German court to speed up VW investor lawsuits
Ruling aims to get claims processed more efficiently
AGerman court will adopt a rarely used class-action style procedure to more efficiently process claims by investors seeking damages from Volkswagen (VW) over a diesel emissions cheating scandal, according to a ruling.
The regional court in Braunschweig near VW’s Wolfsburg headquarters said on Monday it will pick one case to act as a model to help resolve as many as 170 other damages claims, the closest thing Germany has to class-action lawsuits common in the US.
Private and institutional investors are suing VW, alleging that managers at the carmaker failed to disclose in a timely manner its involvement in a diesel emissions test cheating scandal.
VW rejects the claim. “VW continues to take the view that it has duly complied with disclosure rules related to securities law,” a VW spokesman said on Monday, adding the court’s decision to allow for a model proceeding is a “normal procedural step” that is also backed by VW.
Most of the 170 cases have been filed by private investors with the largest case by lawyer Andreas Tilp filed on behalf of 277 institutional investors and worth 3.26 billion euros ($3.6 billion).
Tilp has represented investors in many German cases over capital market-disclosure issues.
The Braunschweig court said the representative plaintiff will be named at the earliest in the fourth quarter and the model proceedings will help speed up resolution of the cases.
Germany’s legal system does not allow for US-style class action suits for resolving the consumer claims of Volkswagen owners.
The purpose of model proceedings is to resolve generic or common issues for other related cases, but unlike in a US class action, the model proceeding does not have the legal effect of also resolving all of the individual claims.
Europe’s largest automaker is caught up in legal action in the US, South Korea and elsewhere and also faces criminal investigations related to its diesel emissions test manipulations, its biggest-ever corporate scandal.
Investors say they lost hundreds of millions of euros after US regulators revealed VW’s manipulation on September 18.
VW knew earlier about the regulatory probe into high levels of car emissions, but did not admit until September 22 that 11 million cars worldwide were fitted with illegal software.
Germany introduced model proceedings in mass actions for certain types of securities fraud in 2005 following a case involving Deutsche Telekom, which became the target of thousands of lawsuits over alleged prospectus fraud, allegations the company denied.
Italy’s anti-trust agency also said on Monday that it had fined VW 5 million euros for allegedly misinforming car buyers about diesel emissions results.
The Italian watchdog said it would impose the highest fine in its power on VW, which it said had marketed diesel-powered cars that had been tested for polluting emissions using a software that gave artificially low results.
VW and its Italian division “have fully cooperated with the utmost openness and transparency” to help ascertain the facts, the carmaker said and “are certain that the IAA-decision presents well-founded grounds of appeal.”
Production halt
On the carmaker side, VW suspended production of vehicles at one of its biggest plants in Germany for two days this week for a shortage of seat covers, a spokesperson for the German automaker said on Monday.
Production in Emden, VW’s northern German factory, which employs nearly 10,000 workers, is on halt Monday and Tuesday as a supplier to Sitech Sitztechnik GmbH, VW’s in-house maker of vehicle seating is having delivery problems, the spokesman at VW’s Wolfsburg headquarters said.
“We are in contact with the supplier,” he said. “The canceled production shifts will be made up for.”
The Emden factory, adjacent to one of Europe’s largest vehicle transshipment ports, builds the VW Passat saloon and estate models, and the CC saloon as well as components.
The plant produced 264,000 vehicles last year with daily output currently at 1,250 cars, the spokesman said.