For the last five years, there's been a certain "Groundhog Day" quality to a $13 billion securities fraud class action against Goldman Sachs.

As in: the lower court judge certified the class of investors, and Goldman—with the backing of all-star amici—made a frantic interlocutory appeal to the Second Circuit, which reversed and remanded the case. 

The lower court judge then re-certified the class, and Goldman—with the backing of all-star amici—made another frantic interlocutory appeal to the Second Circuit.

But this time, the Second Circuit broke the cycle. In a 2 to 1 decision, the appeals court on Tuesday upheld the decision by U.S. District Judge Paul Crotty of the Southern District of New York to certify the class, which covers investors who bought Goldman stock between February 5, 2007, and June 10, 2010.

Plaintiffs counsel Darren Robbins of Robbins Geller Rudman & Dowd in a statement said, "After nine long years of hotly contested litigation, we look forward to presenting our case to a jury to determine whether Goldman's repeated representations about its honesty and integrity in dealing with its clients are consistent with Goldman secretly constructing a series of sophisticated financial products designed to fail."

The plaintiffs are also represented by Labaton Sucharow, as well as Thomas Goldstein of Goldstein & Russell, who came on board for the appeal.

Goldman—which is represented by Sullivan & Cromwell's Robert Giuffra Jr.—said it plans to seek en banc review.

"We believe that our appeal raises important and recurring legal issues impacting securities class actions generally. We intend to ask the full Second Circuit to review this decision," said Goldman spokeswoman Maeve DuVally.

The decision may also create a split with the Eighth Circuit on the application of the price maintenance theory and the Ninth Circuit on when plaintiffs must plausibly plead materiality—which could make for a compelling cert petition.

I've written several times before about the case, but to recap: Goldman Sachs in 2010 got busted by the feds for allegedly packaging certain mortgage-backed securities to help one favored client who was short on the position at the expense of lesser clients, who lost $1 billion. The Wall Street firm paid the U.S. Securities and Exchange Commission a record $550 million to settle the case, admitting it was a "mistake" not to disclose the role of favored client John Paulson in the so-called Abacus transaction.

When news broke that Goldman was being sued by the SEC, the firm's share price dropped. 

The plaintiffs claim that Goldman misled investors with statements in various annual reports and SEC filings. These include: "We have extensive procedures and controls that are designed to … address conflicts of interest" and "Our reputation is one of our most important assets" and "Our clients' interests always come first" and "Integrity and honesty are at the heart of our business." 

The defense—backed by a slew of impressive amicus briefs—countered that no investors relied on those aspirational statements to the point of artificially propping up Goldman's stock price. (Because as I've noted before, most of them sound like sayings you'd see printed on a poster featuring a soaring bird or mountaintop.)

But Second Circuit Senior Judge Richard Wesley, who was joined by Judge Denny Chin, said that whether or not the statements are material isn't the point—at least not now.

"We are not blind to the widespread understanding that class certification can pressure defendants into settling large claims, meritorious or not, because of the financial risk of going to trial," Wesley wrote. "Referencing these legitimate policy concerns, Goldman argues that rejecting its theory would open the floodgates to unmeritorious litigation by allowing courts to certify classes that it believes should lose on the merits."

After all, most companies have made similar aspirational statements. If plaintiffs lawyers need only point to such clichés anytime a company's stock drops following an allegation of misconduct, class certification would be a slam-dunk.

"This would indeed be troubling," Wesley wrote. "But our law already beats back this parade of horribles in three meaningful ways."

 First, he wrote, materiality challenges are fair game under Rule 12(b)(6) motions to dismiss. But Goldman lost that particular fight years ago when Crotty refused to toss the case in 2012.

"Right or wrong, we lack the authority to review that decision at this time. Rule 23 does not give defendants a do-over on materiality."

However, Goldman will get to re-litigate the issue prior to trial, when Crotty rules on the defense's pending motion for summary judgment. One of Goldman's arguments "is that the alleged misstatements are immaterial as a matter of law," the Second Circuit majority observed. 

While Goldman can't challenge materiality head-on right now, the Second Circuit noted that it could still attempt to show by a preponderance of evidence that its stock fell for some other reason.

Goldman presented evidence of 36 news reports, including front page stories from The New York Times and The Wall Street Journal, which focused on the firm's shortcomings in handling conflicts of interest. 

None of those reports had any impact on Goldman's stock price. What caused it to tank was being sued by the SEC, the defense said, plus subsequent news of other investigations.

But the Second Circuit majority was not persuaded. "Goldman's burden is to show that the market would not have reacted had Goldman told the truth about its alleged failure to manage its conflicts," Wesley wrote. "It is difficult to imagine that Goldman's shareholders would have been indifferent had Goldman disclosed its alleged failure to prevent employees from illegally advising clients to buy into CDOs that were built to fail by a hedge fund secretly shorting the investors' positions."

Judge Richard Sullivan in his dissent disagreed. 

"Here, the obvious explanation for why the share price didn't move after 36 separate news stories on the subject of Goldman's conflicts is that no reasonable investor would have attached any significance to the generic statements on which plaintiffs' claims are based," he wrote. "The most obvious explanation … is that the drop was caused by news that the SEC and DOJ were pursuing enforcement actions against Goldman."