The Higher Regional Court of Stuttgart has given parties to respond to a preliminary legal opinion the court had prepared with regards to the question of whether there are grounds for a (parallel) Porsche Holding SE (Porsche SE) model case proceeding in Stuttgart. Before, Porsche had been named second defendant in the ongoing Volkswagen AG (VW) model case proceeding by the Higher Regional Court of Braunschweig. It is likely that the Higher Regional Court of Stuttgart will render its final decision shortly. This will have an impact on the options for investors seeking recovery for their losses for Porsche SE shares in the aftermath of ‘Dieselgate’.
Porsche Holding SE is the listed holding company of the Porsche family which holds around 52% of the Volkswagen AG ordinary shares (not to be confused with the producer of the sports cars, Porsche AG). Interestingly, Martin Winterkorn was the CEO of VW and Porsche SE from 2009 onwards. Further, other members of the board of VW were also active at Porsche SE. Porsche SE has its seat in Stuttgart while the seat of Volkswagen is close to Braunschweig.
Model case proceeding
When the share price of VW sharply dropped after the notice of violation was published by US environmental authorities and VW admitted that defeat devices had been used, the share price of Porsche SE also sharply dropped. When several investors claimed damages before the Lower Regional Court of Stuttgart a model case proceeding was initiated by the lower court in 2017 to determine the liability of Porsche SE. The proceeding has not yet been “accepted” by the Higher Regional Court of Stuttgart, the court in which a Stuttgart model case proceeding would take place. Instead, on 15 June 2018 Porsche SE was named second defendant in the Volkswagen model case proceeding before the Higher Regional Court of Braunschweig.
In a legal opinion, the Higher Regional Court of Stuttgart addressed the reasons why it had not “accepted” the model case proceeding and made very clear that it does not see grounds for a Porsche SE model case proceeding to take place in Stuttgart. Parties to the trial had time to comment on the legal opinion of the court until 7 September. For the Court, many relevant questions regarding the liability of Porsche will already be addressed in the Braunschweig model case proceeding. For this reason:
All Porsche related cases in Stuttgart could be stalled until the model case proceeding in Braunschweig has ended.
We expect a final decision by the Higher Regional Court of Stuttgart in the next weeks. We believe that it is very likely that the court will not change its opinion. The same question will also be addressed by the Higher Regional Court of Braunschweig as some plaintiff groups do not agree with the assessment that Porsche SE should be party to the model case proceeding in Stuttgart.
Depending on the decisions of both Higher Regional Courts (Braunschweig and Stuttgart), Deminor will either issue proceedings for a group of institutional investors or register its claims in one of the model case proceedings.
Affected Porsche SE investors have still the opportunity to register for the case until 15 October.
Written on September 21, 2018 by
Felix von Zwehl
General Counsel Germany