The German Capital Investor Model Case Act (Kapitalanleger-Musterverfahrensgesetz) was first established in 2005 and is intended to make it easier for aggrieved investors to enforce claims for damages by enabling model proceedings for false, misleading or omitted public capital market information, such as in annual financial statements or stock exchange prospectuses. In model proceedings, questions of fact and law that arise in at least ten individual damages proceedings can be decided uniformly by a Higher Regional Court ("OLG") with binding effect for all claimants.
In 2018, the Act on the Introduction of a Model Complaint in Civil Procedure (Musterfeststellungsklage) was enacted. With the model declaratory action, claims of a large number of similarly aggrieved consumers can be efficiently asserted. Registered consumer protection associations (Verbraucherschutzbund) have the possibility to have the existence or non-existence of factual and legal preconditions for the existence or non-existence of claims or legal relationships established for the benefit of at least ten affected consumers. The model declaratory action is conducted exclusively between the consumer protection association and the defendant. It thus represents a foreign body in private autonomy, where claimants are otherwise not separated from their claims in the conduct of proceedings. Affected consumers can register for a court action and thus achieve the suspension of the limitation period for their possible claims. The results of the model declaratory judgement have binding effect for subsequent actions of the consumers' own.
Has the directive been implemented in this jurisdiction?
Is the jurisdiction allowing for an opt-in or opt-out model?
The draft law already published provides for an opt-in model.
Brief description of major class action cases in Germany:
All cases fall under the current regime and therefore do not relate to the Directive.
Cases relating to the Investor Model Case Act (Kapitalanleger-Musterverfahrensgesetz)
Deutsche Telekom AG: The first proceedings in Germany under the KapMuG were against Deutsche Telekom AG for alleged prospectus inaccuracies in the DT3 IPO. In 2012, the Frankfurt OLG was unable to find any prospectus errors in a model decision. In 2014, the German Federal Supreme Court ("BGH") ruled that the prospectus was defective and referred the proceedings back to the Frankfurt OLG for a new hearing. The original model claimant has died since. Most recently, after 20 years of trial, Telekom AG made a settlement offer to the claimants, which was to be substantiated by mid-2022.
Hypo Real Estate Holding AG: A large number of actions for damages have been brought against Hypo Real Estate Holding AG (mother company of the Hypo Real Estate Group), among others, which are based on the fact that duties to inform the capital market were breached in 2007 and 2008. The Munich OLG issued a model decision in response to a submission order of the Munich Regional Court ("LG") in which it found, inter alia, breaches of information duties in connection with press releases in 2007, the effects of the US real estate crisis as of 2007 and an ad hoc announcement in 2008. In 2014, the Munich OLG ruled that Hypo Real Estate Holding AG had not dutyfully informed investors of its difficult situation in 2007. In 2020, the BGH partially confirmed the model decision of the Munich OLG and otherwise referred it back to it for further proceedings. In mid-2022, the model claimant and Hypo Real estate Holding AG agreed on a settlement.
Volkswagen AG - Dieselgate: The next significant case under the KapMuG started in September 2018 on behalf of more than 1600 individual claims before the Braunschweig OLG against Volkswagen AG due to investors' share price losses in connection with the emissions scandal ("Dieselgate"). The proceedings are still ongoing. Parallel proceedings are also ongoing against Porsche Automobil Holding SE.
Ernst & Young (EY) - Wirecard scandal: Early 2022, the starting signal has been given for shareholder lawsuits in the context of KapMuG proceedings against the auditor Ernst & Young (EY) in the Wirecard scandal, because they seemingly failed to uncover $2.1 billion that were missing at Wirecard AG. The Munich Regional Court has announced its binding decision to refer the proceedings to the next instance. The Bavarian Supreme Court will hear the case. The background to this is that the insolvent Wirecard AG and also its responsible Management Board members will only be able to compensate a small part, if at all, of the share price losses suffered by the aggrieved investors. Therefore, an attempt will be made to hold EY responsible instead.
Cases relating to the Introduction of a Model Complaint in Civil Procedure (Musterfeststellungsklage)
Volkswagen AG - Dieselgate: With the introduction of the model action for a declaratory judgement on 1 November 2018, the VZBV filed an action against Volkswagen AG before the Braunschweig OLG on the same day on the grounds of Dieselgate. ADAC supported the model lawsuit as a cooperation partner.The aim of the lawsuit was to determine whether buyers of diesel vehicles in which a certain type of engines were installed are entitled to compensation. More than 400,000 consumers joined the lawsuit. The proceedings ended with a settlement between the parties in 2020. More than 240,000 consumers accepted this offer and Volkswagen AG had to pay out a total compensation of about 750 million Euros.
Mercedes-Benz Bank: In 2019, the association of bank clients (Schutzgemeinschaft für Bankkunden) brought an action before the Stuttgart OLG against Mercedes-Benz Bank on the grounds of non-transparent revocation information in loan agreements for car financing. The Stuttgart OLG dismissed the model declaratory action as inadmissible barely 3 months after the action was filed. This decision was confirmed by the BGH in 2020.