VW Sued in Germany by Pension Fund Over Emissions Scandal Lossesby
California teachers fund is lead claimant, law firm says
Lawyers are seeking other investors to join group action
Volkswagen AG was sued by the California State Teachers’ Retirement System in the latest lawsuit to emerge from the emissions cheating scandal that wiped more than $20 billion from the carmaker’s market value.
The lawsuit was filed in Braunschweig District Court Monday on behalf of the fund and other institutional investors in VW, law firm Quinn Emanuel said. Damages could rise to as high as 700 million euros ($792 million) if other investors agree to join the group action, the firm said.
“Companies must be held accountable when they engage in such widespread deliberate deceit, which destroys shareholder value, damages their reputation and harms the public,” Brian Bartow, general counsel at the pension fund, said in a statement.
Volkswagen last year admitted installing software to beat government emission tests, acknowledging it needed to fix as many as 11 million diesel cars. The company is facing more than 600 claims from American customers who allege they were cheated, investor actions in the U.S. and Germany, and regulatory penalties of as much as $10 billion dollars. Profits from the company’s VW brand tumbled 86 percent in the first quarter.
A spokesman for the carmaker declined to comment on the lawsuit.
On Monday, German prosecutors said they are investigating whether former Chief Executive Officer Martin Winterkorn was too slow to tell investors about the potential cost of the recall.
The probe is reviewing whether Volkswagen should have disclosed the risks to investors sooner, prosecutors in Braunschweig said. On Sept. 22, four days after the cheating became public, Volkswagen set aside 6.5 billion euros to cover the cost of fixing rigged engines. The figure later grew to 16.2 billion euros for legal and other costs.
Investors bought VW shares at inflated prices because the company misled markets about the emissions from its diesel engines, according to Quinn Emanuel.