MEMORANDUM OPINION & ORDER
Before the Court is the defendants’ motion for partial judgment on the pleadings, pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, filed on August 22, 2011. For the reasons stated herein, the defendant’s motion is GRANTED.
BACKGROUND
On March 22, 2007, pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure, the Court granted in part a motion to certify a class “consisting of all persons from the United States, France, England, and the Netherlands who purchased or otherwise acquired ordinary shares or American Depository Shares [ (“ADS”) ] of Vivendi Universal, S.A. [ (“Vivendi” or “Company”) ]....” In re
The Individual Plaintiffs allege — asserting claims pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78j(b), 78t(a), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5, as well as claims pursuant Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§ 77k(a), 77Z(a)(2), 77o — that Vivendi, Jean-Marie Messier, and Guillaume Hannezo (collectively, “Defendants”) made materially false or misleading statements regarding Vivendi’s financial health.
On June 24, 2010, the Supreme Court issued its opinion in Morrison v. National Australia Bank Ltd., — U.S. -,
It is the Supreme Court’s Morrison opinion, and this Court’s application of such in Vivendi II, upon which the Defendants moved the Court, through the instant motion, to enter partial judgment on the pleadings in their favor and to dismiss the Exchange Act claims of Individual Plaintiffs who purchased or otherwise acquired Vivendi ordinary shares. The Defendants filed their motion on August 22, 2011,
The motion being fully briefed, and neither party having requested oral argument, the Court now turns to its resolution.
LEGAL STANDARD
Rule 12(c) of the Federal Rules of Civil Procedure provides that “a party may move for judgment on the pleadings” anytime “[a]fter the pleadings are closed — but early enough not to delay trial.” Fed. R.Civ.P. 12(c). “In deciding a Rule 12(c) motion, [the Court] applies] the same standard as that applicable to a motion under Rule 12(b)(6), accepting the allegations contained in the complaint as true and drawing all reasonable inferences in favor of the nonmoving party.” DAlessio v. N.Y. Stock Exch.,
DISCUSSION
I. Motion for Partial Judgment on the Pleadings
A. Governing Law
1. Exchange Act
To state a claim for relief pursuant to Section 10(b) and Rule 10b-5, “a plaintiff must allege that the defendant (1) made misstatements or omissions of material fact, (2) with scienter, (3) in connection with the purchase or sale of securities, (4) upon which the plaintiff relied, and (5) that the plaintiffs reliance was the proximate cause of its injury.” ATSI Commc’ns, Inc. v. Shaar Fund, Ltd.,
Section 20(a) of the Exchange Act provides for so-called “controlling-person liability,” SEC v. First Jersey Sec., Inc.,
2. Securities Act
“Claims under sections 11 and 12(a)(2) of the Securities Act have ‘roughly parallel elements.’ ” Fait v. Regions Fin. Corp.,
1. Exchange Act Claims
The Defendants argue that because “[a]ll four amended complaints assert claims based on Vivendi ordinary-shares” — “which are not listed for trading purposes on any U.S. exchange” — the Court must dismiss the plaintiffs’ Exchange Act claims pursuant to Morrison. Mem. of Law in Supp. of Defs.’ Mot. for Partial J. on the Pleadings (“Defs.’ Mem.”) at 4-5 (Aug. 22, 2011) (ECF No. 1096). In opposition, the Individual Plaintiffs “refer the Court to” the arguments presented in the papers submitted by the Class Plaintiffs in response to a post-trial Court order for supplemental briefing regarding the effect of Morrison. Indiv. Pis.’ Mem. of Law in Response to Defs.’ Mot. for J. on the Pleadings Based on Morrison v. National Australia Bank (“Pis.’ Mem.”) at 1 (Sept. 9, 2011) (ECF No. 1098). The Individual Plaintiffs “further submit that Morrison was wrongly decided and look forward to a day when a future Supreme Court corrects the error,” id., and they “are optimistic that the SEC will recommend — and Congress will enact — legislation overruling Morrison,” id. at 2.
The Court concludes that the Individual Plaintiffs’ Exchange Act claims must be dismissed. The Court has already rejected the Class Plaintiffs’ arguments in Vivendi II, see
2. Securities Act Claims
After filing the instant motion, the Defendants, in a letter to the Court dated October 6, 2011, requested that, “for the sake of judicial efficiency,” the Court “allow Defendants to amend their motion” to cover the Individual Plaintiffs’ Securities Act claims in addition to the Exchange Act claims specifically identified in the motion. Letter from Penny P. Reid to Hon. Richard J. Holwell at 1-2 (Oct. 6, 2011) (on file with Court). The Individual Plaintiffs did not oppose the request, and the Court approved it in an October 17, 2011 Order. See Endorsed Letter at 1.
While Morrison involved solely an Exchange Act claim, see Morrison,
In the only two federal cases to have considered the issue to date, two courts— both in this District — have dismissed Securities Act claims pursuant to Morrison. In In re Royal Bank of Scotland Group PLC Securities Litigation, Judge Batts seized on the Morrison Court’s statement that the Securities Act shares the “same focus on domestic transactions” as the Exchange Act, Morrison,
The Court agrees with those decisions and concludes that Morrison permits Securities Act claims only “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,” Morrison,
For those reasons, and like its sister courts in this District, the Court determines that Morrison’s underlying logic counsels extending its holding to cover the Securities Act, and therefore the Individual Plaintiffs’ Ordinary Share Claims under that statute must also be dismissed.
II. Sanctions
In the memorandum accompanying their motion for partial judgment on the pleadings, the Defendants indicate that they “intend to seek costs covering the expense of filing this motion” because the “Individual Plaintiffs’ refusal to withdraw their
That inquiry, though, must wait for another day. The PSLRA requires Rule 11 findings to be made “upon final adjudication of the action,” id. § 78u-4(c)(l). But, though the Court has granted the Defendants’ motion for partial judgment on the pleadings, this case has not yet reached “final adjudication.” In this Memorandum Opinion & Order, the Court dismisses the Individual Plaintiffs’ Ordinary Share Claims only — that is, only their claims related to purchases of ordinary shares of Vivendi securities, shares which were sold on the Paris Bourse, a foreign exchange. Indeed, as the Court explained above, it is precisely the “foreignness” of those ordinary shares which subject them to dismissal under Morrison. On the other hand, the Individual Plaintiffs further allege violations of the Exchange Act, Securities Act, and those statutes’ implementing regulations as to “American Depository Shares,” or “ADS,” which were traded solely on the New York Stock Exchange— a domestic exchange falling outside the Morrison . analysis. See, e.g., Allianz Compl. ¶¶ 2, 38; AP Compl. ¶¶ 2, 38; B-W Compl. ¶¶ 2, 38; Capitalia Compl. ¶¶ 2, 38; see also Defs.’ Mem. at 3 n. 10 (“Defendants are only seeking dismissal of the claims brought in connection with the acquisition of Vivendi ordinary shares at this time.”). Those claims — the Individual Plaintiffs’ “ADS Claims” — then, are still in play in this litigation, and the Court therefore declines to engage in the Rule 11 fact-finding mandated by the PSLRA at this time. It will instead endeavor to make such findings upon the filing of the Defendants’ promised Rule 11 motion or, alternatively, at the termination of this action under the requirements of the PSLRA.
CONCLUSION
For the reasons stated in this Memorandum Opinion & Order, the Court GRANTS the Defendants’ motion for partial judgment on the pleadings [ECF No. 1095], and the Ordinary Share Claims of the Individual Plaintiffs in the above-captioned cases are dismissed.
SO ORDERED.
Notes
. The Individual Plaintiffs bring their claims under Section 20(a) of the Exchange Act and Section 15 of the Securities Act — which impose control-person liability over primary violations of the Acts within which they are respectively located — only against the individual defendants, Messier and Hannezo.
. As noted above, the Individual Plaintiffs also assert claims involving their purchases of American Deposit Shares, or “ADS,” purchased on the New York Stock Exchange, located in New York City. See, e.g., Allianz Compl. ¶¶ 2, 38; AP Compl. ¶¶ 2, 38; B-W Compl. ¶¶ 2, 38; Capitalia Compl. ¶¶ 2, 38. These "ADS Claims” are not in issue here.
. The Defendants move jointly in all of the above-captioned cases, with two exceptions. First, Hannezo is the only named defendant in the individual actions numbered 09 Civ. 2568, 09 Civ. 2592, 09 Civ. 2603, and 09 Civ. 2611, and therefore it is only he who moves the Court in those cases. Second, Hannezo clarifies that he "joins in th[e Defendants'] motion only with regard to those Individual Plaintiff actions in which he has been properly served." Mem. of Law in Supp. of Defs.’ Mot. for Partial J. on the Pleadings ("Defs.' Mem.”) at 1 n. 1 (Aug. 22, 2011) (ECF No. 1096).