Article: Court of Appeals Braunschweig: Damper for VW in the Model: Court Strengthens Plaintiff
Braunschweig (dpa) – In the multi-billion dollar investor process to “diesel gate” Volkswagen and its main shareholder Porsche SE have taken a new damper.
According to the provisional opinion of the Oberlandesgericht Braunschweig, the knowledge of managers below board level is also crucial for the possible information of the markets.
But Judge Christian Jäde made it clear that this was not a preliminary decision.Plaintiff attorney Andreas Tilp nevertheless spoke of a “very good day for the plaintiffs”. VW lawyer Markus Pfüller stated that they do not share the opinion of the court.
The Senate’s argument: Senior executives and department heads are in direct contact with the board. Specifically, Jäde addressed the units for aggregate development as the “core” as well as product safety.
In addition, for example, in the engine development with insider knowledge is expected to have an impact on the business and can be relevant to the markets, he said. Thus not only the executive committee is responsible for so-called “ad-hoc messages” to the markets.
The main issue in the proceedings is whether VW has timely informed the markets of the scandal surrounding millions of maltreated diesel engines. An “ad hoc announcement” in the exhaust gas scandal was published by the Group on September 22, 2015.
From the perspective of the plaintiffs, this was too late, from a VW point of view, however, there were no indications of a price relevance until the US Environmental Protection Agency (EPA) had made their allegations public on 18 September 2015. Sample Defendants are Volkswagen and VW’s principal shareholder, Porsche SE; the claimant is the fund company Deka Investment – representing around 1,700 claimants.
According to Jäde, divisional heads are partially responsible for “ad hoc” information to the markets – the executive board alone can not cope with the procurement of information: “In a no-longer so small company, the executive board is not in a position to” ad -hoc »obligation to fulfill alone,» he said. However, these facts are disputed, there is still no supreme court decision.
Tilp explained that it no longer matters whether ex-CEO Martin Winterkorn knew the background of the scandal. The problem with this is that if the Senate were to commit to this view, it could be said that the board is liable even if employees deliberately conceal information. According to VW data, there are currently 1750 divisional managers throughout the Group. Throughout the period that the process revolves, there are far more.
However, another crucial question for the procedure is that the Senate left open whether there was any price-relevant information at all. “And that’s what counts,” it says in a VW statement. One would still argue “excellently” about this question, explained Pfüller. And, if the knowledge of the board were demonstrable in the scandal, then one would not need the “detour” over the attribution of the knowledge of the management level, he said. At any rate, the idea of a settlement is currently absurd – “we are in the introduction of the subject of the dispute”.
Volkswagen said: “What we have heard today about the attribution of knowledge does not correspond to the prevailing view in jurisprudence and literature.”
As early as last year, Jäde had stated – also as a preliminary assessment – that the auto giant might have informed the capital market too late. He referred to the VW confession to US authorities of 19 August 2015, to have manipulated diesel engines – this could have been a price-sensitive information. After the exhaust gas scandal became known, the VW preference shares had lost almost half of their value in the meantime, investors suffered partly massive losses.
Overall, the plaintiffs claim about 9 billion euros in damages. However, there are still some complaints in the regional courts of Braunschweig and Stuttgart, so that the amount in dispute at the Oberlandesgericht Braunschweig amounts to about five billion euros.
In addition to the Brunswick proceedings, there are almost 200 shareholder lawsuits in Stuttgart, with which investors want to claim damages from Porsche SE. Whether in these cases its own process according to capital investor pattern procedure law in Stuttgart must give, decide there the higher regional court on Wednesday.