Say what you will about the United States Supreme Court and its apparently strange and, to conservatives, vexing constellations of coalitions on all sorts of things, but above all it has been constructed to protect business interests. Well, maybe above all to drive cross-shaped loopholes into every aspect of American law and life, but business interests are a close second. And key to that effort has been the erosion to near-nothing of class-action lawsuits, which may have been a useful tool in the hands of the poor and powerless, but which are a serious pain in the ass of corporate capitalists.
Goldman Sachs was presumably relying on this irresistible penchant on the part of the nine when it said that it shouldn’t be held liable for the things it says. After all, the suggestion that a bank should have to live up to aspirational standards like “integrity” and “honesty” just because it said it would had come in a class-action lawsuit, and surely this alone would be enough to convince the court that the argument had no merit, and therefore Goldman needn’t lift much of a finger to counter it. To which a unanimous Supreme Court replied, “do better.”
On Monday, Justice [Amy Coney] Barrett, writing for a unanimous court on this point, repeated that the parties’ dispute “has largely evaporated.”
The two sides now agreed, as did the court, she wrote, that judges may take account of generic statements and that they “may consider expert testimony and use their common sense in assessing whether a generic misrepresentation had a price impact.”
Of course, this being this Supreme Court, it couldn’t just allow a class-action certification to stand, and so Goldman will be given the opportunity to do better, and the Second Circuit another opportunity to do the Roberts court’s dirty work for it.
Justice Barrett wrote that Goldman was entitled to renew its arguments in the appeals court because, she said, there was some question about whether it had “properly considered the generic nature of Goldman’s alleged misrepresentations….”
She clarified how the Basic presumption worked. Plaintiffs must come forward with some evidence that the contested statements affected the stock price, she wrote, but defendants bear the burden of persuading the court that there had been no effect.
For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker.