After suffering a stinging appellate court defeat in New York, Goldman, Sachs & Co. has turned to the U.S. Supreme Court to reverse its loss. Relying on a team that includes Gibson, Dunn & Crutcher partner Theodore Olson and Boies, Schiller & Flexner partner Jonathan Schiller, the bank has filed a petition for certiorari in which it asks the justices to review a ruling by the U.S. Court of Appeals for the Second Circuit that expanded the class of investors that can bring securities class action claims against mortgage-backed securities offerers.
The Second Circuit found in NECA-IBEW Health and Welfare Fund v. Goldman Sachs, 11-2762-cv, that plaintiffs have standing to raise class claims on offerings where they did not purchase the actual certificates in question, so long as they purchased certificates backed by loans from the same originators as the ones in the litigation. The decision stood in stark contrast to a string of cases in which judges threw out or limited mortgage-backed securities cases against major financial institutions due to strict standing requirements (NYLJ, Sept. 10). The ruling was a huge victory for lead plaintiff NECA-IBEW Health and Welfare Fund, which is represented by Robbins Gellar Rudman & Dowd. Goldman was defended by Richard Klapper of Sullivan & Cromwell before the Second Circuit.
Goldman argues in its cert petition that the Second Circuit’s decision grants standing to plaintiffs to bring class claims that they would not be allowed to bring individually. Further, the bank maintains that the opinion is in conflict with a “long and unbroken line” of Supreme Court decisions in which the justices have ruled that plaintiffs must have standing in order to sue in federal court. “Even where named plaintiffs have standing to assert some claims, a court cannot adjudicate other claims that the named plaintiffs lack standing to assert,” Goldman states. The bank also asserts that the decision conflicts with rulings in other jurisdictions—such as a 2011 decision by the First Circuit in Plumbers’ Union Local No. 12 Pension Fund v. Nomura Asset Acceptance, 632 F.3d 762—thus necessitating Supreme Court review.
NECA-IBEW’s attorney, Darren Robbins of Robbins Gellar, told Law Journal affiliate Litigation Daily that he had not reviewed the petition in depth, but was not surprised that Goldman would file for Supreme Court review. “This is a reflexive maneuver by a well-heeled investment bank that has peddled defective securities,” said Robbins. “They’ve hired some of the most talented lawyers available, but it won’t help.” Robbins was dismissive of Goldman’s claim that the Second Circuit decision will wreck havoc on securities litigation, pointing out that the vast majority of MBS claims have settled or are now time barred as a result of the statute of limitations.
@|Victor Li, a reporter for Litigation Daily, an affiliate of the New York Law Journal, can be contacted at firstname.lastname@example.org.