Someday, plaintiffs lawyers representing Vivendi shareholders will have a chance to argue to the U.S. Court of Appeals for the Second Circuit that their securities claims against the company never should have been dismissed. And the Second Circuit might shock securities litigators everywhere by ruling that investors who bought ordinary Vivendi shares on the Paris Bourse can pursue their claims, despite the U.S. Supreme Court's ruling in Morrison v. NAB that U.S. securities laws don't apply to foreign transactions.

But it ain't gonna happen soon. On Monday, Manhattan federal district court judge Richard Holwell rejected a motion asking him to enter final judgment on his February 2011 ruling dismissing the ordinary shareholders' class claims on Morrison grounds. That means that class counsel from Abbey Spanier Rodd & Abrams; Milberg; MoloLamken; and Brower Piven must wait until the Vivendi securities litigation finally wraps up before they can ask the Second Circuit to weigh in. And since the lawyers in the case are still mired in litigation over claims by a subset of investors who survived Morrison because they purchased Vivendi American Depository Receipts instead of ordinary securities, they could be waiting a long, long time.

 

The New York Law Journal reported Tuesday that Judge Holwell is retiring from the bench to start a litigation boutique with two partners from Kasowitz, Benson, Torres & Friedman with whom he practiced at White & Case. The new firm, Holwell Shuster & Goldberg, was set to open for business by Tuesday evening, making Monday's ruling in the Vivendi case one of Holwell's last.  

Morrison has claimed plenty of victims, but the decision has been a particularly bitter pill for class counsel in the Vivendi case. Six months before the Supreme Court issued its opinion in June 2010, a jury delivered an estimated $9.3 billion verdict for the Vivendi class, finding the company liable for 57 public misstatements concerning its securities. When Judge Holwell ruled last February that Morrison precluded all claims in the case except those brought by investors that purchased Vivendi ADRs on the New York Stock Exchange, Vivendi counsel Paul Saunders of Cravath, Swaine & Moore told us the decision erased 90 percent of Vivendi's liability.

Because Judge Holwell's ruling modified the scope of the Vivendi shareholder class, the plaintiffs lawyers were able to petition the Second Circuit to hear an immediate appeal under federal class action rules. After the Second Circuit rejected that petition in June, the only option that remained for an immediate appeal was to persuade Judge Holwell to issue a final judgment on the Morrison issue before entering final judgment on all claims in the case.

Judge Holwell refused to do that in Monday's 9-page ruling, concluding that allowing a "piecemeal" appeal would be inefficient and that forcing the plaintiffs to wait to file a comprehensive appeal wouldn't be prejudicial. "[T]he substance of the Court's Morrison holding has already been appealed to the Second Circuit in various cases, diminishing the prejudice that plaintiffs might suffer by waiting for resolution of the claims process here," he wrote.

Cravath's Saunders wasn't available to comment when we called to ask about Monday's ruling. We also left a message with lead class counsel Arthur Abbey of Abbey Spanier, but we didn't immediately hear back.