309
Annual Report -
2013
-
Vivendi
4
Financial Report | Statutory Auditors’ Report on the Consolidated Financial Statements |
Consolidated
Financial Statements
| Statutory Auditors’ Report on the Financial Statements | Statutory Financial Statements
Note 28. Litigation
Note 28.
Litigation
In the normal course of its business, Vivendi is subject to various
lawsuits, arbitrations and governmental, administrative or other
proceedings (collectively referred to herein as “Legal Proceedings”).
The costs which may result from these proceedings are only recognized
as provisions when they are likely to be incurred and when the
obligation can reasonably be quantified or estimated, in which case,
the amount of the provision represents Vivendi’s best estimate of
the risk, provided that Vivendi may, at any time, reassess such risk
if events occur during such proceedings. As of December 31, 2013,
provisions recorded by Vivendi for all claims and litigations amounted
to €1,379 million, compared to €1,357 million at December 31, 2012
(please refer to Note 20).
To the Company’s knowledge, there are no Legal Proceedings or any
facts of an exceptional nature, including, to the Company’s knowledge,
any pending or threatened proceedings in which it is a defendant, which
may have or have had in the previous twelve months a significant impact
on the Company’s and on its group’s financial position, profit, business
and property, other than those described herein.
The status of proceedings disclosed hereunder is described
as of February 19, 2014, the date of the Management Board Meeting
held to approve Vivendi’s Financial Statements for the year ended
December 31, 2013.
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Securities Class Action in the United States
Since July 18, 2002, sixteen claims have been filed against Vivendi,
Messrs. Messier and Hannezo in the United States District Court for the
Southern District of New York and in the United States District Court
for the Central District of California. On September 30, 2002, the New
York court decided to consolidate these claims under its jurisdiction into
a single action entitled
In re Vivendi Universal SA Securities Litigation
.
The plaintiffs allege that, between October 30, 2000 and August 14,
2002, the defendants violated certain provisions of the US Securities
Act of 1933 and US Securities Exchange Act of 1934, particularly with
regard to financial communications. On January 7, 2003, the plaintiffs
filed a consolidated class action suit that may benefit potential groups
of shareholders.
On March 22, 2007, the Court decided, concerning the procedure for
certification of the potential claimants as a class (“class certification”),
that persons from the United States, France, England and the
Netherlands who purchased or acquired shares or American Depositary
Receipts (ADRs) of Vivendi (formerly Vivendi Universal SA) between
October 30, 2000 and August 14, 2002, could be included in the class.
Following the class certification decision of March 22, 2007, a number
of individual cases were filed against Vivendi on the same grounds
as the class action. On December 14, 2007, the judge issued an order
consolidating the individual actions with the securities class action for
purposes of discovery. On March 2, 2009, the Court deconsolidated
the Liberty Media action from the class action. On August 12, 2009,
the Court issued an order deconsolidating the individual actions from
the class action.
On January 29, 2010, the jury returned its verdict. It found that
57 statements made by Vivendi between October 30, 2000 and
August 14, 2002, were materially false or misleading and were made
in violation of Section 10(b) of the Securities Exchange Act of 1934.
Plaintiffs had alleged that those statements were false and misleading
because they failed to disclose the existence of an alleged “liquidity
risk” which reached its peak in December 2001. However, the jury
concluded that neither Mr. Jean-Marie Messier nor Mr. Guillaume
Hannezo were liable for the alleged misstatements. As part of its
verdict, the jury found that the price of Vivendi’s shares was artificially
inflated on each day of the class period in an amount between €0.15
and €11.00 per ordinary share and $0.13 and $10.00 per ADR, depending
on the date of purchase of each ordinary share or ADR. Those figures
represent approximately half the amounts sought by the plaintiffs in the
class action. The jury also concluded that the inflation of the Vivendi
share price fell to zero in the three weeks following the September 11,
2001, tragedy, as well as on stock exchange holidays on the Paris or
New York markets (12 days) during the class period.
On June 24, 2010, the US Supreme Court, in a very clear statement,
ruled, in the Morrison v. National Australia Bank case, that American
securities law only applies to “the purchase or sale of a security listed
on an American stock exchange”, and to “the purchase or sale of any
other security in the United States.”
In a decision dated February 17, 2011 and issued on February 22, 2011,
the Court, in applying the “Morrison” decision, confirmed Vivendi’s
position by dismissing the claims of all purchasers of Vivendi’s ordinary
shares on the Paris stock exchange and limited the case to claims of
French, American, British and Dutch purchasers of Vivendi’s ADRs on the
New York Stock Exchange. The Court denied Vivendi’s post-trial motions
challenging the jury’s verdict. The Court also declined to enter a final
judgment, as had been requested by the plaintiffs, saying that to do
so would be premature and that the process of examining individual
shareholder claims must take place before a final judgment could be
issued. On March 8, 2011, the plaintiffs filed a petition before the
Second Circuit Court of Appeals seeking to appeal the decision rendered
on February 17, 2011. On July 20, 2011, the Court of Appeals denied
the petition and dismissed the claim of purchasers who acquired their
shares on the Paris stock exchange.
In a decision dated January 27, 2012 and issued on February 1, 2012, the
Court, in applying the Morrison decision, also dismissed the claims of
the individual plaintiffs who purchased ordinary shares of the Company
on the Paris stock exchange.
On July 5, 2012, the Court denied a request by the plaintiffs to expand
the class to nationalities other than those covered by the certification
decision dated March 22, 2007.
The claims process commenced on December 10, 2012, with the sending
of a notice to shareholders who may be part of the class. Recipients
of the notice had until August 7, 2013 to file a claim form and submit
documentation evidencing the validity of their claim. These claims
are currently being processed and verified by an independent claims
administrator and by the parties. Vivendi will then have the right to
challenge the merits of these claims. At the end of this process, which
should be completed during the first half of 2014, the judge will be able
to determine the total amount of damages and enter a final judgment,
thereby enabling Vivendi to commence its appeal.
Moreover, in connection with the Halliburton case under review by the
Supreme Court of the United States, Vivendi filed an
amicus curiae
brief. This case addresses the conditions under which class actions are
certified in the United States.
Vivendi believes that it has solid grounds for an appeal at the
appropriate times. Vivendi intends to challenge, among other issues,
the plaintiffs’ theories of causation and damages and, more generally,
certain decisions made by the judge during the conduct of the trial.
Several aspects of the verdict will also be challenged.
