US judge dismisses Volkswagen bondholder's lawsuit
Group of investors sued the company after it admitted in September 2015 to secretly installing software to evade emissions rules
A US judge dismissed a lawsuit filed by institutional investors who purchased bonds from Volkswagen US unit and claimed the automaker had made false and misleading statements before its massive diesel emissions scandal became public.
Investors bought $8.3 billion in dollar-denominated bonds Volkswagen Group of America Finance sold in 2014 and 2015. A group of those investors sued the company after it admitted in September 2015 to secretly installing software to evade emissions rules for at least six years that led to the ouster of its chief executive, damaged the company’s reputation and prompted massive bills.
US District Judge Charles Breyer in San Francisco, late Friday dismissed the class-action suit against VW, its US unit and former chief executive Martin Winterkorn. the judge had ruled in July the case could go forward but reconsidered his decision after VW lawyers raised a new ruling by a federal appeals court in a case involving Barclays.
The investors alleged damages into the hundreds of millions of dollars after the bonds' value dropped. Judge Breyer gave the investors 30 days to file an amended complaint, but he said they will face a "heavy burden" to demonstrate they meet legal requirements.
The lead plaintiff in the action is the Puerto Rico Government Employees and Judiciary Retirement Systems Administration.
Volkswagen spokeswoman Jeannine Ginivan said Saturday the company "welcomes the court’s decision to dismiss the entire action as fundamentally flawed."
In total, VW has agreed to spend more than $25bn in the US to address claims from owners, environmental regulators, states and dealers and offered to buy back about 500,000 polluting US vehicles.
Investors from around the world are seeking 9 billion euros ($11bn) in damages from Volkswagen, which they say did not inform shareholders quickly enough over its use of illegal software to cheat US tests on diesel engine emissions.
About 1,600 lawsuits have been lodged at a regional court in Braunschweig near VW’s Wolfsburg headquarters, seeking damages over the sharp fall in VW shares that followed its emissions admission.
Earlier this week, Volkswagen told the German court it had no duty to disclose the possible financial damage of its manipulations prior to September 2015, when it issued an ad-hoc statement that the illegal software could be in around 11 million cars worldwide.
Led by investment management firm Deka, the plaintiff’s side includes another 2,000 individuals who have raised claims without suing VW, Reuters reported earlier this week.
Public hearings of the case at the Braunschweig court are due to start in early September.
Updated: March 4, 2018 04:09 PM