Commercial Litigation and Liability

Diesel scandal offers a glimpse of what is to come

One thing is becoming ever more apparent since the diesel scandal came to light at Volkswagen: this whole affair, which is no longer limited to the Wolfsburg-based corporation, is like a magnifying glass honing in on all the dispute resolution trends that are set to shape the years to come.

On the one hand it highlights just how powerful consumer class action suits can be. The association-led class action suits planned to be introduced by Federal Minister of Justice Heiko Maas may not have materialized before the parliamentary election in the end, however plaintiffs’ representatives have displayed an unprecedented level of creativity in the course of the diesel scandal, thus far breaking the mold with foundation models and other means and modes of taking legal action.

Litigation funders are gaining in significance here, enabling US-style lawsuits to find their way into Europe. It therefore comes as no surprise that US firms such as Hausfeld and Quinn Emanuel Urquhart & Sullivan are driving this development forward.

The fact that good ideas catch on had already been evidenced with regard to cartel damages, where esp. Deutsche Bahn assumed a leading role. The sugar and truck cartels in particular are attracting damages claims. The diesel affair could, however, set new standards in this respect if the industry agreements, which have been made public, have in fact transcended the legally permitted limit.

And if that were not enough to keep the litigation and antitrust specialists busy, legislators have now implemented a European directive with the ninth amendment to the German Act against Restraints of Competition, marking a small revolution for German civil procedural law. For the first time ever, both claimants and defendants are now entitled to demand that evidence is disclosed prior to a trial. The new regulations may well keep the courts busy for years while also bringing about a significant increase in activity for litigators.

Banking boom continues

The strong upwards trend in terms of litigation in the banking sector is nothing new. The class action suits of years past aimed at banks and their loss-making financial products in the wake of the financial crisis may be past their peak, however major internal investigations looking at the banks’ involvement in controversial tax deals, such as dividend stripping (“cum-ex”) trades, which defrauded the revenue office of several billion euros, are far from over. Whether or not the trades were in fact illegal is yet to be determined. More recent judgments pronounced by the fiscal courts and the ongoing activity at the public prosecutors’ offices would however suggest an inclination towards illegality – with serious consequences for those involved.

All eyes on the executives

Should this be the case, high-volume D&O liability disputes should be reckoned with. A lawsuit is already under way in the case of UniCredit subsidiary HypoVereinsbank against former members of the board.

In the VW complex, too, the focus will shift to the liability of those holding positions of power within the company – whether with an eye to deception, delayed ad hoc notifications or possibly illegal arrangements with competitors. Practices specializing in insurance law are already stretched in terms of dealing with the consequences of the scandal thus far. The actions of executives – and the review of said actions by supervisory boards – are being subjected to an ever harsher liability regime. This is also reflected in a criminal law ruling: with regard to the HSH collapse, the Federal Court of Justice (Bundesgerichtshof) quashed the acquittal of the former managers, stating that their breach of obligations under corporate law was so severe that it also constitutes a breach of duty under criminal law.

Bystanders are also envisaging additional demands being placed on managers following the implementation of the EU directives on shareholders’ rights and corporate social responsibility.

Defense specialists assert themselves

A huge number of firms are now involved in the VW affair. Topping the list here is Freshfields Bruckhaus Deringer, which is coordinating the defense against civil action taken by customers in over 50 countries and also represents the corporation in criminal law besides unfair competition, administrative and regulatory matters. With more than 4,000 proceedings pending in Germany alone, Freshfields is now calling on the support of additional firms under its leadership. It is, for instance, publicly known that also Luther, Heuking Kühn Lüer Wojtek and Noerr are defending the corporation against claims made by customers.

SZA Schilling Zutt & Anschütz is taking the lead when it comes to claims made by investors who feel they have been misled by the corporation’s information policy. Companies affected by D&O liability matters are similarly relying on established outfits. In part, the big corporate units at Freshfields Bruckhaus Deringer and Hengeler Mueller, besides well-connected firms such as Hogan Lovells and CMS Hasche Sigle, are continuing to profit from the current wave of claims.

Changes are mainly seen here where lawyers manage to relieve their previously active colleagues as new advisors with no prior involvement in a particular case. The best example of this was seen at Linklaters in the wake of several dividend stripping (“cum-ex”) cases.

Increasing integration between litigation and antitrust practices

By contrast, there is a lot more activity on the part of the plaintiff. In terms of stock corporation disputes, objection proceedings still tend to be where the action is following a change in the law a few years back. However, the case of VW and the rise of shareholder activism based on the US model, which sees shareholders drawing on legal means in an attempt to influence the management of a company, are establishing a whole new breed of plaintiff firm.

Broich and Quinn Emanuel Urquhart & Sullivan, for instance, are representing precisely these types of active shareholders, as recently evidenced in the Stada case. With regard to class action suits falling under the Capital Markets Test Case Act, which are playing a significant role in the course of the diesel scandal, the firm Tilp is the most experienced in Germany.

Dr. Stoll & Sauer, Rogert & Ulbrich and Hausfeld, on the other hand, litigate on behalf of VW customers, some of them representing several hundred plaintiffs. Hausfeld is one of the most prominent outfits, however, not only here but also in cartel damages disputes, where established plaintiff representatives such as Oppenländer and Osborne Clarke are faced with more and more competition.

The first thing that comes to mind here are the parties involved in the truck cartel, which, in turn, is keeping lawyers busy at renowned defense outfits such as Gleiss Lutz (Daimler), Hengeler Mueller (MAN) and Clifford Chance (Volvo/Renault). These practices also form the spearhead of a development which is gaining in momentum with the boom in cartel damages: the ever closer integration of the litigation and antitrust specialists.


The subchapter on corporate litigation deals with firms which advise on court disputes between companies on the one side and investors, shareholders and individual shareholders on the other, e.g. by way of challenges against board resolutions. A further focus is placed on disputes between shareholders or cases involving claims made against a company’s decision-making bodies. Additional firms experienced in litigation are also found in the ?corporate chapter.

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