Quinn Emanuel files €700m lawsuit against Volkswagen

International firm Quinn Emanuel has filed a substantial damages action against German car manufacturer Volkswagen AG (VW) on behalf of the California State Teachers' Retirement System, one of the world's largest pension funds, and scores of other institutional investors.

The case seeks to recover damages based on VW's failure to timely disclose its use of so-called defeat devices in diesel-powered vehicles between 2008 and 2015.

Defeat devices are software-based engine control systems designed to reduce nitrogen oxide (NOx) emissions in standardised emissions' testing conditions while permitting NOx emissions many times the legal maximum at all other times.

Up to 482,000 vehicles sold by VW in the US were found to have been fitted with such software. However, it was subsequently discovered that the scandal was not confined to the US, as the German company had apparently installed a further 11 million devices in vehicles sold across the globe.

VW's attempt to avoid emissions' control regulations has exposed the company to numerous regulatory investigations and consumer law suits across the globe resulting in severe damage to its reputation and a greatly diminished shareholder value.

The markets reacted negatively to the scandal, as some ‚¬25bn of Volkswagen's market capitalisation was wiped away. Investors saw the company's share price collapse from approximately ‚¬160 to ‚¬100 a share.

The plaintiffs in this case are long-term investors in VW ordinary and preference shares, stock they purchased at inflated prices because capital markets were, according to them, deliberately misled about the non-compliant diesel engines in VW's vehicles.

The case will be heard by the Braunschweig District Court. Quinn Emanuel will also file a model case application under a German statute permitting group relief in capital markets' cases.

The firm has been working with litigation funder Bentham Europe in co-ordinating the case. Jeremy Marshall, chief investment officer at Bentham, said: 'Today's filing represents the culmination of the work of many months but is merely the first step in the campaign.

'We have been struck throughout by the depth of feeling that exists against Volkswagen's admitted practices and its recent reaction to its self-inflicted crisis.

'The breadth of the shareholder base that is represented by Quinn Emanuel should be a wake-up call to Volkswagen AG that it needs to engage with shareholders now, resolve matters, and concentrate on regaining its market share.'

Dr Nadine Herrmann, managing partner of Quinn Emanuel's Hamburg office and the lead counsel in the case, commented: 'The case against Volkswagen is a litmus test for Germany's statutes protecting the integrity and efficiency of its capital markets.

'Were Volkswagen to escape liability on the flimsy excuses transpiring in its press releases to date, pleading ignorance of its boards in the face of widespread, systematic emissions' cheating, the courts would do Germany's economy a great disservice.

'If there ever was a corporate scandal requiring vigorous civil enforcement of information access rights it is this one. We are very fortunate that so many serious investors placed their trust in our firm and we stand ready to fight for them as hard as we can at this important frontier in German capital markets' law.'