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Volume X, Number 193

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Class Action Litigation Newsletter Spring 2020 - Second Circuit

Ark. Teacher Ret. Sys. v. Goldman Sachs Grp., Inc., 955 F.3d 254 (2d Cir. 2020)

Second Circuit rejects argument that sought to inject a merits determination about materiality into the class-certification analysis.

The Second Circuit again addressed this class action brought by Goldman Sachs (Goldman) shareholders against the investment company. Plaintiffs allege Goldman made false statements about its conflicts of interest regarding collateralized debt transactions involving subprime mortgages thereby artificially maintaining its stock price. The Second Circuit previously reversed class certification for this same class of investors, concluding that the district court had applied the wrong standard of proof to Goldman’s evidence rebutting the presumption of reliance. On remand the district court considered Goldman’s rebuttal evidence, rejected it as insufficient, and again certified the class.

In this second appeal, Goldman argued that the district court improperly certified the class because it relied on general statements about the business instead of misstatements about “specific, material financial or operational information” or about meeting “market expectations” regarding specific metrics. The Second Circuit rejected these arguments on the ground that class certification was not the proper procedural stage to determine whether the alleged statements were sufficiently material to support a claim of securities fraud. The Second Circuit acknowledged that the class certification analysis may “overlap” with merits issues, but this principle does mean a court can undertake a “free-ranging” examination of the merits. The Second Circuit concluded that, although Goldman might be correct that certain statements were insufficiently material, this had nothing to do with whether common issues predominated under individual issues: “[t]his is why materiality is irrelevant at the Rule 23 stage. Win or lose, the issue is common to all class members.”

©2020 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume X, Number 149


About this Author

Robert Herrington, Greenberg Traurig Law Firm, Los Angeles, Cybersecurity Litigation Attorney

Robert J. Herrington is an attorney in firm's Products Liability & Mass Torts Practice. He focuses his practice on defending consumer products companies in complex, multi-party litigation, including class actions, government enforcement litigation, product defect litigation and mass torts. Rob represents companies in a variety of industries, including apparel and footwear, retail, emerging technologies, consumer electronics, video game, telecommunications, advertising and publicity, online retailing, food and beverage, nutritional supplements, personal care products...

Stephen L. Saxl Class Action Attorney Greenberg Traurig

Stephen L. Saxl is the Co-Chair of the Class Action Litigation Group. He concentrates his practice on defending class actions and complex litigation matters in federal court and New York State courts. His class action experience includes cases in the securities, retail, telecommunications, publishing, insurance, Internet and tobacco industries. He has defended clients against statutory and common law claims including fraud, unfair trade practices, Racketeer Influenced and Corrupt Organizations (RICO), breach of contract and price-fixing.


  • Class actions
  • Complex civil litigation
  • Securities and broker-dealer litigation
  • Commercial litigation
  • Consumer litigation
  • Antitrust
  • Media
  • Privacy litigation
  • Product liability
John Crisham Litigation Attorney Greenberg Traurig

John Crisham has briefed, argued, and won complex civil litigation cases involving class actions, energy and environmental matters, commercial and business disputes, products liability and health care, and employment law. John has represented clients at virtually every state of litigation, from dispositive motions to appeals, in more than 15 different states, before 10 different federal Courts of Appeal, and in the United States Supreme Court. He served as counsel for the prevailing petitioners in Mutual Pharmaceutical Company v. Bartlett, 570 U.S. 472 (2013) and Pliva, Inc. v...

Phillip H. Hutchinson Business Litigation Attorney Greenberg Traurig West Palm Beach, FL

Phillip H. Hutchinson is a strategic business litigator who defends corporations in complex litigation claims in state and federal courts, including individual class actions and real estate litigation disputes. Phillip has represented clients in cases involving complex product liability disputes, automobile rollover claims, construction defects (including delay claims), insurance coverage defense, eminent domain actions, employment discrimination, non-competition agreements, and real estate disputes, including commercial leases. He has broad experience in complex case management,...

Lisa M. Simonetti Complex Litigation Attorney Greenberg Traurig Los Angeles, CA

Lisa M. Simonetti focuses on the defense of complex litigation, with broad experience representing clients in the financial services industry, including regional and national banks, credit card issuers, mortgage bankers, various types of loan servicers, consumer finance companies and third-party collectors. She serves as trial and appellate counsel in courts across the country and routinely counsels financial services clients on compliance with state and federal laws and regulations.


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