Shareholders and drivers are suing VW: The largest trial in the diesel scandal begins on Monday at the Braunschweig Higher Regional Court. It’s about 9 billion euros.
What is the shareholders’ trial against Volkswagen about?
DThe Higher Regional Court of Braunschweig will for the first time hear an institutional investor’s claim for damages against Volkswagen in a test case from next Monday. The Sparkasse fund company, Deka Investment, is demanding more than 200 million euros as compensation for the loss in value that the shares suffered after the diesel scandal was uncovered in September 2015. But that is only the tip of the iceberg: Overall, the proceedings concern lawsuits amounting to around 9.5 billion euros. This is the highest amount that investors have ever asked for a corporation in Germany.
What are the allegations?
On September 18, 2015, the California EPA published the allegation that VW had manipulated the emission values of its diesel vehicles in the United States with the help of software. Four days later, Volkswagen admitted irregularities for the first time. In the course of these revelations, the share price collapsed by more than 40 percent. The shareholders want to be compensated for this damage. The plaintiff’s attorney Andreas Tilp even argues that Volkswagen should have warned investors back in 2008, when the engine was first certified, that the strict American environmental regulations could only be complied with by using manipulation software.
How does the trial work?
The procedure is carried out as a model procedure in accordance with the Capital Investor Model Procedure Act (KapMuG). So far, this special feature has only existed in Germany in the area of investor lawsuits. The effort is huge, which is why the town hall in Braunschweig is specially rented to accommodate all the lawyers, journalists, consultants and spectators. The point is actually to make mass lawsuits simpler: the central idea is that not every plaintiff has to fight his or her own proceedings. Instead, the Higher Regional Court of Braunschweig has selected a model plaintiff with Deka Investment who now has to fight through her process until the final decision. The other plaintiffs are, however, summoned to the test case, their proceedings are paused for that time. According to the Higher Regional Court, around 1640 lawsuits with more than 3500 participants against VW are suspended. In addition to Volkswagen, Porsche Automobil Holding SE, which is associated with VW, is also on trial in a few lawsuits. The result of the model lawsuit is binding for all other lawsuits.
How are the chances?
In the coming months, the judges will have to assess whether VW has informed investors in good time about the affair surrounding the fraud involving millions of manipulated diesel engines. Experience has shown that this is difficult to assess. The model plaintiff’s lawyer, Andreas Tilp, is confident of victory. Together with an international team, he has collected a lot of evidence that should make it clear that the VW management knew about the manipulation early on. Even the use of a shutdown device was information relevant to the stock exchange. Volkswagen, on the other hand, rejects all allegations. The board was unaware of the manipulations that were only organized by a small group of engineers. In addition, there were no price-relevant news before September 18, 2015. The only thing that is clear at this point is that it will be a tough process that may drag on for years. Tilp is sure that the matter will go to the Federal Court of Justice.
What can VW shareholders do now?
Shareholders who have not yet filed a lawsuit can no longer join this model proceeding. The deadline for this expired a year ago. However, they can still claim damages on their own. However, you should hurry with this, you only have until the end of the year, otherwise the statute of limitations threatens. In addition to Tilp, there are many other lawyers who advise investors on their lawsuits. The law firms of Nieding + Barth and Hausfeld Rechtsanwälte are particularly prominent, and they work together with the consumer protection portal myRight.
What can car owners do if they are demanding compensation because of the diesel scandal?
Car owners can sue Volkswagen with the argument that their vehicle has lost dramatically in value due to the manipulation of the emissions values - and many do that with the help of lawyers. Quite a few have succeeded, and a plaintiff has even been awarded a higher-quality replacement vehicle. The exact number of plaintiffs is currently difficult to determine because there is still no model case for them. Estimates assume around 50,000 lawsuits. Only from November 1st will there be an opportunity to join a “model declaratory action”. Unlike in the case of investor lawsuits, an association such as the consumer association must lead the process on a representative basis. Consumers can secure their claims by registering in the complaint register at the Federal Office of Justice.