In re Vivendi Universal, S.A. Securities Litigation (241 F.R.D. 213 [S.D. N.Y. 2007]) held that German and Austrian shareholders of Vivendi Universal S.A. should be excluded from the class action brought for alleged violations of the U.S. federal securities laws. The U.S. District Court for the Southern District of New York permitted other foreign shareholders, from England, France and the Netherlands, to be included in the class.
In 2002, investors from Austria, England, France, Germany, the Netherlands and the United States brought a securities class action against Vivendi Universal, S.A. and two of the company’s senior officers. The plaintiffs alleged that the defendants violated the U.S. federal securities laws, including the anti-fraud provision, Section 10(b), of the Securities Exchange Act of 1934, by artificially inflating the price of Vivendi stock through the dissemination of materially false and misleading statements. These false and misleading statements, among other things, induced them to buy the company’s securities pursuant to a registration statement and prospectus issued in connection with the Dec. 8, 2000, three-way merger of Vivendi, Seagram Company Limited and Canal Plus S.A., they alleged.
The court initially found in a prior ruling that it had jurisdiction not only over purchasers of Vivendi American Depository Receipts on the New York Stock Exchange, who were mostly U.S. citizens, but also over the claims of foreign purchasers who purchased Vivendi stock on foreign exchanges, mostly Europeans. The court found that the defendant’s activities in New York promoting Vivendi stock was more than merely preparatory to the alleged fraudulent scheme.
The defendants then argued against class certification on the grounds that all foreign plaintiffs must be excluded from the class because it is a near certainty that if the action was dismissed, taken to judgment, or settled, defendants would not be able to assert claim preclusion to bar subsequent actions in the countries in which foreign plaintiffs reside.
In this Emerging Issues Commentary, James M. Wilson Jr., a partner in Chitwood Harley Harnes LLP in Atlanta, concludes that the class action appears to be gaining more acceptance in some form beyond the U.S. boundaries, predominantly in European countries. Nevertheless, the argument that an American judgment will not be accorded preclusive effect in a foreign national’s home country will continue to be used by both plaintiff and defendants to try to prevent foreign nationals from serving in a representative capacity in class actions in the United States. Access the full version of "James M. Wilson Jr. On Class Action Trends: Foreign Law’s Impact On Class Actions" with your lexis.com ID. Additional fees may be incurred. (Approx. 6 pages.)
If you do not have a lexis.com ID, you can purchase the Emerging Issues Analysis content through our lexisONE Research Packages.