Some U.S. Investor Claims Allowed to Proceed in VW Diesel Scandal

U.S. investors may proceed with certain legal claims that Volkswagen AG recklessly understated the financial liabilities of its diesel emission cheating—but only in statements made after May 2014, a federal judge in California rules.

The complaints have been filed primarily by U.S. municipal pension funds. They say VW delayed and deliberately understated the impending impact of the scandal. The lawsuits assert that VW’s market capitalization plummeted by $63 billion after the company’s cheating was revealed in September 2015.

VW has since agreed to pay some $25 billion in fines and compensation for rigging 555,000 of its diesel-powered vehicles to evade U.S. emission laws. The company admits it sold another 10.5 million rigged diesels in other markets, including 8.5 million units in Europe.

U.S. District Court Judge Charles Breyer dismissed claims that VW made misleading statements before May 2014, the period in which it began to realize it might be caught for using illegal software in the cars. Breyer also rejected a plaintiff claim that VW brand chief Herbert Diess understated the carmaker’s financial liabilities in 2015.

But Breyer ruled that lawsuits may proceed about intentionally understated assessments made by Martin Winterkorn, who was VW’s CEO at the time, and Michael Horn, who was then president and CEO of VW’s Americas unit.