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Non-French investors seek damages from Vivendi in Paris

By Gérard Bon

PARIS, Oct 31 (Reuters) - Pension funds and financial institutions from outside France have sued Vivendi in the Paris commercial court, seeking billions of euros in damages over its handling of a liquidity crisis under former boss Jean-Marie Messier from 2000 to 2002.

The one-time Vivendi shareholders, who lost money when almost 90 percent of the media-to-telecom group's market value was erased, are taking action in France because they have been excluded from a United States court class action by a U.S. Supreme Court decision, lawyers for the plaintiffs involved said.

In the U.S. class action, a Manhattan federal court jury found in January 2010 that Vivendi had misled shareholders about its financial health between October 2000 and August 2002, when the shares fell.

The damages were estimated at first at up to $9.3 billion by plaintiffs but were later cut by what Vivendi said could be as much as 80 percent through the exclusion of non-U.S.-based shareholders.

That prompted Vivendi in December 2010 to reduce the amount set aside to pay for potential damages to 100 million euros ($138 million) from 550 million.

Final damages for the U.S. class action have not yet been set and Vivendi has said it plans to appeal once they are.

Messier and former financial officer Guillaume Hannezo were not found liable by the U.S. jury.

Ron Soffer, a lawyer based in Paris, said he represented about 100 financial institutions from the United States, Germany, Sweden and the Netherlands which bought the Paris-traded shares of Vivendi during the period from 2000 to 2002.

"Given the ... decision by the U.S. Supreme Court, the U.S. courts are no longer able to hear legal actions filed by shareholders who bought shares outside the U.S.," explained Soffer.

The legal proceeding, which is in its early stages, is underway at the same time as Messier is in another Paris court to appeal his criminal conviction in 2010 for embezzlement and giving misleading information to shareholders.

A court handed Messier a three-year suspended sentence and fined him 150,000 euros in the case.

In the French criminal case, Vivendi is considered a plaintiff although it has said it would not seek damages from the executive.

Herve Pisani, who represents Vivendi in the civil case now starting in the Paris commercial court, said the group was now contesting the standing of some of the institutional shareholders suing for damages.

"We are fighting with them before even getting into the deeper issues: most of the requests for damages are not justified and some cannot even document that they were Vivendi shareholders during the period in question," he said.

The plaintiffs plan to base their argument in France on the findings of the French stock market regulator AMF, which found Vivendi guilty of misleading the public and its shareholders.

The decision was confirmed on appeal in 2009.

But Pisani said the decision did not establish a causal link between the alleged misleading communications by Vivendi and the wrong that the shareholders claim to have suffered.

A Vivendi spokesman referred questions regarding the civil case to Pisani.