Judge in Germany urges VW to settle diesel emissions cases

Court urges compromise with 470,000 owners in case that could stretch to 2023

Normally German law does not permit class-action suits but this case is taking place under a new legal provision in place since last November. Photographer: Dominic Verhulst/Bloomberg

Normally German law does not permit class-action suits but this case is taking place under a new legal provision in place since last November. Photographer: Dominic Verhulst/Bloomberg

 

A German court has urged Volkswagen to reach a settlement with 470,000 people who joined a class-action suit over their cars’ manipulated diesel engines.

Germany’s federal consumer agency has taken legal action in a court in Brunswick claiming software to switch off car emissions filters in regular road use represent “immoral and deliberate” action by VW that has damaged motorists’ rights.

The unprecedented case that opened on Monday involves VW group cars – Volkswagen, Audi, Seat or Skoda – with the EA189 motor type with defeat devices uncovered four years ago by US environmental authorities.

On the first day of proceedings, the court agreed to hear the case but presiding judge Michael Neef promised a rigorous analysis of all similar compensation cases under German law.

Normally German law does not permit class-action suits but this case is taking place under a new legal provision in place since last November.

Given the number of complainants, hearings have been shifted from the city court complex to a local event hall.

Lawyers for the consumer association say the resale value of affected owners cars has collapsed. But in initial remarks, the court appeared to side with VW arguments that software fixes and other interventions have left customers with working cars.

“After all the vast number of the vehicles are still being used,” said the judge. “That damage has resulted does not seem apparent.”

In addition, he said, any compensation awards would have to be written off against the duration of use to date because “we don’t see that a vehicle can be used for years for free”.

Legal observers say that a full hearing and appeals could mean it will be 2023 before a final verdict.

Even after this test case is concluded, individual owners will then still have to file individual compensation claims.

Given the time and potential tidal wave of legal cases, the court on Monday suggested compromise may be in everyone’s interests.

“A settlement is very difficult but possible,” the judge said.

Consumer association lawyers are seeking €17,510 compensation per VW owner, which they say reflects the average payouts to date. If every one of the 2.4 million owners of affected vehicles was entitled to compensation, that would see a bill of €42 billion for the German car company.

In the United States, VW paid an average of €19,428 compensation to 350,000 affected motorists – a total of €6.8 billion.

In Europe, VW has disputed that the so-called software defeat devices amounted to an illegal emissions manipulation. It says that almost all vehicles affected have, by now, received free software updates at no damage to the car.

Various individual cases to date have seen no consistent approach by German courts, with some ending in buy-back and compensation and others dismissed.

The Brunswick case brings huge financial risk for VW and almost none for complainants. Many have legal insurance to cover all costs while others have signed up with case financiers who agree to cover costs in exchange for taking a cut of any compensation award.