The US Supreme Court has brought a touch of sanity into the relationship between a company and its shareholders in the matter of those meretricious class actions brought whenever a company’s performance takes the market by surprise: the court refused to hear an appeal by disgruntled shareholders of Apple Computer Inc that filed a securities fraud lawsuit after Apple’s stock dropped 75% in 1983 claiming that the company and its directors engaged in fraud by making 16 misleading statements about the sales prospects for the Lisa computer and companion Twiggy disk drive; in 1987, a federal judge dismissed the class action without a trial, finding no evidence of a securities law violation and in September 1989, a federal appeals court in San Francisco affirmed the dismissal of most of the lawsuit, ruling that Apple’s directors didn’t intentionally mislead investors about Lisa’s outlook, since the directors reasonably thought the prospects for success were good – and that if they had troubled to read the trade or business press, the holders would have seen that Apple’s optimistic statements about Lisa were offset by gloomy forecasts and criticisms that reached the market through the news media; high tech companies that rountinely get wrong footed by quirks of technology and a fickle market will hope that the plantiffs’ costs will be sufficiently high to make others think twice before bringing such suits.
