One for All

German business antsy about prospect of class-action lawsuits

vw class action lawsuit germany
Trying to tip the scales. Source: Shutterstock/Helga Khorimarko

Much to the dismay of peeved VW owners keen to sue the cheating automaker for compensation over the diesel emissions scandal in 2015, German law makes no provision for class-action lawsuits. It is great for Volkswagen, because German VW customers would have to wage costly David v. Goliath legal battles to get their money back. Meanwhile in the US, class-action clout gives drivers strength in numbers to get payouts from the Wolfsburg-based company.

But the tide is turning now that Germany’s new government finally plans to allow collective lawsuits, a decision that not only deeply upsets VW, but other business leaders who are afraid they, too, will eventually have to pay up. Their argument against the change is that class-action lawsuits wouldn’t help consumers but just line lawyers’ pockets.

“The coalition must ask itself whether it wants to help consumers or serve the lawyers’ business models,” said Stephan Wernicke, the chief legal expert of the Association of German Chambers of Commerce and Industry (DIHK). The change, he said, “entails many risks of abuse that companies are rightly resisting.”

New Justice Minister Katarina Barley of the Social Democratic Party is in a hurry to get the law through parliament by November at the latest to give customers a chance to sue VW before the end of the year, when claims against the automaker come up against the statute of limitations. Ms. Barley said the legislation was especially important to her because it would improve people’s chances of getting justice. Consumer associations and politicians have been calling for collective lawsuits to be made possible ever since Dieselgate became public in 2015.

“Complex cases like the diesel scandal can’t be solved with the ‘one for all’ principle.”

Stephan Wernicke, DIHK legal expert

Mr. Wernicke of the DIHK said the government is overly focused on the VW scandal in its bid to get the law changed. “Complex cases like the diesel scandal can’t be solved with the ‘one for all’ principle,” he said. “That is short-sighted and it risks giving consumers false hope.”

Under the draft law, only recognized consumer rights groups would be allowed to launch collective lawsuits. But that restriction may be hard to enforce as it could clash with EU rules, Mr. Wernicke warned. To prevent the emergence of an “international claims industry,” he proposed setting up a public ombudsman to pursue class-action lawsuits. “Such a neutral and effective conflict resolution system for all involved is something that companies are also aiming for,” he said. He urged the coalition to wait until September, when the changes will be discussed by a congress of legal experts.

That’s unlikely to happen. Ms. Barley’s draft law, one of the first big projects of Chancellor Angela Merkel’s government, is expected to be approved by the cabinet in April.

Dietmar Neuerer is the politics correspondent for Handelsblatt Online. To contact the author: neuerer@handelsblatt.com

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