UPDATE 2-Porsche faces new $1 bln lawsuit by hedge funds

* Funds allege Porsche engineered massive short squeeze

* More than $1 billion losses claimed) (Adds background, details throughout)

By Jonathan Stempel

NEW YORK, March 15 (Reuters) - Several New York hedge funds, including Greenlight Capital LP and Tiger Global LP, have filed a new lawsuit accusing German automaker Porsche SE (PSHG_p.DE) of causing more than $1 billion of losses by cornering the market in shares of Volkswagen AG (VOWG_p.DE).

The lawsuit, filed in a New York state court, follows the December dismissal by a Manhattan federal judge of a similar $2 billion lawsuit filed by hedge funds, including some that sued on Tuesday. [ID:nN30119446]

That judge, Harold Baer, cited a June 2010 ruling by the U.S. Supreme Court that narrowed the ability of plaintiffs to use U.S. federal courts to pursue claims involving foreign conduct. His ruling has been appealed, court records show.

James Heaton, a lawyer for various hedge funds in both cases, declined to comment, as did Porsche spokesman Steve Janisse.

The hedge funds alleged they lost money through a "massive short squeeze of historic proportions" in October 2008.

They contended that 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, shares of VW soared, briefly making the company the world's biggest by market value. This caused losses for hedge funds that had bet on a decline in the stock price.

"Put simply," the complaint said, "Porsche targeted short sellers in order to amass a position in VW shares that it could not have amassed on the open market without the plaintiffs' short selling."

Tuesday's lawsuit alleges common law fraud and unjust enrichment. It also seeks punitive damages.

Greenlight is led by David Einhorn, who rose to prominence by making a prescient call on Lehman Brothers Holdings Inc's LEHMQ.PK accounting problems before the Wall Street bank's September 2008 bankruptcy.

Tiger is overseen by Chase Coleman, a disciple of legendary hedge fund manager Julian Robertson.

Other plaintiffs in the case include Glenhill Capital LP, Glenview Capital Partners LP, Royal Capital Value Fund LP and various affiliates.

The case is Glenhill Capital LP et al v. Porsche Automobil Holding SE, New York State Supreme Court, New York County, No. 650678/2011. (Reporting by Jonathan Stempel; Editing by Gary Hill and Steve Orlofsky)