Pomerantz Submits Amicus Brief to Supreme Court
POMERANTZ MONITOR | MARCH APRIL 2021
By The Editors
In a hotly contested issue before the United States Supreme Court affecting investors’ rights to recoup damages from publicly traded companies as a result of securities fraud, Pomerantz LLP submitted the sole amicus brief on behalf of twenty-seven of the foremost U.S. scholars in the field of evidence. One of the two issues before the High Court in Goldman Sachs Group Inc. et al v. Arkansas Teachers Retirement System, et al. (No. 20-222) squarely affects investors’ ability to pursue claims collectively as a class: whether, in order to rebut the presumption of reliance originated by the Court in the landmark Basic v. Levinson decision, defendants bear the burden of persuasion—as every circuit court to address the issue has held—or whether they bear only the much lower burden of production, as Goldman Sachs argues. The burden of production is easily satisfied by the mere recital of words or the introduction of evidence without actual persuasive effect.
When interpreting statutes, the Supreme Court and the circuit courts sometimes create presumptions to best effectuate congressional intent. That is exactly how the Basic presumption came to be. The Court determined that the congressional policy embodied in the Securities Act of 1934 called for the full and accurate disclosure of information related to securities to promote the integrity of the market and the setting of “just” prices. The Court reasoned that advancing that goal would best be achieved through a presumption of class-wide reliance if plaintiffs show, among other things, that a defendant made material misrepresentations that affected a security’s price.
Pomerantz argues that Federal Rule of Evidence 301, which shifts the burden of production but not that of persuasion, is merely a default rule that, by its own terms, is inapplicable because the substantive law at issue necessarily demands that the defendants actually show, i.e., prove, that the presumption is defeated. It would be palpably unfair – and inconsistent with the reason behind the Supreme Court’s creation of the presumption in the first place – to impose on investors the high burden of satisfying the presumption, only to have defendants overcome it by merely introducing some evidence creating a dispute as to price impact.
“Institutional and retail investors alike have the right to hold those that defraud them accountable,” said Emma Gilmore, the Pomerantz Partner spearheading the effort, “and pursuing their claims as a class has been a critical step in their pursuit of justice.”
Read Pomerantz’s full amicus brief to the Supreme Court at pomlaw.com/AmicusMar2021.