Volkswagen investors seek $9.2 billion for diesel scandal losses
A German court has been flooded with new lawsuits against Volkswagen from investors who say they lost billions as the value of the carmaker’s shares plunged after its diesel emissions scandal.
The surge could add to the company’s financial woes as it deals with the fallout from the revelation a year ago that it had cheated on emission tests.
In Germany, a regional court in Braunschweig, near Volkswagen’s headquarters in Wolfsburg, said it had registered more than 1,400 complaints from institutional and individual shareholders seeking $9.2 billion in damages. Of those suits, 750 were submitted on Monday alone, coinciding with the one-year anniversary of the disclosure by U.S. authorities of the company’s use of illegal software on its diesel vehicles to cheat on U.S. emission tests.
The company had already reached a $15 billion settlement in the United States and set aside nearly $20 billion for costs related to the deception. It also faces a raft of complaints from customers in Europe, though regional law means it is harder for disaffected vehicle owners to unite to sue the carmaker.
The volume of the new claims, the court said, was equivalent to about half the number of cases it processes in an average year. The suits were filed in Germany because that is where the primary listing is for Volkswagen’s stock.
The development, which came after the court decided in August to allow investors to submit collective claims against Volkswagen, could foreshadow legal bottlenecks. But because German law contains no provision for class-action litigation, a common tactic in the United States, the court will use a system similar to a “bellwether trial.”
Rather than rule on each suit individually, the court plans to select one plaintiff as a model out of the 1,400 suits filed. It expects to do so by the end of the year and to apply its eventual judgment to all the other cases.
The rush of filings this week was intended to ensure that Volkswagen could not challenge the claimants’ right to sue by citing a one-year statute of limitations for material claims under German securities law, said Marc Schiefer, a German lawyer representing institutional and individual shareholders whose claims against the carmaker exceed $5.6 billion.
But he noted that German law was changed last year to allow claimants to sue for three years after the facts of a case become known. That means additional investor suits could be filed against Volkswagen in Germany until 2018.
Among the shareholders suing Volkswagen in Braunschweig are hundreds of individuals, as well as private and public pension funds in Germany and the United States.
Volkswagen car owners in Europe are also seeking payouts. But unlike the solution proposed to shareholders, the main recourse available to consumers has been to band together with a handful of lawyers and online collection agencies to obtain compensation.
Such efforts, which are not related to the investor lawsuits, have so far only managed to recruit a small fraction of the 8.5 million owners in Europe of tainted Volkswagen diesels.