Term: 2020
Docket: 20-222
Goldman Sachs Group Inc. v. Arkansas Teacher Retirement System
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20-222 GOLDMAN SACHS GROUP, INC. V. ARKANSAS TEACHER RETIREMENT SYSTEM DECISION BELOW: 955 F.3d 254 CERT. GRANTED 12/11/2020 QUESTION PRESENTED: 1. Whether a defendant in a securities class action may rebut the presumption of classwide reliance recognized in Basic Inc. v. Levinson, 485 U.S. 224 (1988), by pointing to the generic nature of the alleged misstatements in showing that the statements had no impact on the price of the security, even though that evidence is also relevant to the substantive element of materiality. 2. Whether a defendant seeking to rebut the Basic presumption has only a burden of production or also the ultimate burden of persuasion. LOWER COURT CASE NUMBER: 18-3667
The U.S. Supreme Court case Goldman Sachs Group Inc. v. Arkansas Teacher Retirement System, 2020 revolved around a securities fraud class action lawsuit against Goldman Sachs by the Arkansas Teacher Retirement System and other similarly situated plaintiffs. The plaintiffs alleged that Goldman Sachs made misleading statements about its business practices which inflated its stock price, causing them significant losses when the truth was revealed and the share prices fell dramatically. They sought to certify their claims as a class action on behalf of all purchasers of Goldman's common stock during this period who were allegedly defrauded by these misrepresentations. Goldman argued that it should be able to rebut these allegations at an early stage in proceedings before certification is granted, asserting that any potential inflation of their stocks due to generic statements would have been minimal or non-existent given they did not contain new information for investors. The Supreme Court agreed with this argument in part but remanded the case back to lower courts for further consideration on whether such evidence could indeed refute claims at an early stage or if it should be considered later during trial.
The dissenting opinion in the case of Goldman Sachs Group Inc. v. Arkansas Teacher Retirement System argued that the majority's decision to remand the case back to lower courts for further consideration was unnecessary and could potentially complicate future securities litigation cases. The dissenters believed that there was already sufficient evidence presented by plaintiffs demonstrating a general inflationary impact on stock prices due to misleading statements made by Goldman Sachs, thus satisfying requirements for class certification under Rule 23(b)(3) of Federal Rules of Civil Procedure. They expressed concern over how the majority's ruling might be interpreted as requiring direct proof of price impact at this stage, which they saw as an overly burdensome standard not supported by precedent or policy considerations.
