Did you hear that? That was a sigh of relief, emanating from the few souls that are still holding the fort at Volkswagen in Wolfsburg and Porsche in Zuffenhausen. The sudden release of long held breath was caused by U.S. District Judge Harold Baer, who dismissed a lawsuit by 10 hedge funds who accused Porsche of securities fraud during the Wiedeking/Härter hijinx. The hedgies claimed more than $2 billion in damages, which gave Volkswagen pause in fully absorbing Porsche. Now, they can floor it.
What tripped the claimants? The U.S. Supreme Court, in Morrison v. National Australia Bank, reasonably told plaintiffs that U.S. courts are the wrong place to sue for allegedly egregious acts perpetrated elsewhere. That ruling left Judge Baer no other alternative.The shares were traded at a German exchange. Go complain there.
While the judge was at it, he also dismissed claims against former Porsche CEO Wendelin Wiedeking and former CFO Holger Härter, Porsche said.
The hedge funds could appeal, but chances are nil to zip.
Said an exasperated Jim Sabella, a lawyer retained by the Black Diamond hedge fund group: “The real problem is Morrison, which is a disaster for investors.”
It’s a disaster for lawyers who need education in jurisdiction.