Compagnie Générale des Eaux was a centuries-old French utilities conglomerate led by Jean MarieMessier. In 1998, Compagnie Générale des Eaux changed its name to Vivendi, S.A., and developed a plan to reinvent as an entertainment media company. Vivendi shed its utilities and environment divisions and acquired various media businesses. A significant point in Vivendi’s plan occurred in 2000 when Vivendi merged with Canal Plus, S.A., a French film and television production company, and Seagram Company Ltd., a Canadian entertainment company.
The three way merger resulted in one of the world’s largest media companies, rivaling AOLTime Warner. Vivendi, S.A., now simply Vivendi, continued to acquire companies, spending cash and increasing its debts. Vivendi’s debts blossomed from 3 billion euros to 21 billion euros between 2000 and 2002. Throughout Vivendi’s buying frenzy, it continuously conveyed to the public it was in sound financial health. Despite Vivendi’s assurances, Moody’s and the S&P downgraded Vivendi’s debt rating in 2002, rating it at just above junk level. Vivendi’s stock subsequently fell 26%.
As it turned out, Vivendi’s financial officers had known it was facing a cash-crunch long before the negative ratings were publicized. Chief Financial Officer Hannezo had informed Messier of the impending problems, who continued to acquire companies. A class action lawsuit was filed against Vivendi, Messier, and Hannezo in 2002 under Rule 10(b). The case moved to trial in 2009 after years of discovery, and, in 2011, a jury found under Rule (10b) violations of fifty seven statements, Vivendi liable, but not Messier or Hannezo.
Vivendi appealed the jury verdict on grounds that it could not be held liable for certain statements because they were forward-looking statements under the PSLRA. Under what conditions is a defendant not liable under 15 U.S.C. § 78u-5(c), the provision concerning forward-looking statements?
One of the alleged misstatements identified by Vivendi was the following given on February 14, 2001: “Vivendi Universal enters its first full year of operations with strong growth prospects and a very strong balance sheet. This new company is off to a fast start and we are very confident that we will meet the very aggressive growth targets we have set for ourselves both at the revenues and EBITDA levels.” Do you think the statement qualifies as a forwardlooking statement? Why or why not? What did the court think of this statement?

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