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Note 25. Litigation
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Statutory Financial Statements
On June 24, 2010, the US Supreme Court, in a very clear statement,
ruled, in the Morrison v. National Australia Bank case, that American
securities law only applies to “the purchase or sale of a security listed on
an American stock exchange”, and to “the purchase or sale of any other
security in the United States.”
In a decision dated February 17, 2011 and issued on February 22, 2011,
the Court, in applying the “Morrison” decision, confirmed Vivendi’s
position by dismissing the claims of all purchasers of Vivendi’s ordinary
shares on the Paris stock exchange and limited the case to claims of
French, American, British and Dutch purchasers of Vivendi’s ADRs on
the New York Stock Exchange. The Court denied Vivendi’s post-trial
motions challenging the jury’s verdict. The Court also declined to enter
a final judgment, as had been requested by the plaintiffs, saying that to
do so would be premature and that the process of examining individual
shareholder claims must take place before a final judgment could be
issued. On March 8, 2011, the plaintiffs filed a petition before the Second
Circuit Court of Appeals seeking to appeal the decision rendered on
February 17, 2011. On July 20, 2011, the Court of Appeals denied the
petition and dismissed the claim of purchasers who acquired their shares
on the Paris stock exchange.
In a decision dated January 27, 2012 and issued on February 1, 2012, the
Court, in applying the Morrison decision, also dismissed the claims of the
individual plaintiffs who purchased ordinary shares of the company on
the Paris stock exchange.
On July 5, 2012, the Court denied a request by the plaintiffs to expand
the class to nationalities other than those covered by the certification
decision dated March 22, 2007.
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. On November 10, 2014, at Vivendi’s
initiative, the parties filed a mutually agreed upon proposed order
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 described in Note 1.7, Accounting Rules and Methods,
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 US Treasury bills. On January 17, 2013, the Court entered a final
judgment in the total amount of €944.8 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
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Annual Report 2014