A US federal judge dismissed a lawsuit by 10 hedge fund groups accusing German automaker Porsche SE of cornering the market in shares of Volkswagen AG, resulting in more than $2 billion of damages.US District Judge Harold Baer said the funds, led by Elliott Associates and Black Diamond Offshore Ltd, could not maintain securities fraud claims based on Porsche's alleged "short squeeze."He cited a June ruling by the US Supreme Court, in Morrison v. National Australia Bank Ltd, that narrowed the ability of plaintiffs to use US courts to pursue claims involving non-US conduct.Claims were also dismissed against former Porsche CEO Wendelin Wiedeking and his deputy Holger Haerter, Porsche said.It is unclear whether the hedge funds might appeal.VICTIMISED"Obviously, we're disappointed," said Jim Sabella, a lawyer representing the Black Diamond hedge fund group. "While we disagree with Judge Baer, the real problem is Morrison, which is a disaster for investors."Kaspar Stoffelmayr, a lawyer representing the hedge funds led by Elliott, declined to comment. An outside spokeswoman for that group did not immediately return a call for a comment.The hedge funds alleged they were victimised when Porsche quietly bought nearly all the freely traded ordinary shares of Volkswagen as part of a plan to take over the company, contrary to its public statements that it had no plans to do so.When Porsche revealed its holdings in October 2008, shares of VW soared, briefly making the company the world's biggest by market value.This caused losses for the hedge funds, which had entered swap agreements and would have benefited from a decline in price.VOLKSWAGEN'S PROBLEM"Plaintiffs' swaps were the functional equivalent of trading the underlying VW shares on a German exchange," Baer wrote."The economic reality is that plaintiffs' swap agreements are essentially 'transactions conducted upon foreign exchanges and markets,' and not 'domestic transactions'" warranting US court protection, he added.Baer dismissed most of the plaintiffs' claims with prejudice, meaning they cannot be brought again.The claims had posed a risk for Volkswagen, which wants to merge Porsche into its operations next year.