Porsche Likely to Face Investor Test-Case Over Diesel ProbeBy
Investors filed 147 suits, seeking 900 million euros
U.K. pension fund’s case is first to be heard in Stuttgart
A Stuttgart court is likely to bundle nearly 150 lawsuits under a special procedure for large cases, Presiding Judge Fabian Richter Reuschle said Friday at a hearing, referring to a procedure akin to U.S. class actions. He was overseeing a hearing in a case filed by a U.K. pension fund that is seeking 5.7 million euros ($6.4 million). All the cases total about 900 million euros, the judge said.
The Porsche shareholders say they lost money because the company failed to disclose in a timely manner the risks Volkswagen faces from installing software that cheated on emissions tests. Since then-Volkswagen Chief Executive Officer Martin Winterkorn also served as Porsche’s head, the company, which owns more than 50 percent of VW’s stock, should have disclosed the scheme on its own and much earlier, investors argue.
The suits in Stuttgart constitute a second front for investors. VW’s stock price dropped 35 percent and Porsche’s 32 percent in the two trading days after U.S. regulators disclosed the software that detected when a car was on a test stand and reduced harmful emissions to allow the vehicle to pass inspections.
The judge said he will wait until after he’s heard a separate investor case involving Porsche and Volkswagen jointly in Stuttgart before making his ruling. This may not come before the end of the year. The hearing Friday involved a lawsuit led by West Midlands Pension Fund, one of the U.K.’s largest retirement funds, covering the areas including Birmingham and Coventry.
Volkswagen is facing 1,400 suits seeking a total of 8.2 billion euros in the Regional Court of Braunschweig.
Porsche lawyer Markus Meier said that the holding company first heard on Sept. 18, 2015 about the scandal, when the U.S. authorities disclosed it. It couldn’t inform markets earlier as Winterkorn wasn’t permitted to share confidential information he received in his role at VW.
The court will look into the responsibilities of executives serving on multiple boards of legally separate companies, Judge Richter Reuschle said. While principally they’re barred from disclosing what they learned from one company to the other, things may have been different in the VW case because Porsche was a major shareholder.
"When we’re talking about risks so grave that they may threaten to destroy the company, then there may be a duty to disclose the information by a person who serves on both boards," the judge said. "In such circumstances the law could assume that both companies know what their CEO knows. We have to see whether that applies to Porsche and VW."
Friday’s case is: LG Stuttgart, 22 O 101/16.
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