judgement day

In German courts, the tide is turning against VW

Volkswagen
The heat is on. Source: Imago, DPA [M]

A wave of lawsuits is piling up in Germany as car owners sue Volkswagen, the fallen industrial icon, for systematically manipulating its emissions values.

And the carmaker is losing those cases as judges roundly condemn VW’s behavior.

Criticism of VW’s “unethical and immoral behavior” is a change of tune for the corporate, legal and government establishment that treated VW, one of Germany’s most important companies, with kid gloves compared to the response in the US.

For a long time, that approach enabled VW to avoid compensating car owners in Europe, arguing that software updates were sufficient and no further action was needed.

Now, in Germany, the gloves are off, according to hundreds of court verdicts, though courts here lack US-style class-action lawsuits and billion-dollar settlements. One judge in Düsseldorf wrote: “Seeking profit at the cost of deliberately deceiving consumers and authorities is to be seen as reprehensible.” A judge in Stuttgart said VW had violated “the sense of decency of all who support fairness and justice.” The regional court in Arnsberg ruled last June that VW had “created a system to deliberately conceal its actions from regulatory authorities and consumers.”

In most of those cases, judges found that VW committed fraud, which is exactly the charge the carmaker pleaded guilty to in the US in 2016. Scores of German judges ruled that the carmaker cheated its clients and they openly challenged VW’s claim that the fraud took place without the knowledge of top management.

“We regard these verdicts as legally flawed and expect them to be overturned in the appeals.”

Eric Felber, VW spokesman

The rulings have proven costly for VW and could further push up the Dieselgate bill, which currently stands at €25 billion ($30.8 billion). The bulk of that sum is for customers and authorities in the US and Canada, where the carmaker agreed in 2016 to settlements and fines which might reach up to $24 billion. Customers in other countries such as the Netherlands and Austria are also suing for damages.

Whereas the US legal system allowed VW customers to settle with the carmaker, to receive $10,000 in compensation and to sell back their car, Germany’s laws initially left diesel owners empty-handed. The country’s Federal Motor Transport Authority only forced VW to update the engine’s software of 2.8 million manipulated diesel autos, including Audi and Porsche brands, and remove the illegal code, which elevated toxic emissions on the road.

Not all German car owners accepted this, however, and instead opted to sue VW. A customer demanded back the €31,378 ($38,652) she paid for a VW Touran compact multi-purpose vehicle. She won this case last August after the court ruled that the car was faulty. In another case, the owner of an Audi A1 was reimbursed the purchase price of €36,097.

Volkswagen and Dieselgate-01

VW, unsurprisingly, is fighting back. “We regard these verdicts as legally flawed and expect them to be overturned in the appeals,” said company spokesman Eric Felber. He pointed out that in 1,450 court rulings so far, customers have had their claims against the company or VW dealers rejected. He did not say how many cases VW has lost.

Lawyers for plaintiffs have different numbers. Düsseldorf law firm Rogert & Ulbrich, which represents 6,750 VW customers, said it wins 65 percent of cases and the rest are settled out of court — to the customers’ advantage. Some 50,000 VW customers have signed up with myRight, a digital startup that provides legal advice and enables people affected by Dieselgate to press their claims. And in the last four months alone, 400 new lawsuits were filed at Braunschweig’s regional court, where prosecutors are investigating Dieselgate.

It is difficult to put a number on all the Dieselgate settlements and court rulings in Germany. But thousands of customers want to hold VW responsible for selling them manipulated cars and are calling for refunds, an unprecedented situation in the proud history of German automaking.

Every court defeat spurs more consumers to take on VW. “The chances are improving,” said Julius Reiter of law firm Baum Reiter & Collegen. “There’s a clear trend in favor of plaintiffs.”

One consolation for customers is that VW is still making enough money to compensate them. Matthias Müller, the company’s boss, presented annual figures on Tuesday, confirming last month’s record earnings. VW’s net profit more than doubled to €11.6 billion. If diesel owners keep winning in German courts, they can at least claim part of this sum.

Sönke Iwersen leads Handelsblatt team of investigative reporters. Jan Keuchel is a Handelsblatt correspondent covering investigations and the German legal system. Volker Votsmeier is an investigative reporter with Handelsblatt. To contact the authors: iwersen@handelsblatt.com, keuchel@handelsblatt.com and votsmeier@handelsblatt.com

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!