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1 UNITED STATES DISTRICT COURT
1 SOUTHERN DISTRICT OF NEW YORK
2 ------x
2
3 LIBERTY MEDIA CORP. et al.,
3
4 Plaintiffs,
4
5 v. 03 CV 2175 (SAS)
5
6 VIVENDI UNIVERSAL S.A., et
6 al.,
7
7 Defendants.
8
8 ------x
9 June 21, 2012
9 10:04 a.m.
10
10 Before:
11
11 HON. SHIRA A. SCHEINDLIN,
12
12 District Judge
13
13 APPEARANCES
14
14 BAKER BOTTS LLP
15 Attorneys for Plaintiff Liberty Media Corp.
15 BY: R. STAN MORTENSON
16 MICHAEL CALHOON
16 ALEXANDRA WALSH
17 EVAN WERBEL
17 JULIE RUBENSTEIN
18 RICHARD SOBIECKI
18
19 WEIL GOTSHAL & MANGES
19 Attorneys for Defendant Vivendi
20 BY: JIM QUINN
20 PENNY REID
21 CAITLYN CAMPBELL
21
22 CRAVATH, SWAINE & MOORE LLP
22 Attorneys for Defendant Vivendi
23 BY: DANIEL SLIFKIN
23 PAUL C. SAUNDERS
24 TIMOTHY G. CAMERON
24 YONATAN EVEN
25 SARITA PRABHU
SOUTHERN DISTRICT REPORTERS, P.C.
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1 (In open court; jury present)
2 THE COURT: Good morning, everyone.
3 As I told you, we are going to begin right away with
4 the summations. The defense goes first and the plaintiff goes
5 last because the plaintiff has the burden of proof.
6 With that, Mr. Quinn.
7 MR. QUINN: Thank you, your Honor.
8 Good morning, all.
9 I am sure you are happy this day has come. I think
10 everybody is. Let me start by thanking all of you and
11 everybody in this courtroom for your service. You have been an
12 extraordinary jury.
13 As Professor Silber said, you asked better questions
14 than most of us. You were attentive. You came every day.
15 One of the things that always strikes me about when we
16 are having these final arguments and talking to the jury in
17 this context is the really amazing thing about our system.
18 Here we have a fight between two big companies, and you folks
19 are going to make that decision -- from all different walks of
20 life. There is nothing like it anywhere in the world. It is
21 really cool.
22 And so I know I'm proud of the system and I am proud
23 of the way you as a jury have come here every day, been
24 patient, listened to the lawyers. I am sure a lot of what we
25 say is boring, and we occasionally tried to be funny, not
SOUTHERN DISTRICT REPORTERS, P.C.
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1 always, but it is really important. Your service is really
2 important.
3 So let's get to what this case is about and what it
4 isn't about. You have heard a lot about the prior proceeding,
5 Lord knows.
6 And you have also heard that Vivendi's going to appeal
7 that. It is not final. We are not proud about that. You know
8 that Mr. Bushnell told you he wasn't proud of it. He regretted
9 it.
10 But that is not what this case is about, because from
11 Liberty's perspective they would have you believe that there's
12 really nothing for you to decide. There was the prior
13 proceeding.
14 They had certain findings with regard to the hidden
15 liquidity risk. It's over. But you recall Judge Scheindlin at
16 the beginning of the case said to you, no, there is a lot to
17 decide. There is a lot left here.
18 You have to decide whether or not they relied, did
19 they justifiably rely on these statements.
20 You have to decide whether in fact those statements
21 caused them to suffer loss.
22 You have to decide whether they could have avoided all
23 the loss simply by not closing when they closed.
24 Those are the issues that are before you. They are
25 complicated, and we are going to go through it and we are going
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1 to talk about what the evidence in this courtroom, the written
2 documents, and the testimony of the witnesses, including the
3 witnesses from Liberty, show about each one of those issues.
4 Now, here is the things that we said from the very
5 beginning we were going to prove.
6 That Liberty Media had its own reasons for closing the
7 deal, and it did not rely on any misleading statements. I
8 think we have proved that in spades.
9 Number two, that despite warnings, despite the red
10 flags, Liberty Media did nothing to investigate the problems at
11 Vivendi. And we proved that in spades.
12 And, third, that Liberty Media did not have to close
13 the deal, certainly not on May 7, and it was solely Liberty's
14 choice to close when they closed. And we proved that.
15 Those are the key issues in this case. The other side
16 spent several days bringing in witnesses like John Luczycki and
17 Karen Trickett and Marie-Jose Kravis, and they showed you
18 videos from all of those things having to do with what happened
19 back in 2001. Now, none of those people who testified had
20 anything to do with this deal, nothing.
21 They showed you the book of warnings and the
22 death-seat memo, all of those documents that have to do with
23 the prior proceeding. This is not the prior proceeding. This
24 is this proceeding. And these are the issues ultimately that
25 you folks are going to have to decide.
SOUTHERN DISTRICT REPORTERS, P.C.
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C6lnlib1 Summation - Mr. Quinn
1 Now, one thing we should keep in mind, and I hope you
2 will, is one very simple thing that they themselves testified
3 to over and over again. And that was that you know the drop in
4 the stock between December and May, the 50 percent drop in the
5 stock, 800 million, 900 million whatever the number was, they
6 testified over and over again that they took the risk as part
7 of the contract with regard to the stock going down.
8 In fact, they kept saying we couldn't get out of the
9 contract just because of that. But that was the contract.
10 That's what they agreed to.
11 And you heard from Professor Coates. He said it was
12 highly unusual. It wasn't customary to have this kind of deal.
13 But that's what they agreed to.
14 These are sophisticated guys. They know what they are
15 doing. They took the risk that the stock would go down because
16 it also could have gone up. That's what happens in this
17 circumstance. But the contract itself makes clear that any of
18 that loss in value is not damages here because that is what
19 they agreed to as part of the contract.
20 Now, as much as they kind of danced and weaved about
21 this issue, I think we can all agree that Liberty and
22 Mr. Malone and Mr. Bennett and Mr. Tanabe are very
23 sophisticated investors.
24 Mr. Tanabe actually described Liberty as a collection
25 of, "I think a lot of people would say, financial engineers,
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1 accountants, tax advisers, and lawyers."
2 That's what they do. They are investors. They don't
3 make stuff. They invest, and they do it very well, and they're
4 very sophisticated at it and they know what they're doing.
5 This is critical. Whose choice was it to close? This
6 is the testimony you heard in this courtroom:
7 "Q. So, let me see if I have this right. Legally, you didn't
8 have to close on May 7th?
9 "A. I believe that's the case."
10 That's Dr. Malone.
11 "Q. That was solely Liberty's choice?
12 "A. I believe that's true."
13 Mr. Tanabe.
14 "Q. And you chose, notwithstanding that, knowing that you were
15 going to be down a billion dollars, you chose to close,
16 correct?"
17 Mr. Tanabe: "Yes, we did."
18 This is about choice. They had choices, they had
19 options, and that is what they chose to do. Not for any
20 nefarious reason. They had good business reasons for doing it.
21 We are going to go through those good business reasons.
22 Now, remember, they had their own book of warnings.
23 They had Mr. Dermer.
24 Mr. Dermer spent five months finding out the
25 skeletons, and you saw one article where he said he thought
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1 they were talking about Mr. Messier deceiving investors. He
2 talked about the fact that there were liabilities that hadn't
3 been disclosed. All of this was prior to the contract being
4 closed on May 7.
5 And his vote, the guy who was closest to it, the guy
6 who was studying it the most, his vote was not to close.
7 But they closed anyway. They closed anyway because
8 they had good business reasons to close. They had options.
9 They had lots of options.
10 They could have renegotiated the price. Mr. Bushnell
11 told you that that's done all the time. They could have asked
12 more questions, Lord knows. They didn't ask any other than a
13 one-hour meeting where after which -- and we will go through
14 this in greater detail -- after which they concluded that what
15 they were being told wasn't true, that they were essentially
16 being lied to. Talk about a red flag.
17 They could have delayed the closing. There's no issue
18 but that they could have delayed the closing. They had until
19 September 30, at which point they could walk away from the
20 whole thing.
21 There is no question that they could have delayed it
22 and they could have chosen not to close. We are not closing
23 now until we know more. We are not going to close.
24 Now, we will talk about this a little later. Their
25 excuse now, ten years after the fact is, well, they said we
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1 could have gotten sued. We could have gotten sued.
2 Well, Mr. Bushnell told you there was no way Vivendi
3 was going to sue them, because the closing conditions hadn't
4 been met. They had no claim.
5 But did you see a single e-mail or memo that in all
6 the documents that said anything about the possibility that
7 either Mr. Diller or Vivendi was going to sue them because they
8 didn't close? I am going to suggest to you there is not.
9 Because that wasn't on their mind.
10 The opposite was on their mind. They were actually
11 looking for ways to close.
12 As Mr. Bushnell told you, it was Liberty not looking
13 to get out, but Liberty was making suggestions, how we can
14 figure out a way to close this deal by May 7.
15 And we all know why they wanted to close on May 7:
16 The dividend was coming three days later. They can talk about
17 the fact it is only 37 million and we were down 800 million or
18 whatever. But by contract they were down 800 million. This
19 was 37 million in cash that was going to go into their pockets.
20 What else have you heard? We heard this over and over
21 again. During this entire period of time, Mr. Malone
22 testified -- let's start first with the December signing. He
23 testified specifically that they had significant leverage to
24 negotiate the things that they wanted.
25 Why? Because they had those blocking rights. They
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1 could make the deal not happen. They had leverage in December,
2 and they used it and they got what they wanted.
3 And they had leverage in May. You see the e-mail that
4 Mr. Tanabe wrote on the very day of the closing where he says
5 he had leverage because of the failure to satisfy both the
6 Lagardre waiver and the F-3 condition.
7 Leverage. These guys are sophisticated businessmen,
8 nothing wrong with that. But for them to now say, stepping
9 back -- and, oh, sure, it's true. I guess theoretically
10 anybody can be defrauded. But that's not what happened here.
11 These guys weren't victims. They knew what they were
12 doing. They entered into this with their eyes wide open; or,
13 to use a different phrase, because they did this knowingly
14 blindly with their eyes wide shut. But they knew what they
15 were doing.
16 So let's talk a little bit about the reasons for
17 closing the deal and the fact that they weren't relying on
18 misleading statements.
19 You remember this from the beginning, and Lord knows
20 they put it up enough times. I thought it was a perfectly nice
21 chart actually, but they didn't seem to like it very much and
22 they didn't like it very much because it showed why they were
23 really doing the deal.
24 Because of the testimony I have actually made some
25 changes to the chart. They didn't like "get rid of the
SOUTHERN DISTRICT REPORTERS, P.C.