Trial Court Significantly Reduces High Profile Vivendi Jury Award in Light of Supreme Court's Morrison Decision

The force of the U.S. Supreme Court’s decision in Morrison v. National Australia Bank was made dramatically apparent earlier this week when the U.S. District Court for the Southern District of New York in In Re Vivendi Universal, S.A. Securities Litigation dismissed fraud claims brought by U.S. and foreign purchasers of Vivendi ordinary shares that traded overseas. The Court’s decision is the latest chapter in a litigation that has stretched on for more than nine years, and the ruling substantially reduces the damages Plaintiffs can recover on the jury verdict they received early last year, estimated then to be worth more than nine billion dollars. Joining a number of other recent district court decisions applying Morrison, the Court significantly narrowed the size of the potential class of shareholders, allowing only claims for purchases of ADRs that were listed on a U.S. exchange to proceed, and thereby reduced Plaintiffs’ potential damages by more than 80%. In joining with these other recent decisions, the Vivendi decision further solidifies the clear trend among district courts in strictly and broadly applying Morrison and in rejecting plaintiffs’ efforts to find exceptions for certain foreign securities transactions. The memo briefly describes the decision and discusses the significance of the ruling.