supreme Court is to give little or no weight to the Conference Committee's stated intentions absent ambiguity or absurdity in the legislation. Such an atmosphere of uncertainty is not likely to encourage companies to disclose information. As long as this uncertainty remains, a company risks exposing itself to liability by releasing information in reliance on the Act.
Additionally, the Committee indicates that under the first prong, courts should consider the cautionary statement, but not the state of mind of the person making the statement.87 A plain meaning analysis, however, reveals that there is no textual basis in the Act for the Committee's assertion. Contrary to the Conference Report, an examination of the issuer's state of mind may be needed in order to determine whether the first prong's requirements are met.88 Depending on the interpretation of the words "important" and "immaterial," the issuer's state of mind at the time of the statement could be considered relevant to whether the cautionary statement was actually meaningful. No basis exists, therefore, for the Committee's claim that courts should not examine it.89
Further ambiguity arises when an issuer learns that information provided when the forward-looking statement was made, though correct at the time, has subsequently become incorrect.90 There is no duty under the PSLRA to update a forward-looking statement.91 A close reading of this language indicates that the Act does not declare that there is no duty to update but, instead, that the Act itself does not impose such a duty where one is not otherwise present. In addition, the Act does not prohibit such a duty from being imposed by other applicable law.92
A similar question which arises is whether an issuer must correct a forward-looking statement that the issuer later learns was false when made. A distinction could be raised between "updating" a statement and "correcting" it, where updating would refer to a statement correct when made, and correcting would refer to a statement that was false when made. The Act does not specifically address correcting a previously issued statement. Therefore, it appears that while the Act imposes no duty to update a forward-looking statement, liability may arise for failure to correct it.
Pursuant to the second prong of the safe harbor, an issuer who is a natural person is protected if the plaintiff fails to prove that the issuer made the forward-looking statement with actual knowledge that it was false or misleading.93 Where the issuer is an entity, the plaintiff must prove that the statement was made by or with approval of an executive who had actual knowledge that the statement was false or misleading.94 The Act is ambiguous as to the consequences of releasing a forward-looking statement on behalf of a corporation when the speaker does not have appropriate approval.95 Under the plain meaning of the Act, there appears to be no duty to correct the unapproved statement. It appears that the safe harbor would still apply to a statement which is known by the entity to be false. The same result appears likely for a projection made by a natural person which the person later learns was false when made. Since the plaintiff could not prove that the statement was made with actual knowledge that it was false or misleading, the statement would remain protected.
B. Potential Problems
In addition to the numerous ambiguities which arise from a plain meaning analysis of the Act, two potential problems are readily apparent. 96 In no unequivocal terms, the PSLRA allows individuals to disseminate information they know to be false by surrounding such information with cautionary language. Additionally, the Act allows individuals to escape liability by avoiding actual knowledge of the truth or falsity of forward-looking statements, even in the absence of cautionary language.
A significant problem arising from a plain meaning examination of the Act is that it creates what some experts have called a "license to lie."97 Strict interpretation of the safe harbor provision shows its two prongs to be set forth in the disjunctive. A forward-looking statement is protected either if it is accompanied by meaningful cautionary statements or if the plaintiff fails to prove that the statement was made with actual knowledge that it was false or misleading.98 Consequently, a forward-looking statement that is known to be untrue can be protected under the safe harbor by the presence of cautionary language. This does little to encourage public investment in a company, for any statement accompanied by statutorily sufficient cautionary language might be a blatant lie, and yet remain protected by the safe harbor.99
Even if a court considered the section ambiguous or absurd, and found it appropriate to consider legislative history, the Conference Committee itself emphasizes that the two prongs are set forth in the disjunctive.100 It further states definitively that, "[f]orward-looking statements will have safe harbor protection if they are accompanied by a meaningful cautionary statement."101 The Committee then claims, however, that a cautionary statement is not covered by the safe harbor if it misstates historical facts."102 The Act's language does not support the Committee's last assertion, for it appears to provide companies with a license to lie even in the form of a misstatement, so long as the lie is accompanied by cautionary statements. Perhaps this is just a distinction made between historical facts and forward-looking statements. More likely, however, the Committee is attempting to put its own spin on the statutory language. If the Court remains true to its plain meaning approach, it will ignore the Committee's pronouncement. Either way, a license to lie still exists as a result of the Act's disjunctive phrasing of the two prongs. When an issuer can receive safe harbor protection for an outright lie, any disclosure is far from meaningful. Another potential problem arises from the safe harbor's actual knowledge requirement.103 Examining the language of the second prong, which can apply even when no cautionary language accompanies a forward-looking statement, shows that the statement still receives safe harbor protection if the plaintiff does not prove that the statement was made with actual knowledge that it was false or misleading. Note, further, that the burden is placed upon the private plaintiff to prove actual knowledge by the company.104 Thus, under this prong, the required level of culpability is not recklessness but, rather, the heightened standard of actual knowledge.105 In all practicality, meeting such a burden can be nearly impossible, given the likelihood of an uncooperative defendant.
While the Act itself does not define or specifically adopt another definition of actual knowledge, this level of culpability is clearly quite high. Accordingly, even in the absence of cautionary language, a recklessly issued forward-looking statement is protected from private liability by this second prong. Potentially liable company representatives might, therefore, make efforts to shield themselves from liability by purposefully remaining ignorant regarding specific instances of false statements.
The language of the safe harbor provision of the Private Securities Litigation Reform Act of 1995 exemplifies the Act's imprecise, ambiguous, and problematic nature. One thing which is clear from the Act is that Congress has not learned the lesson that the Supreme Court has repeatedly tried to teach. The Court has routinely relied on strict interpretation of securities laws, each time conveying a message to Congress that its language should be clear and conform to commonly accepted definitions. Only where the text is ambiguous or absurd may a court turn to legislative history for guidance. Unfortunately, the Conference report is of little use, as it often differs significantly from the text of the Act.
The Court fails to realize the near impossibility of trying to teach Congress such a lesson. The Act will result in uncertainty and litigation rather than an immediate, effective, and substantive reform of securities law. Lower courts will be burdened with resolving the uncertainties and framing their opinions according to their respective views as to what is "plainly" set forth in the Act. Potential private plaintiffs will lose at least some right to bring an otherwise valid action. Companies will be able to shield themselves from liability by exploiting the license to lie and actual knowledge provisions of the safe harbor which likely result from a plain meaning interpretation of the Act. Whether Congress will finally learn its lesson remains to be seen.
Steven J. Spencer
1 See Francis J. Menton, Jr. & Elizabeth S. Stong, Evaluating Claims Under Reform Act, N.Y. L.J., Jan. 4, 1996, at 5. 2 Pub. L. No.104-67,109 Stat. 737 (1995).
3 The House of Representatives initially passed the legislation by a vote of 320 to 102. See 141 CONG. REC. D1423-01, at H14055 (1995). The Senate's initial vote was 65 to 30. See 141 CONG. REC. D1415-01, at S18035-36 (1995). The House voted 319 to 100 on December 20, 1995. On December 22, 1995, the Senate voted 68 to 30 to override President Clinton's December 19, 1995 veto. See Anne Elsele, Litigation Bill Override Hailed But Not by All, NEw TECH. WEEK, Jan. 2, 1996; Legislative Status Report, 315 BOND BUYER 29811, Jan. 8, 1996.
4 Harvey L. Pitt & Karl A. Groskaufmanis, Securities Reform Act Offers Limited Safe Harbor, NAT'L L.J., Jan. 15, 1996, at B4.
5 See Nickie McWhirter, Tort Reform Symbolizes Special Interest Influence, DETROIT NEWS, Apr. 2, 1996, at A7 ("Promises made; promises kept! Never mind the quality of the product."); Andrew Rainer, Private Securities Litigation Reform Act A Step in the Wrong Direction, MASS. L. WKLY., Mar. 25, 1996, at B8 (labeling
Act "a distinct step in wrong direction"); Benjamin J. Stein, Tort Reform.' Is a License to Steal, N.Y. TIMES, July 30, 1995, sec 4, at 15 ("The supposed rationale for these measures is absurd."); see also Industry Hails Veto Override, Consumer Groups, Others Opposed, B.N.A. SEC. L. DAILY, Dec. 28, 1995 (mentioning original version of PSLRA as part of Contract With America).
6 H.R. CONF. REP. NO. 104-369, at 31 (1995), reprinted in 1995 U.S.C.C.A.N. 730, 730.
8 15 U.S.C. sec 77a et. seq. (1994 dc Supp. 1995). 9 15 U.S.C. sec 78a et. seq. (1994 & Supp. 1995). 10 15 U.S.C. sec 77z-2 (1994 & Supp. 1995).
11 See infra note 27 (discussing Supreme Court's trend in securities statutory interpretation).
12 See infra note 84 and accompanying text (discussing failure of Act to encour
age meaningful disclosure).
13 Arguably, the safe harbor is also the most significant provision of the PSLRA. See infra notes 46-48 and accompanying text (discussing Act's most notable provisions).
14 See William N. Eskridge, Jr., The New Textualism, 37 UCLA L. REV. 621, 624 (1990) [hereinafter Eskridge, New Textualism]; see also Richard J. Pierce, Jr., The Supreme Court's New Hypertextualism: An Invitation to Cacophony and Incoherence in the Administrative State, 95 COLUM. L. REV. 749, 750 (1995) (noting change in Court's approach to statutory construction in favor of textualism).
15 See Immigration & Naturalization Serv. v. Cardoza-Fonseca, 480 U.S. 421, 453 (1987) (Scalia, J., concurring) ("[W]e are not free to replace [the clear language of the legislature] with an unenacted legislative intent."); Eskridge, New Textualism, supra note 14, at 623. Justice Scalia's position on statutory interpretation can be traced to his pre-Supreme Court opinions. See Richard Nagareda, Comment, The Appellate Jurisprudence of Justice Antonin Scalia, 54 U. CHI. L. REV. 705, 720-26 (1987).
16 Cardoza-Fonseca, 480 U.S. at 452 (Scalia, J., concurring) (citations omitted).
17 See Eskridge, New Textualism, supra note 14, at 623-24 (discussing Scalia and theory of new textualism).
18 See Eskridge, New Textualism, supra note 14, at 654. According to Justice Scalia, legislative history is a "frail substitute for bicameral vote upon the text of a law .... It is at best dangerous to assume that all the necessary participants in the law-enactment process are acting upon the same unexpressed assumptions." Thompson v. Thompson, 484 U.S. 174, 192 (1988) (Scalia, J., concurring in part) (citation omitted).
19 William N. Eskridge, Jr., Gadamer/Statutory Interpretation, 90 COLUM. L. REV. 609, 610 (1990).
20 Towne v. Eisner, 245 U.S. 418, 425 (1918).
21 Justice Scalia concedes the relevance of context in statutory analysis. See United Savings Ass'n of Texas v. Timbers of Inwood Forest