Ein Problem: Volkswagen Facing $10.7 Billion Investor Lawsuit Over Diesel Scandal

Matt Posky
by Matt Posky
ein problem volkswagen facing 10 7 billion investor lawsuit over diesel scandal

Volkswagen Group will be staring down the barrel of a courtroom next week, which isn’t anything new. The automaker’s investors want 9.2 billion euros ($10.7 billion) in compensation after arguing the carmaker should have informed shareholders about a diesel emission scandal before regulators got the word out in 2015.

The lawsuit groups 1,668 individual claims, primarily those brought in by VW’s institutional shareholders, who previously accused the automaker of failing to inform investors about the scope of a scandal. Volkswagen’s excuse has always been that top brass had no idea the issue would be serious enough to cost the company 27.4 billion euros in punitive fines. But new evidence continues to emerge that upper management was well aware of the defeat devices’ existence.

Shareholders claim that, if Volkswagen opened up early on the problem, they could have limited the losses stemming from the scandal. Instead, the Environmental Protection Agency blew the whistle in September of 2015 and VW shares plummeted as details emerged. Reuters estimates that shares dropped 37 percent in value within the first few days following the EPA’s announcement. That valuation would continue to fall sharply for the remainder of the month.

Volkswagen has since admitted to emissions cheating and accepted its penance, but continues to deny any wrongdoing as far as the regulatory disclosure is concerned. The company has remained steadfast in its assertion that board members, including Volkswagen’s current chief executive Herbert Diess and chairman Hans Dieter Poetsch, have not violated any official disclosure rules.

“Neither the management board nor individual board members caused or were involved with the compliance violation in the United States,” VW’s court filing said.

The trial is scheduled to begin on Monday in Braunschweig, Germany — near VW’s Wolfsburg headquarters. Presiding Judge Christian Jaede will be running the show.

Because Germany doesn’t allow U.S.-style class-action lawsuits, the case, brought by Deka Investment GmbH, will serve as a proof for future litigation. The Wall Street Journal reports that the outcome would serve to inform the rulings on the multitude of pending lawsuits seeking $10.7 billion in damages. It also claimed that a victory for shareholders was far from certain, as it is not common practice for German courts to grand such large awards for damages in civil litigation cases.

[Image: Volkswagen]

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  • Johnny ro Johnny ro on Sep 07, 2018

    Shareholder lawsuits are weird. The suit is on behalf of shareholders, who bear the profits and losses of VAG. Lets pretend they win their $10b. Where does it come from? From VAG shareholder equity. A forced dividend, paid out by current shareholders to the 2015 shareholders? Wonder if German lawyers will take the top 30% of the settlement?

    • Jpolicke Jpolicke on Sep 08, 2018

      This occurred to me as well. If you're suing a company you own a part of, you're hurting your own investment. Kind of like suing your spouse for damaging your shared car that was fixed with money from your joint account. Now, if they went after Winterkorn, Piech, et al, personally, that would be worthwhile. Strip 'em down to the shorts.

  • Iddqd Iddqd on Sep 08, 2018

    as a german i know a bit more, so here it is: one memo-styled letter appeared, written by some mid-level manager of VW at then CEO Winterkorn, informing him of the potentiality of a possible lawsuit in the US months before the CEO took any `action`- if you want to call it that. This mid-level manager stands by his word and the rest is to be decided..

  • SilverCoupe I am one of those people whose Venn diagram of interests would include Audis and Formula One.I am not so much into Forums, though. I spend enough time just watching the races.
  • Jeff S Definitely and very soon. Build a hybrid pickup and price it in the Maverick price range. Toyota if they can do this soon could grab the No 1 spot from Maverick.
  • MaintenanceCosts Would be a neat car if restored, and a lot of good parts are there. But also a lot of very challenging obstacles, even just from what we can see from the pictures. It's going to be hard to justify a restoration financially.
  • Jeff S Ford was in a slump during this era and its savior was a few years away from being introduced. The 1986 Taurus and Sable saved Ford from bankruptcy and Ford bet the farm on them. Ford was also helped by the 1985 downsize front wheel drive full sized GM cars. Lincoln in 1987 even spoofed these new full size GM cars in an ad basically showing it was hard to tell the difference between a Cadillac, Buick, and Oldsmobile. This not only helped Lincoln sales but Mercury Grand Marquis and Ford Crown Victoria sales. For GM full size buyers that liked the downsized GM full size 77 to 84 they had the Panther based Lincoln Town Cars, Mercury Grand Marquis, and Ford Crown Victorias that were an alternative to the new GM front wheel drive full size cars that had many issues when they were introduced in 1985 and many of those issues were not resolved for several years. The Marks were losing popularity after the Mark Vs. 1985 was the last year for the rear wheel drive Olds Delta 88 and rear wheel drive Buick Lesabre the rear wheel Caprice and Caprice Classic 3rd generation continued till 1990 when it was redesigned. B Body Buick Estate wagons continued thru 1990 as the Olds Custom Cruiser wagon and both were redesigned. GM held onto a few rear wheel drive full size cars but the Lincoln ad really brought home the similarly looking front wheel drive full size cars. Lincoln's ad was masterful.
  • SCE to AUX Toyota the follower, as usual. It will be 5 years before such a vehicle is available.I can't think of anything innovative from them since the Gen 1 Prius. Even their mythical solid state battery remains vaporware.They look like pre-2009 General Motors. They could fall hard.
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