We have posted before on the class action securities case against Vivendi (e.g., here). The recent trial involving the case is a lesson for international litigation practice. Since our last posting, the defendants in the case sought to stay the trial pending Second Circuit review. Because there was no vehicle to access appellate review, permission from the District Court was sought, and denied (see our post here). An application to the Second Circuit for “mandamus” was made and also denied. Liberty Media v. Vivendi Universal, S.A., 03 Civ. 2175, Dkt. No. 200 (2d Cir. 2011).
Thereafter, the District Court ruled and, with a new Judge in place in the case, reconsidered a decision not to permit Vivendi to relitigate certain issues, specifically falsity, materiality, and scienter elements of their securities claims under Section 10(b). These issues were determined in the class action litigation. The District Court here was being asked to apply preclusion concepts to non-class, private suits. The Court agreed. The Court found that the class determinations were final enough. Said the Court:
“Although there is no final judgment yet, the issues remaining to be resolved in the class action concern only damages and reliance. Thus, the jury verdict (which was upheld after a post-trial motion) is sufficiently ‘final’ for purposes of collateral estoppel”.
The Court cited for this proposition an oft-cited 1961 Second Circuit case, Lummus Co. v. Commonwealth Oil Refining Co. 297 F.2d 80 (2d Cir. 1061).
It will be recalled that the Second Circuit determined in Absolute Acitivist Value Master Fund, Ltd. v. Ficeto, No. 11 Civ. 221 (2d Cir. 2012), that the extraterritoriality unavailability of the securities laws as decided by the Supreme Court in Morrison (on which we have posted many times) did not apply if the operative acts occurred in the U.S., — what the Second Circuit has described as “irrevocable liability” or where title was transferred. Here the Court determined that Morrison’s extraterroriality bar did not apply, since a merger agreement was executed here. Having so determined, and having determined that defendants could not relitigate the crucial issues of , materiality, and scienter, the case went to the jury. The jury returned a verdict for over $950 million.