A Detroit judge ruled Volkswagen Group does not have to face a $750 million lawsuit by a unit of supplier Prevent Group, who alleged the automaker sought to strangle the company’s business over a pricing dispute.
U.S. District Judge Bernard Friedman on Monday threw out a 2019 antitrust suit filed by Prevent USA, accusing VW of launching a corporate dirty-tricks campaign to interfere with its acquisitions, cut it off as a supplier and make an example out of the Bosnia-based company.
The case was among more than a half-dozen suits the two companies have filed against each other in three countries regarding a 2016 pricing squabble over Prevent’s decision to cut off parts supplies to VW. Judges in Germany have split their rulings in the cases.
Friedman said Prevent’s suit was a “continuation of an ongoing dispute” currently before the German courts over the Bosnian company’s allegations VW is trying to drive it out of business. The judge threw it out on procedural grounds, finding the case should be heard in Germany.
“While we are disappointed by the ruling, the dismissal on forum grounds simply postpones the inevitable,” Duane Loft, a U.S.-based lawyer for Prevent, said in an emailed statement. “Eventually, in some court, Volkswagen will have to answer for its misconduct.”
Prevent Group claims in the lawsuit it was targeted by VW after a 2016 dispute tied to canceled orders for seat covers and transmission cases forced the automaker to temporarily close plants making Golf and Passat cars and lay off workers.
While the companies worked out a quick settlement of the 2016 dispute, Prevent argues in court filings VW executives set up an internal group to find ways to force Prevent out as a supplier and exclude it from the car parts business altogether.
The Project 1 task force led efforts to interfere with acquisitions, hiring private investigators to tail the Bosnian company’s executives and “manufacturing negative press” about the supplier, the filings allege.
A VW manager assigned to Project 1 began having qualms about the group’s mandates and secretly taped some of the task force’s sessions, according to the filings. Those tapes later were leaked to media outlets in Germany.
The manager — who had been uncovered as the mole by an internal investigation and suspended — later was found dead in his burned up car, court filings show. He lived in a village near VW’s Wolfsburg headquarters. German authorities are still investigating his death.
VW and Prevent have sued each other over the pricing dispute and the Project 1 allegations in Germany and in Holland, according to court filings. Prevent filed two suits in the U.S. over the flap.
Friedman cited Prevent’s decision to sue VW in Germany over the battle between the two companies in deciding the case did not belong in the U.S. courts.
“Germany is an available and adequate forum for the litigation of the instant dispute,” he said. The Bosnian company’s decision to seek redress in German courts is “powerful evidence plaintiffs themselves recognize Germany as an available and adequate forum for the litigation of such disputes.”
The case is Prevent USA Corp. v. Volkswagen AG, 19-cv-13400, U.S. District Court for the Eastern District of Michigan (Detroit).
