A divided appellate court has affirmed the dismissal of a lawsuit filed against Goldman Sachs & Co. by creditors of the failed Internet start-up eToys Inc. for allegedly advising eToys to underprice its initial public offering and failing to disclose conflicts of interest.

In a 4-1 ruling yesterday in EBCI Inc. v. Goldman Sachs & Co., 601805/02, the majority of the Appellate Division, First Department, panel upheld Manhattan Supreme Court Justice Eileen Bransten’s (See Profile) dismissal of the case on the grounds that there was no fiduciary relationship between eToys and the investment bank. The majority opinion was written by Justice Leland G. DeGrasse (See Profile) and joined by Justices Richard T. Andrias (See Profile), David Friedman (See Profile) and Diane T. Renwick (See Profile).

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