Betting on lawsuits has growing appeal—and noteworthy backers, as a case against Volkswagen over its emissions scandal reveals.
The researchers from West Virginia University who in 2013 first discovered evidence that Volkswagen might be cheating on emissions tests weren’t thinking of California teachers at the time. But when the news of VW’s deception finally broke on Friday, Sept. 18, 2015, Brian Bartow—chief lawyer for the California State Teachers’ Retirement System, the second-largest pension fund in the U.S.—knew right away he had a problem. CalSTRS, with $190 billion or so in assets, owned about 330,000 Volkswagen shares.
Within days, VW’s stock price plummeted almost 40 percent, CalSTRS had lost roughly €20 million ($22.5 million) on its holdings, and the carmaker’s reputation was under withering attack. “It seems Volkswagen had a dirty little secret, and it’s not just consumers who are feeling betrayed,” Representative Fred Upton (R-Mich.), chairman of the U.S. Energy and Commerce Committee, said on Sept. 29.