Hedge funds lost another round in court over a suit stemming from Porsche's attempted takeover of Volkswagen, which saw Wolfgang Porsche, left, and Ferdinand Piech, chairman of VW, on the same team, but with VW in charge.

In what many might consider karma, dozens of hedge funds looking for a payoff from the controversy surrounding Porsche failed bid for Volkswagen AG suffered were shot down in court: again.

The U.S. Court of Appeals for the 2nd Circuit in New York City upheld the dismissal of a lawsuit by a group of more than two dozen American and British hedge funds that claimed to suffer big losses in the fall of 2008 when Porsche executives manipulated the company’s holdings of Volkswagen stock in what turned out to an abortive bid to take over VW.

Porsche had started buying shares in 2006 but ultimately the plan collapsed during the financial crisis that followed the collapse of Lehman Brothers.

The episode ultimately left Porsche saddled with billions of dollars of debt, cost Wendelin Wiedeking his job and led to Volkswagen take over Porsche, which was completed in 2012.

Meanwhile, hedge funds looking to “short” Porsche share were left with billions of dollars in losses. The appeals court said Porsche’s alleged wrongdoing was “so predominantly foreign” that it could not be held liable in U.S. federal courts under domestic securities fraud laws.

The court also upheld the dismissal of lawsuits over claims that the company misled investors.

The lawsuits, including some pending in Europe, have revolved around efforts by various hedge funds, including Paul Singer’s Elliott International LP and David Einhorn’s Greenlight Capital LP, to recover about $2 billion in losses they blamed on Porsche’s “massive short squeeze” in VW.

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They claimed that during 2008, Porsche quietly bought up freely traded VW shares, despite publicly stating it had no plans to take a 75% controlling stake.

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When Porsche revealed actually held a big stake in October 2008, shares of VW stock skyrocketed. This briefly made VW the world’s largest company by market value, but caused losses for the hedge funds on swap agreements where they had bet the share price would drop.

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The hedge funds’ original suit was dismissed in December, but they appealed to the 2nd Circuit, which sided with district court.

Lawsuits against Porsche also have been dismissed in German courts, narrowing the potential liability faced by Volkswagen, which inherited the potential liabilities with its takeover of Porsche, which was supported by both the German Chancellor Angela Merkel and the German state of Lower Saxony.