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On May 20, 2021, the Eastern District of New York dismissed a putative securities fraud class action against an auto manufacturer and certain of its executives alleging that the company had engaged in a decades-long anticompetitive conspiracy and that defendants made various false or misleading statements concerning competition, competitive pressures, commodity prices, manufacturing inputs and compliance. Mucha v. Volkswagen, 2021 WL 2006079 (E.D.N.Y. 2021) (Irizarry, J.). The court held that plaintiffs failed to state a claim for securities fraud because they failed to adequately allege that the company engaged in any unlawful conduct.

The court determined that plaintiffs “have not alleged adequately that [the company] engaged in any unlawful conduct. Thus, they fail to state a claim for securities fraud.” The court pointed out that the company’s statements were alleged to be false or misleading because of the company’s purportedly unlawful anticompetitive conduct. However, the court observed that plaintiffs did not contend that the statements would still be false or misleading if the company’s cooperation with its rivals was lawful and that plaintiffs also acknowledged that “not all forms of cooperation within the industry are illegal.”

The court further determined that plaintiffs “failed to plead with particularity that [the company’s] coordinated actions with other car manufacturers were unlawful and anticompetitive.” Specifically, the court held that plaintiffs’ “failure to identify any specific laws or to plead with particularity how [the company’s] conduct violated those laws is fatal[.]” The court stated that even though the allegations regarding the company’s cooperation with other manufacturers were detailed, plaintiffs did not identify any specific laws violated or explain how the conduct ran afoul of those laws.