On July 26, 2010, Judge Richard J. Holwell, of the United States District Court for the Southern District of New York heard argument by the parties in the Vivendi securities fraud class action concerning the impact of the United States Supreme Court's decision in Morrison v. National Australia Bank Ltd., No. 08-1191, 2010 WL 2518523, 2010 U.S. LEXIS 5257 (June 24, 2010).
In Morrison, the Supreme Court considered whether Section 10(b) of the Securities Exchange Act of 1934 provides a cause of action to "foreign plaintiffs suing foreign and American defendants for misconduct in connection with securities traded on foreign exchanges." The Supreme Court held that Section 10(b) applies to claims asserted in connection with the purchase or sale of a security listed on an American stock exchange, and the purchase or sale of any other security in the United States. The Morrison Court did not consider claims by U.S. purchasers or any claims with respect to a security identified as being listed or registered on a U.S. stock exchange.
In briefs submitted to Judge Holwell and during the July 26, 2010 hearing, Class Plaintiffs argued that the verdict in favor of all class members remains intact after Morrison for several reasons. First, Morrison does not affect the verdict in favor of class members who purchased ADRs because Vivendi ADRs were listed on the New York Stock Exchange and purchased in the United States. Second, in Morrison the Court only considered whether "foreigners" were covered by Section 10(b), so claims by U.S. purchasers, like the U.S. class members who purchased Vivendi ordinary shares, were not directly addressed by the Supreme Court. Third, as Vivendi has admitted, its ordinary shares, were listed on the New York Stock Exchange and were registered under the Securities Exchange Act of 1934. Plaintiffs argued that under Morrison, that means that class members who purchased Vivendi ordinary shares (including foreign class members) are covered by Section 10(b).
In an attempt to reduce its damages from the January 29, 2010 jury verdict against it, Vivendi argued that the holding in Morrison forecloses the claims of all purchasers of Vivendi ordinary shares because they were neither listed nor sold on an American stock exchange, but instead were listed only on foreign exchanges, where they were subject to foreign laws and regulations. Vivendi has requested that the Court enter judgment as a matter of law dismissing with prejudice the Section 10(b) claims of all shareholders who purchased Vivendi ordinary shares.