MEMORANDUM OPINION AND ORDER
This is a securities fraud class action brought on behalf of shareholders of Vivendi, S.A. ("Vivendi" or the "Company") against the Company and its former Chief Executive Officer and Chief Financial Officer, Jean-Marie Messier and Guillaume Hannezo. Vivendi is a limited liability company incorporated in France. Plaintiffs accuse defendants of concealing a liquidity crisis that, once it became known, caused a material drop in the price of Vivendi shares traded on the New York and various foreign stock exchanges, including the Bourse in Paris.
By opinion dated November 4, 2003, the Court (Baer, J.) denied defendants' motion to dismiss for lack of subject matter jurisdiction. In re Vivendi Universal, S.A. Sec. Litig., 381 F. Supp. 2d 158, 169 (S.D.N.Y. 2002) ("Vivendi I"). By opinion dated September 21, 2004, the Court (Holwell, J.) denied defendants' motion for reconsideration, finding that subject matter jurisdiction was properly based on defendants' alleged conduct, including operation of the Company by the CEO and CFO from their New York headquarters, which contributed to the alleged fraud and directly caused injury to both domestic and foreign investors. In re Vivendi Universal, S.A. Sec. Litig., No. 02 Civ. 5571 (RJH), 2004 WL 2375830, at *7 (S.D.N.Y. Oct. 22, 2004) ("Vivendi II"). On May 21, 2007, the Court (Holwell, J.) granted plaintiffs' motion for class certification and included in the class shareholders from the United States, France, England and the Netherlands. In re Vivendi Universal, S.A. Sec. Litig., 242 F.R.D. 76 (S.D.N.Y. 2007) ("Vivendi III").
Defendants now move for partial reconsideration of the Court's class certification decision, citing "recent" information that allegedly shows that the superiority requirement of Federal Rule of Civil Procedure 23(b)(3) cannot be established as to French shareholders who, defendants maintain, should now be excluded from the class. In short, defendants contend that French courts will never give res judicata effect to a judgment in a Rule 23(b)(3) opt-out class action and, therefore, that this action cannot be a superior means of litigating the French shareholders' claims.
Having reviewed the parties' typically comprehensive submissions, the Court concludes that virtually all the "recent" developments cited by defendants reflect the ongoing debate in France and the European Union as to whether class action procedures ought to be adopted, with either an opt-in or opt-out feature. However, the underlying issue-what form or forms of collective actions would be consonant with the French constitution as interpreted by France's high constitutional court, the Conseil Constitutionnel-remains unchanged. This issue, and the more immediate issue of whether a French court would refuse to enforce a U.S. class action judgment as contrary to international public policy, were thoroughly briefed by the parties and considered by the Court in the context of plaintiffs' original motion for class certification. For the reasons set forth in Vivendi III and below, the Court denies defendants' motion for reconsideration.
As detailed in Vivendi III, the Court found that the prerequisites to class certification set forth in Rule 23(a) had been readily satisfied. The joinder of individual shareholders was "impracticable" in light of the approximately one billion ordinary shares that were outstanding during the relevant class period. The existence of "questions of law or fact common to the class" was undisputed. And the typicality of the named plaintiffs' claims was amply established as to all but one of the proposed class representatives. Vivendi III, 242 F.R.D. at 83-90. Nor did defendants seriously question whether, under Rule 23(b)(3), common questions of law or fact predominated over any questions affecting individual members. Id. at 90-91. However, defendants did contest whether, with respect to foreign shareholders, plaintiffs had established that a class action was "superior to other available methods for the fair and efficient adjudication of the controversy," as also required by Rule 23(b)(3). In addressing this issue, the Court separately considered the non-exhaustive list of pertinent factors set forth in the Rule:
(A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action. Id. at 91.*fn1
Regarding the first two factors, the Court concluded that this prototypical securities fraud case was particularly appropriate for class treatment. Thousands of individual shareholders allegedly had been damaged by defendants' fraud, and most of them would have claims too small to justify the initiation of an individual action. Moreover, only two individual shareholder lawsuits were pending in France, indicating that individual interest in conducting separate actions was minimal. Id. at 92.
Absent a better pigeonhole, the Court considered under the third articulated factor-the desirability of concentrating claims in this forum-the probable res judicata effects of a judgment entered by this Court. In particular, the Court analyzed to what extent defendants would be exposed to "second bite" actions in a foreign country that were not barred by the judgment in this case.
Judge Friendly analyzed this issue in Bersch v. Drexel Firestone, Inc., 519 F.2d 974 (2d Cir. 1975), and stated, in dicta, that "while an American court need not abstain from entering judgment simply because of the possibility that a foreign court may not recognize or enforce it, the case stands differently when this is a near certainty." Id. at 996 (emphasis added). Given uncontradicted affidavits that this was so in the case before it, the Second Circuit directed the District Court to exclude foreign purchasers from the class in Bersch. See Vivendi III, 242 F.R.D. at 92-93 (summarizing Bersch).
Finding the "near certainty" test incomplete as a general guide to decision, the Court evaluated the risk of non-recognition along a continuum. Where a plaintiff cannot show as part of the general showing required by Rule 23, see In re Initial Public Offering Sec. Litig., 471 F.3d 24, 41 (2d Cir. 2006), that foreign court recognition is more likely than not, this factor weighs against finding superiority; taken in consideration with other pertinent factors, it may lead to the exclusion of foreign claimants on superiority grounds. Generalizing from Bersch, the Court held that "[t]he closer the likelihood of non- recognition is to being a 'near certainty,' the more appropriate it is for the Court to deny certification of foreign claimants." Vivendi III, 242 F.R.D. at 95.
After analyzing a veritable mountain of expert affidavits on foreign law, see id. at 96 n.12, the Court concluded that German and Austrian courts were not likely to give res judicata effect to a judgment entered in this case, while French, English and Dutch courts were likely to do so. With respect to France, the Court applied the test set forth in Munzer v. Jacoby, Cass. civ. lre, Jan. 7, 1964,  Juris-Classeur Périodique [J.C.P.] II 13590, which asks, inter alia, whether a foreign judgment would violate French concepts of "international public policy."*fn2 Concluding that it would not, and considering other factors relevant to the issue of superiority, the Court included French shareholders in the class.
The Second Circuit declined to hear an interlocutory appeal, and the Supreme Court declined to issue a writ of certiorari. In re Vivendi Universal, S.A. Sec. Litig., No. 07-1419 (2d Cir. May 8, 2007); Vivendi S.A. v. Gerard, 128 S.Ct. 391 (2007).
According to defendants a series of "recent events" in France have "now made it clear beyond any doubt" that opt-out class actions are unconstitutional in France, and that a French court would never recognize a judgment in this case, since to do so would violate "French concepts of international public policy" under Munzer. (Vivendi Mem. 1, 5). Accordingly, defendants contend that as far as its French shareholders are concerned, a class ...