Court Allows Foreign Investors To Join US Class Action

by Glen Shapiro, LawAndTax-News.com, New York

24 November 2003

Following a landmark ruling in a securities litigation case against media group, Vivendi Universal, foreign investors have been granted permission to participate in a US class action suit.

In an opinion issued earlier this month, New York judge, Harold Baer rejected Vivendi's motion to dismiss on the grounds that the US court did not have jurisdiction because some of the shares in question were purchased on foreign exchanges, arguing that overseas investors could participate in the US class action litigation, as the firm's business activities in the United States were a "significant contributing cause" to their decision to buy the stock.

Speaking to the Legal Week news service, Melvyn Weiss, prominent class action lawyer and senior partner with Milberg Weiss Bershad Hynes & Lerach, which launched the action on behalf of aggrieved Vivendi investors, called the ruling "an important breakthrough", explaining that:

"Although it is a fact specific case, the section states that if a foreign investor in a foreign exchange [has been financially harmed] they can participate as a class member in a US class action."

This new development, which potentially paves the way for future cross-border class actions, is likely to have struck fear into the hearts of many international companies.

Recommended