36
Annual Report -
2013
-
Vivendi
Group Profile | Businesses |
Litigation
| Risk Factors
1
The claims process commenced on December 10, 2012, with the
sending of a notice to shareholders who may be part of the class.
Recipients of the notice had until August 7, 2013 to file a claim form
and submit documentation evidencing the validity of their claim. These
claims are currently being processed and verified by an independent
claims administrator and by the parties. Vivendi will then have the right
to challenge the merits of these claims. At the end of this process,
which should be completed during the first half of 2014, the judge will
be able to determine the total amount of damages and enter a final
judgment, thereby enabling Vivendi to commence its appeal. Moreover,
in connection with the Halliburton case under review by the Supreme
Court of the United States, Vivendi filed an
amicus curiae
brief. This
case addresses the conditions under which class actions are certified
in the United States.
Vivendi believes that it has solid grounds for an appeal at the
appropriate times. Vivendi intends to challenge, among other issues,
the plaintiffs’ theories of causation and damages and, more generally,
certain decisions made by the judge during the conduct of the trial.
Several aspects of the verdict will also be challenged.
On the basis of the verdict rendered on January 29, 2010, and following
an assessment of the matters set forth above, together with support
from studies conducted by companies specializing in the calculation of
class action damages and in accordance with the accounting principles
described in Notes 1.3.1 (
Use of Estimates
) and 1.3.8 (
Provisions
).
Vivendi made a provision on December 31, 2009, in an amount of
€550 million in respect of the damages that Vivendi might have to pay
to plaintiffs. Vivendi re-examined the amount of the reserve related
to the Securities class action litigation in the United States, given the
decision of the District Court for the Southern District of New York on
February 17, 2011, which followed the US Supreme Court’s decision on
June 24, 2010 in the Morrison case. Using the same methodology and
the same valuation experts as in 2009, Vivendi re-examined the amount
of the reserve and set it at €100 million as of December 31, 2010,
in respect of the damages, if any, that Vivendi might have to pay
solely to shareholders who have purchased ADRs in the United
States. Consequently, as of December 31, 2010, Vivendi recognized a
€450 million reversal of reserve.
Vivendi considers that this provision and the assumptions on which it is
based may require further amendment as the proceedings progress and,
consequently, the amount of damages that Vivendi might have to pay to
the plaintiffs could differ from the current estimate. As is permitted by
current accounting standards, no details are given of the assumptions
on which this estimate is based, because their disclosure at this stage
of the proceedings could be prejudicial to Vivendi.
Complaint of Liberty Media Corporation
On March 28, 2003, Liberty Media Corporation and certain of its
affiliates filed suit against Vivendi and Jean-Marie Messier and
Guillaume Hannezo in the District Court for the Southern District
of New York for claims arising out of the agreement entered into by
Vivendi and Liberty Media relating to the formation of Vivendi Universal
Entertainment in May 2002. The plaintiffs allege that the defendants
violated certain provisions of the US Exchange Act of 1934 and breached
certain contractual representations and warranties. The case had been
consolidated with the securities class action for pre-trial purposes but
was subsequently deconsolidated on March 2, 2009. The judge granted
Liberty Media’s request that they be permitted to avail themselves of
the verdict rendered by the securities class action jury with respect to
Vivendi’s liability (theory of “collateral estoppel”).
The Liberty Media jury returned its verdict on June 25, 2012. It found
Vivendi liable to Liberty Media for making certain false or misleading
statements and for breaching several representations and warranties
contained in the parties’ agreement and awarded damages to Liberty
Media in the amount of €765 million. Vivendi filed certain post-trial
motions challenging the jury’s verdict, including motions requesting
that the Court set aside the jury’s verdict for lack of evidence and order
a new trial.
On January 9, 2013, the Court confirmed the jury’s verdict.
It also awarded Liberty Media pre-judgment interest accruing
from December 16, 2001 until the date of the entry of judgment,
using the average rate of return on one-year U.S. Treasury bills.
On January 17, 2013, the Court entered a final judgment in the total
amount of €945 million, including pre-judgment interest, but stayed its
execution while it considered two pending post-trial motions, which
were denied on February 12, 2013.
On February 15, 2013, Vivendi filed with the Court a Notice of
Appeal against the judgment awarded, for which it believes it has
strong arguments. On March 13, 2013, Vivendi filed a motion in the
Second Circuit Court of Appeals requesting that the Court stay the
Liberty Media appeal until the Class Action judgment is entered so
that the two appeals can be heard simultaneously. On April 4, 2013,
the Court of Appeals issued an Order granting Vivendi’s motion,
agreeing to hear the Liberty Media case together with the Class Action.
The appeal in the Liberty Media case is stayed until Vivendi can appeal
from the Class Action final judgment.
On the basis of the verdict rendered on June 25, 2012, and the
entry of the final judgment by the Court, Vivendi maintained as of
December 31, 2013, the provision in the amount of €945 million
recorded as of December 31, 2012.
Trial of Vivendi’s Former Officers in Paris
In October 2002, the financial department of the Paris Public
Prosecutor’s office (
Parquet de Paris
) launched an investigation into the
publication of allegedly false or misleading information regarding the
financial situation and forecasts of the Company and the publication
of allegedly untrue or inaccurate financial statements for the fiscal
years 2000 and 2001. Additional charges were brought in this
investigation relating to purchases by the Company of its own shares
between September 1, 2001 and December 31, 2001. Vivendi joined the
proceedings as a civil party.
The trial took place from June 2 to June 25, 2010, before the 11
th
Chamber of the Paris Tribunal of First Instance (
Tribunal de Grande
Instance de Paris
), following which the Public Prosecutor asked the
Court to drop the charges against the defendants. On January 21, 2011,
the Court rendered its judgment, in which it confirmed the previous
recognition of Vivendi as a civil party. Messrs. Jean Marie Messier,
Guillaume Hannezo, Edgar Bronfman Jr. and Eric Licoys received
suspended sentences and fines. Messrs. Jean Marie Messier
and Guillaume Hannezo were also ordered to pay damages to
shareholders who are entitled to reparation as civil parties. The former
Vivendi officers as well as some civil parties appealed the decision.
The appeal proceedings were held from October 28 to November 26, 2013,
before the Paris Court of Appeal. The Public Prosecutor requested
a 20-month suspended prison sentence and a fine of €150,000
for Mr. Jean-Marie Messier for misuse of corporate assets and
dissemination of false or misleading information, a 10-month suspended
prison sentence and a fine of €850,000 for Mr. Guillaume Hannezo for
