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VW wins judgment in disputes over bondholders over emission fraud



(Reuters) – A divided U.S. appeals court sentenced Volkswagen AG on Friday by giving the German carmaker another chance to end a lawsuit alleging that he deceived bondholders by concealing how it cheated pollution tests on its vehicles.

The Ninth U.S. Circuit Court of Appeals in San Francisco said a lower court judge erroneously applied the law by refusing to dismiss the proposed class action lawsuit by holders of $ 8.3 billion in bonds sold by VW in 2014 and 2015, ordering that he would look into the matter again. [19659002] VW had stated that the plaintiff, Puerto Rico government employees and the legal aid system administration, could not have been misled by marketing materials for the bonds because it did not show that it trusted them. District Judge Charles Breyer had in September 201

9 decided to rely on the German automaker's silence if cheating was adopted, citing the United States' highest court lawsuit in 1972 Affiliated Ute Citizens of Utah against the United States.

However, in Friday's 2-1 decision, District Judge Milan Smith said the presumption did not apply because the plaintiff also claimed to have relied on nine sides of VW's affirmative error statements.

"The plaintiff can prove trust by ordinary means by showing a connection between the alleged errors and its damage," Judge Smith wrote. "Otherwise, the exception would swallow the rule."

VW's lawyer Robert Giuffra, vice president of Sullivan & Cromwell, welcomed the decision, saying the plaintiff was trying to make Affiliated Ute "an open assumption that would apply in any case."

Mitchell Twersky, lawyer at Abraham Fruchter & Twersky, representing the plaintiff, said there were "sufficient reasons" to question the decision, which he said overburdened the plaintiff with securities fraud.

In 2015, VW admitted to having secretly used illegal software to avoid emission regulations for six years. The scandal has cost VW more than 32 billion euros ($ 38.2 billion) worldwide.

The case is Puerto Rican Government Employees and Judicial Pension System Administration v. Volkswagen AG et al., 9th U.S. District Court, Nos. 20-1556. .


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