Law360, New York (March 15, 2016, 12:52 PM ET) — Volkswagen AG has been hit with a $3.6 billion lawsuit in Germany in which nearly 300 institutional investors from across the globe accuse the automaker of breaching its duty to the capital markets participants with regard to its emissions scandal, counsel for the investors said Tuesday.
The $3.61 billion (€3.25 billion) suit was filed in Germany’s Regional Court in Brunswick Monday by 278 investors from 15 different countries, according to the law firm representing them: TISAB Rechtsanwaltsgesellschaft mbH. Among the investor plaintiffs is CalPERS, one of the largest pension funds in the U.S.
The group alleges that VW breached its duty to them beginning in 2008 when it first unveiled its “clean diesel” cars, which the world would later learn were not as clean as the automaker made them out to be. Their suit is the first multibillion-dollar lawsuit to be filed against VW over the admissions scandal, TISAB said.
“Due to the fact that — according to our information and experience — Volkswagen AG persistently denies any settlement negotiations and also refuses to waive the statute of limitation defense until now, it was necessary to file this first multibillion Euro lawsuit. We are pleased that so many institutional entities from all over the world have mandated us to represent them in this lawsuit,” Andreas Tilp, managing partner of TISAB, said.
The lawsuit has garnered the support of a legal and funding consortium consisting of leading U.S. securities class action law firms Grant & Eisenhofer PA and Kessler Topaz Meltzer & Check LLP as well as international investor protection firm DRRT and Ireland-based litigation funding company Claims Funding Europe Ltd., according to multiple sources.
TISAB says the consortium plans to finance further lawsuits against VW brought by the German law firm on behalf of institutional entities. It says that it has been in touch with more than 20 other institutional investors with damage claims totaling more than €1 billion.
The suit filed Monday follows others brought against VW by investors after the news broke that the automaker had been cheating admissions standards worldwide. Earlier in March, Volkswagen denied German shareholders’ accusations that it was too slow to admit its scheme to cheat diesel emissions standards. The company said it complied with the country’s disclosure laws and sees several lawsuits filed against it in Braunschweig District Court in Germany as lacking merit.
The automaker has filed a formal statement of defense in those cases, rejecting investor allegations that it violated corporate disclosure requirements under capital markets law.
After “careful examination” by internal and external experts, VW said it’s clear the management board informed investors of the emissions fraud in a timely fashion, according to a long statement intended to correct “selective and incomplete” media reports.
In the statement VW said an investigation by Jones Day into the emissions fraud is ongoing, and the firm is sifting through 102 terabytes of secured data, equal to about 50 million books. A preliminary report on the investigation is expected by the end of April.
At the moment, VW said, the root of the fraud lies with a group of as-yet-unidentified workers in the company’s powertrain development division, all below its management board.
A Volkswagen spokesman declined to comment Tuesday on the lawsuit filed against the company a day earlier.
–Editing by Emily Kokoll.