284 F.R.D. 144
S.D.N.Y.2012Background
- This SDNY opinion addresses motions in a securities class action against Vivendi following Morrison, focusing on class definition, reliance phase procedures, notice/claims administration, prejudgment interest, and fees.
- The Court previously defined a nationwide class restricted to certain countries; Morrison narrowed US claims for 10(b) against Vivendi’s ordinary shares.
- Plaintiffs seek to broaden the class to include all ADS holders worldwide and/or restore American ordinary-share purchasers, arguing Morrison supports broader coverage.
- Vivendi opposes expanding the class on timeliness, venue, and Rule 23 principles, arguing expanding would prejudice defendants and undermine certification history.
- The court resolves the motion to amend the class, approves partial relief for the individualized reliance phase, and sets frameworks for notice, claims administration, damages, prejudgment interest, and fees.
- Key rulings include limits on class definition expansion, a two-phase reliance process with a Special Master, two-phase claims processing with a separate damages framework, and prejudgment interest calculated on a 1-year Treasury yield with specific timing and allocation rules.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether to amend the class definition to remove geographic limits | Plaintiffs (renaming to include U.S./foreign ADS holders) seek broader class | Vivendi argues time-bar, lack of legal basis, and Rule 23 limits bar expansion | Denied: outside-US ADS claims are time-barred and Morrison does not alter certification analysis |
| Whether to restore ordinary-share purchasers to the class | Plaintiffs want US ordinary-share purchasers back in the class | Vivendi objects on extraterritoriality and administrative complexity | Denied: no basis to extend Exchange Act reach to pre/post-merger ordinary-share holders in US context |
| How individualized reliance will be assessed in the Phase II proceedings | Plaintiffs propose stepwise proof and interrogatories for reliance rebuttal | Vivendi seeks broader, case-specific rebuttal with a three-stage process | Adopted a hybrid procedure: initial reliance screening with a Special Master to identify triable issues, plus limited interrogatories for sophisticated claimants; no full opt-out on reliance forms |
| Post-verdict notice, claims administration, and cost shifting | Plaintiffs want Vivendi to pay for notice/administration per February 17, 2011 Order | Costs should not be shifted until liability conclusively determined; GCG role contested | Appoints GCG for ministerial duties; Special Master for challenges; cost-sharing 50/50 between Vivendi and plaintiffs |
| Award of prejudgment interest and methodology | Prejudgment interest necessary to compensate for loss of use; argues for IRS rate or aggressive measures | IRS rate is punitive; should use Treasury one-year rate without compounding or minimal compounding | Granted in principle; amount determined byTreasury yield with annual compounding starting Aug 14, 2002; not the IRS rate |
Key Cases Cited
- Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (U.S. 2010) (restrains Section 10(b) reach to US-listed securities and US transactions)
- Absolute Activist Value Master Fund Ltd. v. Ficeto, 677 F.3d 60 (2d Cir. 2012) (redefines ‘domestic transaction’ / irrevocable liability standard post-Morrison)
- In re Vivendi Universal, S.A. Sec. Litig., 765 F. Supp. 2d 512 (S.D.N.Y. 2011) (class certification and Morrison considerations in exchange-act claims)
- Basic Inc. v. Levinson, 485 U.S. 224 (U.S. 1988) (presumption of reliance and its rebuttal)
- Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (U.S. 2005) (necessity of showing loss causation and framework for damages)