burden of persuasion

Issues

This case asks the Supreme Court to clarify whether a defendant in a securities class action may rebut the Basic presumption by pointing to the generic nature of the misstatements and by showing that those misstatements did not affect the price of the defendant’s securities. Goldman Sachs Group Inc. argues that courts must consider evidence of the generality of alleged misstatements when determining whether to certify a shareholder class in a securities class action suit. Goldman further argues that defendants only bear the burden of producing some proof that their misstatement did not negatively impact the stock price, while plaintiffs bear the burden of persuading the Court that investors relied on the defendant’s alleged misstatements. The Arkansas Teacher Retirement System counters that the lower courts properly weighed the evidence presented at the class certification stage of the litigation, including the generic nature of the misstatements, when it decided to grant certification of plaintiffs’ shareholder class. ATRS also argues that the defendants implicitly bear both the burden of production and the burden of persuasion when rebutting the presumption because they must make a showing that the particular misrepresentation at issue did not affect the stock’s market price. The outcome of this case will have implications on the availability of class-action lawsuits for investors and the risk of class-action litigation for corporate defendants.

Questions as Framed for the Court by the Parties

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Issues

This case asks the Supreme Court to clarify whether a defendant in a securities class action may rebut the Basic presumption by pointing to the generic nature of the misstatements and by showing that those misstatements did not affect the price of the defendant’s securities. Goldman Sachs Group Inc. argues that courts must consider evidence of the generality of alleged misstatements when determining whether to certify a shareholder class in a securities class action suit. Goldman further argues that defendants only bear the burden of producing some proof that their misstatement did not negatively impact the stock price, while plaintiffs bear the burden of persuading the Court that investors relied on the defendant’s alleged misstatements. The Arkansas Teacher Retirement System counters that the lower courts properly weighed the evidence presented at the class certification stage of the litigation, including the generic nature of the misstatements, when it decided to grant certification of plaintiffs’ shareholder class. ATRS also argues that the defendants implicitly bear both the burden of production and the burden of persuasion when rebutting the presumption because they must make a showing that the particular misrepresentation at issue did not affect the stock’s market price. The outcome of this case will have implications on the availability of class-action lawsuits for investors and the risk of class-action litigation for corporate defendants.

Questions as Framed for the Court by the Parties

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Issues

In this case, a hair's breadth of analytical difference is worth almost $6 million dollars, as the plaintiffs, former employees at Knolls Atomic Power Laboratory ("KAPL") ask the U.S. Supreme Court to overturn the Second Circuit's finding for the defendants. The plaintiffs had prevailed at trial and on appeal on a disparate impact theory of illegal age discrimination under the Age Discrimination in Employment Act (the "ADEA"), 29 U.S.C. 621 et seq., when the Supreme Court remanded for reconsideration in light of Smith v. City of Jackson. While upholding the disparate impact theory, City of Jackson also requires the touchstone of the analysis to be whether employers considered "reasonable factors other than age," which the Second Circuit determined was a burden of persuasion to be borne by the plaintiffs. The employee-plaintiffs disagree, maintaining that the "reasonable factors other than age" harbor in the ADEA statute is a traditional affirmative defense on which the employer-defendants bear the burden of proof. In determining where the burden rests, the Supreme Court's decision will impact the nature of future employee litigation under the ADEA, shape the strategies for a successful reduction in force, and determine what deference is due the Equal Employment Opportunity Commission's regulations interpreting the ADEA.

Questions as Framed for the Court by the Parties

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