Why is there a test case?
The model plaintiff in this case is Deka, a fund company of the Sparkasse Group. Beyond that, there are more than a thousand other plaintiffs — both corporate and private — who also want to enforce their demands. At the same time, there are legal proceedings in Stuttgart against Volkswagen and Porsche. The procedure at Braunschweig's higher regional court is the larger one, with claims particularly against VW totaling more than €9 billion ($10.42 billion). While Monday's case deals with technical aspects of how and when the group communicated with financial markets, the court will have to lay out a timeline of the scandal and determine when executives learned about the cheating. Such details are vital to ongoing criminal investigations in Germany.
What does the test case hope to establish?
Judges will rule on more than 200 questions submitted by the two sides in the case. Among the most vital are whether VW should have let investors know about its cheating software, whether it deliberately covered up the information, and which board members knew what — and when.
What were the losses of the plaintiffs?
That depends on the time of the share purchase. The lawyers under the leadership of Andreas Tilp, who represent the model plaintiff before the higher regional court, will use the closing price of the VW shares before the US Environmental Protection Agency (EPA) made public the exhaust emissions manipulation on September 18, 2015.
EPA's allegations sent Volkswagen shares plummeting by 37 percent from the closing price the day before the announcement to €106 on September 22, 2015, when the Wolfsburg-based auto manufacturer first issued a statement to financial markets warning of risks to earnings from potential penalties.
How do the lawyers want to proceed?
Lawyers see the core problem as not only with the announcement of the manipulation on September 18, 2015, but also far earlier in April 2008. Because, as Tilp says, VW had recognized years before that the reduction of exhaust gases to the prescribed level was not possible. If this turns out to be true, the stock market should have been informed immediately.
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VW submitted an application for certification of the first engine with the technology for exhaust gas reduction. "From then on, VW cheated," says Tilp. In addition, cover-up attempts have continued from March 2014, when VW learned that a study by the International Council on Clean Transportation (ICCT) revealed that the emissions regulations of many cars were not adhered to.
What does VW think?
VW is focusing on September 18, because at that point the board had only just learned of the extent of the scandal. The world's biggest carmaker says the information available at the time did not make communicating with shareholders legally necessary. They argue that the cheating was a scheme by a small group of engineers acting without their superiors' knowledge or authorization. Once alerted by the US authorities, executives did not realize how serious the scandal would become, they add, believing it could be resolved amicably.
At the center of attention will be Martin Winterkorn, the engineer who claimed to know "every nut and bolt" of Volkswagen's entire range of models and ran the company as chief executive from 2007 to 2015.
How long will the trial last?
It is initially scheduled to run until December 10, 2018. The higher regional court could deliver a verdict next year.