VW wins ruling in U.S. bondholder litigation over emissions cheating By Reuters

VW wins ruling in U.S. bondholder litigation over emissions cheating By Reuters

© Reuters. A new logo of German carmaker Volkswagen is unveiled at the VW headquarters in Wolfsburg, Germany September 9, 2019. REUTERS/Fabian Bimmer

By Jonathan Stempel and Jody Godoy

(Reuters) -A divided U.S. appeals court ruled in favor of Volkswagen AG (OTC:) on Friday by giving the German automaker another chance to end a lawsuit claiming it defrauded bondholders by concealing how it cheated pollution tests for its vehicles.

The 9th U.S. Circuit Court of Appeals in San Francisco said a lower court judge misapplied the law in refusing to dismiss the proposed class action by holders of $8.3 billion of bonds VW sold in 2014 and 2015, and ordered he look at the case again.

VW had said the plaintiff, Puerto Rico Government Employees and Judiciary Retirement System Administration, could not have been misled by marketing materials for the bonds because it had not shown it relied on them.

U.S. District Judge Charles Breyer had ruled in September 2019 that reliance on the German automaker’s silence about the cheating was presumed, citing the 1972 U.S. Supreme Court case Affiliated Ute Citizens of Utah v. United States.

But in Friday’s 2-1 decision, Circuit Judge Milan Smith said the presumption did not apply because the plaintiff also claimed to have relied on nine pages of VW’s affirmative misrepresentations.

“Plaintiff can prove reliance through ordinary means by demonstrating a connection between the alleged misstatements and its injury,” Smith wrote. “Otherwise, the exception would swallow the rule.”

VW’s lawyer Robert Giuffra, vice chair at Sullivan & Cromwell, welcomed the decision, saying the plaintiff was trying to make Affiliated Ute “an open-ended presumption that would apply in every case.”

Mitchell Twersky, a lawyer at Abraham Fruchter & Twersky representing the plaintiff, said there were “adequate grounds” to challenge the decision, which he said overly burdened securities fraud plaintiffs.

VW admitted in 2015 to having secretly used illegal software to evade emissions rules over six years.

It pleaded guilty in 2017 to fraud in a $4.3 billion settlement with the U.S. Department of Justice. The scandal has cost VW more than 32 billion euros ($38.2 billion) worldwide.

The case is Puerto Rico Government Employees and Judiciary Retirement Systems Administration v Volkswagen (DE:) AG et al, 9th U.S. Circuit Court of Appeals, No. 20-1556.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link

Leave a comment

Send a Comment

Your email address will not be published.

Enter text shown below: