Goldman Sachs has called a class-action lawsuit against it “the most important securities case” to come before the U.S. Supreme Court in years. Well, having heard arguments over it, the nation’s most august jurists aren’t so sure.
Justice Stephen G. Breyer suggested there may be nothing for the Supreme Court to do, as its main job is to announce general legal principles rather than to decide particular disputes. “This seems like an area that, the more that I read about it,” he said, “the less that we write, the better.”
At issue is the feel-good pablum about “integrity and honesty” and putting client interests “first” that Goldman Sachs—and, to be fair, everyone else—occasionally says and puts into various documents that investors can be said to rely upon when deciding, you know, whether to buy Goldman shares. A bunch of pension funds believe that, although they didn’t actually rely on those statements, because they could have relied on them, they are material and therefore can be the basis of a lawsuit against Goldman for violating those lofty principles. Goldman, which all but admits that the statements aren’t, in fact, true, counters that they also have the legal benefit of being essentially meaningless and thus unable to serve as the basis for this and the impending fusillade of litigation that could be unleashed if publicly-listed companies were actually expected to live up to their marketing copy.
Well, like the fictional but rhetorically useful Goldman investor, the Supremes took the bank’s word for it. It’s just that, like the words “integrity” and “honesty,” when Goldman said “most important,” it was doing so in a very general and not-to-be-relied-upon way.
Kannon K. Shanmugam, a lawyer for the investment bank, said the case involved “exceptionally generic and aspirational statements” that could not have affected its stock price. But he conceded as a general matter that courts could take account of generic statements in deciding whether investors had relied on them.
Thomas C. Goldstein, a lawyer for the pension funds, said the firm’s statements in context justified certifying a class action. But he conceded that the generic nature of the statements was “relevant evidence.”
This did not make the High Court particularly happy. After all, their time is valuable and could be better used further turning the United States into an unrestricted human shooting range and ensuring that the country’s collegiate cartel need not share the windfall provided by its unpaid workforce of football and basketball players with the same.
“You now disclaim in your brief the argument that a statement in itself can be so bland and innocuous and uninformative that there can’t be reliance,” [Justice Samuel Alito] told Goldman’s lawyer, Kannon Shanmugam. “Do you really want to say that?”
“Now we are left, you know, in this position where you’ve both moved more closely together,” [Justice Amy Coney Barrett] said, “and now we have to decide what to do about the Second Circuit’s opinion.”
“Apparently, everybody agrees: Take the evidence for what it’s worth. Fine,” Justice Breyer said. “Why isn’t that the end of the case?”