On May 18, 2022, Partner Lyle Roberts (Washington, D.C.-Litigation), counsel George Anhang (Washington, D.C.-Litigation), and associate Billy Marsh (Dallas-Litigation), filed an amicus brief on behalf of the Washington Legal Foundation (WLF) in support of appellants in Goldman Sachs Group, Inc. et al. v. Arkansas Teacher Retirement System et al., pending before the U.S. Court of Appeals for the Second Circuit. In that case, appellants have challenged the district court’s interlocutory order certifying a class in a putative securities fraud class action. The district court certified the class on remand of the case after the U.S. Supreme Court issued its opinion in Goldman Sachs Group, Inc. v. Arkansas Teacher Retirement System, 141 S. Ct. 1951 (2021). In Goldman, the Court reaffirmed that class certification is inappropriate in a securities fraud class action if an alleged misrepresentation had no impact on the price of the security. The U.S. Supreme Court further stated that an inference of price impact “starts to break down when there is a mismatch between the contents of the misrepresentation and the corrective disclosure.” The district court interpreted this “mismatch” test to require only a finding that the purported corrective disclosures generally “implicate” the same subject matter as the alleged misrepresentations.

The WLF brief urges reversal of the district court’s class certification order, arguing, among other things, that the district court did not properly apply Goldman’s “mismatch” test because the district court endorsed an unreasonably loose connection between generic, front-end statements and purported back-end corrective disclosures. The brief asserts that the district court’s application of Goldman undermines the legal principles and public policy considerations Goldman serves and, if upheld, would chill beneficial corporate speech and encourage meritless securities class actions and coercive settlements.

WLF is a nonprofit public-interest law firm and policy center with supporters in the U.S. Founded in 1977, WLF promotes and defends free enterprise, individual rights, limited government and the rule of law.

The Team