‘Halliburton' Not Grounds To Renew 50(b) Motion

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By Phyllis Diamond

Aug. 19 — The U.S. Supreme Court's recent Halliburton decision does not afford securities fraud defendant Vivendi Universal S.A. a second chance to move for judgment pursuant to Fed. R. Civ. P. 50(b), the U.S. District Court for the Southern District of New York concludedAug. 18.

According to Judge Shira Scheindlin, the issue of whether Vivendi's alleged misstatements affected the market price of its securities already has been litigated twice—at trial and during post-trial motions practice.

As such, she found “no reason to permit it to be litigated a third time in the district court.”

Finances Overstated

In the long-running dispute, shareholders alleged that the Paris-based media conglomerate and two former executives overstated the company's finances by billions of dollars.

In this case, the court said, although Vivendi's Rule 50(b) motion was denied three years ago, the defendant sought to renew the motion because of an intervening change in the law resulting from the high court's Halliburton decision.

In Halliburton Co. v. Erica P. John Fund Inc., the Justices declined to overrule the presumption of reliance afforded by the fraud-on-the-market theory, but held that defendants may seek to rebut the presumption at the class certification stage.

In support of its motion, Vivendi argued that the ruling “created new law with respect to the requirement that in order to make out a claim under [1934 Securities Exchange Act Rule 10b-5], a plaintiff must prove that a misleading statement caused an impact on the price of the security.”

However, the court rejoined, the Halliburton court “made clear that this has always been a requirement” to sue under Section 10(b). What the high court addressed was when a defendant can seek to establish a lack of price impact.

There is no doubt that proof of price impact “has always been part of the equation at the merits stage of a securities case,” the court wrote. In the wake of the high court's decision, “it will now also be a consideration at the class certification stage.”

In this case, the court said, the issue of price impact already has been litigated. “Because this issue has already been fully litigated, and there being no intervening change in the law, Vivendi's request to file a new Rule 50(b) motion is denied.”


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