Goldman Sachs Group, Inc. v. Arkansas Teacher Retirement System

Goldman Sachs Group, Inc. v. Arkansas Teacher Retirement System, 594 U.S. ___ (2021), represents a 2021 ruling by the Supreme Court of the United States concerning securities fraud class action litigation.

Background

Following the 2008 financial crisis, investors initiated a lawsuit against Goldman Sachs, pursuing damages amounting to as much as $13 billion. In 2020, the United States Court of Appeals for the Second Circuit permitted the class action to continue in a 2–1 decision, with Judge Richard J. Sullivan dissenting.

Decision

The Supreme Court, in June 2021, overturned the appellate court’s ruling and sent the case back for additional proceedings. The court, speaking unanimously, clarified that the presumption of classwide reliance established in Basic Inc. v. Levinson applies only when defendants’ statements extend beyond broad assurances. By an 8–1 vote, with Justice Sonia Sotomayor dissenting, it was determined that the lower court had misapplied this criterion. Additionally, a 6–3 majority—dissenting Justice Neil Gorsuch, joined by Justices Clarence Thomas and Samuel Alito—held that defendants must carry the evidentiary burden to overturn the presumption of reliance.