In re Vivendi Universal, S.A. Securities Litigation, No. 02-5571, 2012 U.S. Dist. LEXIS 12969 (S.D.N.Y. Feb. 1, 2012)

In 2007, the District Court for the Southern District of New York certified a class of all persons from the United States, France, England and the Netherlands who purchased or acquired ordinary shares or American Depository Shares of Vivendi Universal, S.A.  This certified class went on to litigate a class action suit in 2009-2010.  Meanwhile, Plaintiffs, individual Vivendi shareholders excluded from the certified class, also filed a number of complaints in the district court, alleging that Vivendi and the individual defendants made materially false or misleading statements regarding Vivendi’s financial health that caused the price of its securities to become artificially inflated.  Plaintiffs asserted various claims under the Securities Exchange Act of 1934 (“Exchange Act”) and the Securities Act of 1933 (“Securities Act”).  The claims involved plaintiffs’ holdings in Vivendi’s ordinary shares, traded on EuroNext, S.A. (“Paris Bourse”), a foreign exchange, as well as in American Depository Shares, traded domestically on the New York Stock Exchange.

Defendants moved to dismiss the Exchange Act claims of the Plaintiffs who purchased or acquired Vivendi ordinary shares.  The motion to dismiss stemmed from the Supreme Court’s holding in Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (2010), that Section 10(b) of the Exchange Act does not apply extraterritorially, and the district court’s application of Morrison to justify dismissal of the Section 10(b) claims brought by holders of ordinary shares in the Vivendi class action suit.  Here, however, Defendants were able to amend their motion to seek dismissal of the individual Plaintiffs’ Securities Act claims under Morrison, in addition to the Exchange Act claims.

The court easily dismissed the Exchange Act claims as to ordinary shares, noting its previous decision to do so in the Vivendi class action.  As to Plaintiffs’ Securities Act ordinary share claims, though, Morrison offered less guidance, as that case involved solely an Exchange Act claim.  However, the district court seized on the Morrison decision’s emphasis of the fact that the Securities Act and Exchange Act were “enacted by the same Congress” and “form part of the same comprehensive regulation of securities trading.”  Noting that the other two federal courts to consider the issue had both issued dismissals of Securities Act claims pursuant to Morrison, the district court concluded 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.”  Since Plaintiffs’ ordinary share claims under the Securities Act related to sales on the Paris Bourse, the court held that Morrison required their dismissal as well.