The NRA, the Pope, Porsche and Piech, all eyes were on the Supreme Court for the last few days: Gun owners watched the Chicago case (right to arm bears upheld.) Accountants and CPAs monitored the treatment of their favorite boondoggle, a.k.a. Sarbanes-Oxley (upheld.) Rome said “oh my God” when they heard that a lawsuit that accuses the Vatican of conspiring with U.S. church officials to cover up sex abuse could proceed. Meanwhile, Germany’s attention, from Zuffenhausen to Wolfsburg, was fixated on Morrison v. National Australia Bank, No. 08-1191. The Supreme Court seriously frustrated attemps by overseas investors who want to drag non-American companies into American courts. Champagne corks popped at Volkswagen and Porsche. The Guardian: “America’s supreme court has told prospective European claimants to take their claims back to Europe.” So what does that have to do with Porsche?
For all practical intents and purposes, the Anschluss of Porsche with Volkswagen has already been consummated. Volkswagen is putting its boys into Porsche. Piech is already leaking his supposedly most secret product plans. Volkswagen is moving at light speed with people and products, but they are dragging their heels when it comes to finishing the “Integrierter Automobilkonzern” – the final, formal, official subjugation of Porsche. Maybe next year. Maybe later. And why’s that?
Damn lawyers. A group of hedge funds brought suit against Porsche. If they win, it could cost Porsche up to €9b. According to a prospectus for a money raise by Volkswagen, a win in U.S. courts “could even lead to the insolvency of Porsche Automobil Holding SE.” You don’t want to own something that might be liable for more than 10 billion dollars.
With the Supreme Court decision that reversed 40 year old case law, the plaintiffs “will have a much harder time to pursue their case in the U.S.A.,” says Das Manager Managzin. The case of Hedgies v. Porsche rests on the same paragraphs and case law that was just annihilated by the High Court.
Says the magazine: “The plaintiffs could now base their case on state law instead of federal law. If that doesn’t work out, they would have to bring their case to a German court. The legal hurdles are much higher in Germany than in the U.S.A.” Not only that. The awards are much, much lower in Germany. Bringing a civil suit is risky in Germany: Loser pays all court and legal costs. The higher the damages claimed, the higher the costs. Let’s put it this way: You don’t want to sue Porsche in Stuttgart unless you have a watertight case. And even then, the judge will most likely wag his finger at you and recommend that you settle.
Manager Magazin’s bottom line: “Piech & Co breathe a sigh of relief.” The U.S. Supreme Court did its share for the advancement of an “Integrierter Automobilkonzern.”