Washington - Volkswagen and
former CEO Martin Winterkorn must defend an
investor lawsuit in California over the company's diesel
emissions cheating scandal, a US judge has ruled.
The plaintiffs, mostly US municipal pension funds, have
accused VW of not having informed the market in a timely fashion
about the issue as well as understating possible financial
liabilities, according to the 41-court document seen by Reuters.
The pension funds include those representing Arkansas State
Highway Employees and Miami Police. The lawsuits said VW's
market capitalization fell by $63 billion after the diesel
cheating scandal became public in September 2015.
The plaintiffs had invested in VW through American
Depositary Receipts (ADR), a form of equity ownership in a
non-U.S. company that represents the foreign shares of the
company held on deposit by a bank in the company's home country.
"Volkswagen is convinced that the accusations raised by
buyers of the corporate securities (so-called American
Depositary Receipts) lack any foundation," a spokesman at VW's
German headquarters said by email.
"It's our intention to make this clear in the further course
of proceedings," he added.
VW shares did not react to the latest legal developments and
were trading up 0.7 percent at 139.7 euros as of 1115 GMT.
Secret software
US District Judge Charles Breyer rejected a request by VW
brand chief Herbert Diess to have the proposed securities fraud
lawsuits tossed out of a California court. Other defendants
include VW's US unit and its Audi of America unit and the
former head of its US unit, Michael Horn.
Volkswagen argued that German courts were the proper place
for investor lawsuits.
Breyer said in his ruling that "because the United States
has an interest in protecting domestic investors against
securities fraud" the lawsuits should go forward in a US court.
Read also: Volkswagen's woes deepen
CEO Winterkorn resigned days after the scandal became public
and much of the company's management has changed since 2015.
VW in September 2015 admitted using sophisticated secret
software in its cars to cheat exhaust emissions tests, with 11
millions vehicles worldwide affected. The cheating allowed
nearly 580 0000 VW's US diesel vehicles sold since 2009 to
emit up to 40 times legally allowable pollution levels.
The lawsuits said VW and its executives misled the investing
public "assuring them to the contrary - namely, that the diesel
vehicles met all applicable emissions standards" and it
"understated the liabilities that it would suffer as a result of
its known emissions non-compliance."
Volkswagen has agreed to spend as much as $17.5 billion in
the United States to resolve claims from owners and federal and
state regulators over polluting diesel vehicles.
Volkswagen could still spend billions of dollars more to
resolve a US Department of Justice criminal investigation and
federal and state environmental claims; come under oversight by
a federal monitor and face other conditions.
The Justice Department and VW are in settlement talks and it
is possible a deal could be reached before January 20, when
President Barack Obama leaves office, according to sources
briefed on the matter.