Volkswagen, several former executives –including Martin Winterkorn, the former Chair of the company’s Board of Management– and the company’s D&O insurers have reached an agreement to settle damages claims the company asserted against the executives relating to the company’s “Dieselgate” scandal. In March 2021, following a years-long investigation of the scandal by an outside law firm, the company filed the claims, in which the executives were alleged to have breached their duties to the company. The settlement, worth in the aggregate approximately $351 million in U.S. dollar terms, includes substantial payments both by the individual executives and by the company’s D&O insurers. The D&O insurers’ contribution reflects a separate settlement between the company and its insurers with respect to insurance coverage issues. A copy of VW’s June 9, 2021 press release describing the settlement can be found here.
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Dutch Shareholder Foundation Seeks to Represent Global Class of VW Investors
Several years ago, when investors’ representatives used class claims settlement procedures available under Netherlands law to reach securities claim settlements involving Royal Dutch Shell (about which refer here) and Converium (about which refer here), there was a great deal of speculation whether the Dutch procedures could become an important vehicle for aggrieved investors to recover damages for alleged securities law violations.
This speculation was particularly magnified after the Amsterdam Court of Appeal, in connection with the Converium settlement, held that the Dutch settlement procedures could be used to resolve securities claims of non-Dutch investors against a non-Dutch company, in the form of judgment that is enforceable throughout the EU and among other European countries. Though many of these kinds of investor settlements were anticipated, the onslaught of securities settlements using the Dutch procedures never really did materialize.
However, a new initiative being organized in The Netherlands on behalf of Volkswagen securities holders whose investment interests were harmed as a result of the automobile company’s emissions-related scandal may represent the most significant effort since the Converium case to try to use the Netherlands procedures on behalf of an aggrieved class of investors. This initiative on behalf of Volkswagen’s securityholders has a number of interesting features. It also raises a number of potentially complicated questions about jurisdiction, priority, potential preemption, and international comity.
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Litigation Funding Firm Announces German Securities Action on Behalf of Volkswagen’s German Shareholders
The recent revelation that Volkswagen had been using a sophisticated software “defeat device” to rig the emissions performance of some of its diesel-engine base vehicles devastated the price of the company’s shares, leading to the filing of a securities class action lawsuit in the U.S. on behalf of purchasers of the company’s ADRs, as well the initiation of efforts to launch procedures in the Netherlands on behalf of VW shareholders who purchased the company’s shares through a Dutch bank or broker.
In my recent post discussing these VW-related securities litigation developments, I raised the question whether investors might also try to file a separate action against VW in Germany, under German law, on behalf of shareholders who purchased their VW shares in Germany. It now appears that a litigation funding firm’s effort to organize a German shareholder action is already underway.
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Volkswagen Vehicle Emissions Scandal Triggers U.S. Securities Suit, Dutch Collective Action Initiative
The news that Volkswagen employed sophisticated software-based “defeat devices” in order to permit a number of its diesel-engine models to appear to meet U.S. emissions standards has dominated the headlines in the business pages over the last few days. The news has already led to the resignation of its embattled CEO, Martin Winterkorn. In addition to regulatory enforcement proceedings, the company faces possible criminal action as well as a host of consumer lawsuits. In addition, on September 25, 2015, plaintiff’s lawyers filed a securities class lawsuit in the Eastern District of Virginia against VW, its U.S. operating divisions, and certain of its directors and officers, on behalf of investors who purchased VW’s American Depositary Receipts (ADRs) in the United States. As discussed below, there are a number of interesting features to this new securities lawsuit. In addition, as also discussed below, a Dutch investors’ association has separately initiated an effort under Dutch collective action statutory provisions to pursue claims against VW, as well.
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