The Appellate Division of the New York State Supreme Court reversed the lower court's denial of Porsche's motion seeking dismissal of the U.S. lawsuits, the Stuttgart, Germany, sports car maker said.
A group of 26 hedge funds are seeking damages of more than $1.4 billion to compensate for losses they sustained when VW briefly became the most expensive company in the world after Porsche quietly accumulated VW shares through options, while initially denying it had takeover aspirations.
The funds allege "fraud and unjust enrichment," the sports car maker said in a Thursday statement.
However, the appeals court held that there was an "inadequate connection" between New York and the German corporate saga, given that VW stock isn't listed in the city and that neither the defendant nor most of the plaintiffs are New York residents.
Porsche preferred shares in Frankfurt were up 5.6% at €61.53 by early afternoon Friday, giving the company a market value of €18.8 billion ($24.8 billion). VW shares were up €1.6 at €163.1, valuing the stock at €77.6 billion.
The plaintiffs have 30 days to appeal to the New York State Court of Appeals, the highest court in the state.
Porsche's New York victory follows a German court's September rejection of two lawsuits seeking €4.7 million from Porsche. The suits were filed by a private Berlin investor and Switzerland's MyCapital MC SA. They accused Porsche of lying in statements in order to manipulate the price of Volkswagen shares -- both had bought VW options betting the stock price would fall.
The same court in Braunschweig, Germany, will look at similar cases next April filed by institutional investors seeking €4.8 billion.
The New York ruling also follows the August finale of a lengthy and turbulent drama surrounding the tie-up between Volkswagen and Porsche. Volkswagen in August paid €4.46 billion and one share for the 50.1% of Porsche's carmaking unit that it didn't already own.
That came almost three years after Volkswagen bought an initial 49.9% stake in the unit, Porsche AG, for €3.9 billion. The investor lawsuits threw the companies' plan to complete a full merger in 2011 off course before the merger partners discovered a legal loophole allowing them to close the deal.
Nicholas J. Wittner joined Dykema Gossett PLLC's product liability practice as of counsel in the firm's Bloomfield Hills, Mich., office. For other updates launch today's Movers & shakers slideshow.
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