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8 Laurel Avenue, Suite 1, East Islip, NY 11730
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Rank Amount Type Name/Court//Date Lead Accounting Firm Accounting Expert
4 $956,556,000 Fraud Liberty Media Corporation et al v. Vivendi Universal S.A.U.S. District Court, Southern District, NY, 6/25/2012
Hemming Morse, LLP Andrew M. Mintzer
8 Laurel Avenue, Suite 1, East Islip, NY 11730
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as published in
verdict $956,556,000
case Liberty Media Corporation, LMC Capital LLC, Liberty Programming Company LLC, LMC USA VI, Inc., LMC USA VII, Inc., LMC USA VIII, Inc., LMC USA X., Inc., and Liberty HSN LLC Holdings, Inc., and Liberty Media International, Inc. v. Vivendi Universal S.A., Jean-Marie Messier, Guillaume Hannezo, and Universal Studios, Inc., No. 03 CV 2175
court U.S. District Court, Southern District, NYJudge Shira Scheindlindate 6/25/2012
Plaintiffattorney(s) Michael L. Calhoon (lead), Baker Botts, LLP,
Washington, DC R. Stan Mortenson, Baker Botts, LLP,
Washington, DC Alexandra Walsh, Baker Botts, LLP,
Washington, DC defenseattorney(s) James W. Quinn (lead), Weil, Gotshal & Manges
LLP, New York, NY Penny Reid, Weil, Gotshal & Manges LLP,
Menlo Park, CA Paul C. Saunders, Cravath, Swaine & Moore,
New York, NY Daniel Slifkin, Cravath, Swaine & Moore LLP,
New York, NY
facts & allegations In May 2002, plaintiff Liberty Media Corp., an Englewood, Colo.-based distributor of televised entertainment, acquired 37.6 million shares of Paris-based Vivendi Universal, which distributes films, musical recordings, televised entertainment and other forms of entertainment. Vivendi Universal had acquired a company, USA Networks, that was partially owned by Liberty Media, and the stock’s transfer represented Liberty Media’s compensation.
The deal had been struck in December 2001. During a period that spanned January 2002 and August 2002, Vivendi Universal’s stock’s value plummeted. Liberty Media claimed that Vivendi Universal had concealed adverse developments that would have inevitably reduced the value of the company’s stock.
Liberty Media and several subsidiaries sued Vivendi Universal, Chief Executive Officer Jean-Marie Messier, Chief Financial Officer Guillaume Hannezo and the Vivendi Universal subsidiary that controlled USA Networks, Universal City, Calif.-based Universal Studios Inc. The plaintiffs alleged that Vivendi Universal’s actions constituted fraud and a breach of warranty.
Plaintiff’s counsel claimed that Vivendi Universal’s operating officers repeatedly and intentionally overstated the company’s health. They contended that the officers concealed a lack of liquid assets, and they claimed that insufficient liquidity ultimately caused the dramatic decrease of the value of the company’s stock.
Defense counsel claimed that the media had thoroughly reported the decreasing liquidity of Vivendi Universal’s assets, and they contended that Liberty Media should have been aware of that situation. They also claimed that other factors caused the decrease of the value of Vivendi Universal’s stock. inJuries/damages Plaintiffs’ causation and damages expert testified that Vivendi Universal’s overstatement of its liquidity and understatement of its financial risk had resulted in the artificial inflation of the value of the company’s stock. He also testified that the revelation of the company’s true financial health over time caused the value of the stock to plummet, and the value of Liberty Media’s holdings of Vivendi Universal to decrease by 841 million euros. The plaintiffs sought recovery of that amount.The defense’s expert economist estimated that poor liquidity could not have caused a loss of more than 172 million euros, though defense counsel also suggested that poor liquidity did not affect the value of Vivendi Universal’s stock.
result The jury found that the plaintiffs’ damages totaled 765 million euros. The New York Stock Exchange’s contemporaneous dollars-to-euros conversion rate was 1.2504-to-1. Thus, 765 million euros equaled $956,556,000.
trial details Trial Length: 4 weeks Trial Deliberations: 1.5 days Jury Vote: 8-0PlaintiffexPert(s) Craig T. Elson, economics, Chicago, IL Andrew Mintzer, accounting,
Los Angeles, CA Blaine F. Nye, loss causation, materiality and
damages, Stanford Consulting Group, Inc., Redwood City, CA
defenseexPert(s) John Coates, IV, securities/commodity futures &
options, Cambridge, MA Ronald Gilson, industries & markets,
Palo Alto, CA William Silber, damage analysis,
New York, NY
editor’s note This report is based on information that was provided by plaintiffs’ counsel. Defense counsel did not respond to the reporter’s phone calls. –Max Mitchell
fraud
Company’s deception marred swap of stock, plaintiffs claimed