Volkswagen and previous CEO Martin Winterkorn should defend an investor lawsuit in California over the automaker’s diesel emissions scandal, a U.S. judge ruled on Wednesday.
U.S. District Judge Charles Breyer also turned down a request by Volkswagen brand chief Herbert Diess to have the proposed securities fraud lawsuits threw out of a California court. Other defendants consist of Volkswagen’s U.S. unit and its Audi of America unit and the previous head of its U.S. unit, Michael Horn.
The investors legal actions are mostly U.S. municipal pension funds that invested in Volkswagen through American Depositary Receipts (ADR), a kind of equity ownership in a non-U.S. business that represents the foreign shares of the business held on deposit by a bank in the company’s home nation.
Volkswagen have argued that German courts were the correct location for investor lawsuits.
Breyer stated in his judgment that “because the United States has an interest in protecting domestic investors against securities fraud” the lawsuits must go forward in a U.S. court.
The pension funds consist of those representing Arkansas State Highway Employees and Miami Police. The lawsuit stated Volkswagen’s market capitalization dropped by $63 billion after the emissions scandal became public.
A Volkswagen spokesperson had no immediate remark Wednesday.
Winterkorn resigned days after the scandal ended up being public and much of the company’s management has been altered since 2015.
Volkswagen in September 2015 confessed using sophisticated secret software in its automobiles to cheat exhaust emissions tests, with 11 millions automobiles worldwide affected. The cheating permitted nearly 580,0000 Volkswagen’s U.S. diesel vehicles sold since 2009 to release approximately 40 times legally permitted pollution levels.
