283 / 348
4
Financial Report | Statutory Auditors’ Report on the Consolidated Financial Statements |
Consolidated
Financial Statements
| Statutory Auditors’ Report on the Financial Statements | Statutory Financial Statements
Note 26. Litigation
requesting the Court to enter a partial final judgment on the January 29,
2010 jury verdict, covering a substantial portion of the claims. Certain
large claims were excluded from this proposed judgment order as Vivendi
continues to analyze whether to challenge the validity of those claims. On
December 23, 2014, the Court entered the partial judgment.
On January 21, 2015, Vivendi filed its Notice of Appeal with the Second
Circuit Court of Appeals. This appeal will be heard together with Vivendi’s
appeal in the Liberty Media case.
Vivendi believes that it has solid grounds for an appeal. 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 Messrs. 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 US 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. Vivendi filed its Notice of
Appeal in the Class Action on January 21, 2015; these two cases will be
heard together by the Court of Appeals.
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,
2014, 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
11th 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 insider trading, and
a 10-month suspended prison sentence and a fine of €5 million for
Mr. Edgar Bronfman Jr. for insider trading. On May 19, 2014, the Paris
Court of Appeal rendered its judgment. Regarding the acts determined
by the lower criminal court to constitute the dissemination of false or
misleading information, the Court held that these acts did not meet the
criteria for such an offense. The Court upheld the conviction against
Jean-Marie Messier for misuse of corporate assets and he received a
10-month suspended sentence and a €50,000 fine. The Court also upheld
the convictions against Messrs. Hannezo and Bronfman for insider trading
and they received fines in the amount of €850,000 (of which €425,000
is suspended) and €5 million (of which €2.5 million is suspended),
respectively. Finally, the Court set aside the lower court’s order for the
payment of damages (€10 per share) to certain shareholders and former
shareholders of Vivendi (the “civil action”). With regard to Vivendi, the
283
Annual Report 2014