Banding together

VW's Dieselgate victims set to pioneer class action lawsuits in Germany

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Junkyard dog. Source: Reuters

German consumers have been chomping at the bit to take Volkswagen to court for cheating them on diesel emissions, and now they will finally get their chance.

Three years after VW admitted using software to artificially lower toxic exhaust fumes, a new law is set to allow up to two million VW customers to join a class action suit for damages.

For years, Germany has resisted such lawsuits because of what it considers abuses of the process in the United States. The only exception has been for investors who suffer losses because of faulty information from a company. But these so-called “model” trials still require individual plaintiffs to file a lawsuit once the model trial has rendered a verdict. This is the method launched by VW investors this week as they seek to recoup an alleged €9 billion ($10.5 billion) in losses.

The consumer class action, however, will take VW’s potential liability to a new level. German owners have looked on helplessly as a US class action suit against the carmaker brought a settlement of $10 billion, including buyback or reimbursement of repair costs.

One for all

But it won’t be straightforward for consumers. The new law, due to come into effect in November, requires a consumer organization fulfilling certain criteria to represent the plaintiffs. Two such organizations – the state-sponsored VZBV consumer advocate and the ADAC automobile club – announced this week they have joined forces to act on their behalf. As with the current investor lawsuit against VW, the consumer action will be heard in the state superior court in Braunschweig, near the car giant’s headquarters in Wolfsburg.

The two consumer groups declined to speculate about the outcome of the trial because it takes German jurisprudence into uncharted territory. “So far, case law across Germany has adjudicated software manipulation very differently in individual lawsuits,” said August Markl, president of ADAC.

The law firms engaged for the class action suit have considerable experience with the VW issue already. Rogert & Ulbrich has represented 8,000 clients against VW or dealers and won hundreds of verdicts favoring the plaintiffs. The other firm, Stoll & Sauer, has represented 10,000 plaintiffs. “Many aggrieved VW diesel drivers have so far been reluctant to sue because of the expense,” said partner Ralf Stoll. “Now this obstacle has been removed.”

There is considerable uncertainty about how many diesel customers will join in, however, though some two million customers potentially belong to the class. The suit takes in buyers of VW, Audi, Skoda and Seat models with EA 189 engines sold after November 1, 2008.

Despite the expected tidal wave of plaintiffs, Mr. Stoll believes VW will take its chances in court. “This process could go on for a few years,” he said. VW professes not to be impressed by the new legal challenge. “There is no legal basis for customer complaints in connection with the diesel issue in Germany,” a company spokesman said.

Dietmar Neuerer covers consumer protection for Handelsblatt in Berlin. Volker Votsmeier heads up the investigative journalism team. Darrell Delamaide adapted this article into English for Handelsblatt Global. To contact the authors: neuerer@handelsblatt.com and votsmeier@handelsblatt.com.

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