File picture: Fabian Bimmer / Reuters.
File picture: Fabian Bimmer / Reuters.

The key battles Volkswagen faces as class action gets underway

By Staff Reporters Time of article published Sep 30, 2019

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Hanover, Germany  - Volkswagen faces a class action lawsuit over the manipulation of diesel emissions starting on Monday in a first for German court proceedings.

The class action suit at the Braunschweig Higher Regional Court starts more than four years after the emissions scandal became public.

Germany has only allowed class action lawsuits since last year. In the Volkswagen cases, individual plaintiffs are represented by vzbv, a German association of consumer protection groups.

Due to the expected massive public interest, the first hearing in the case was moved to Braunschweig's civic hall.

Some 470 000 car buyers have joined the lawsuit. "We are of the opinion that Volkswagen deceived them and now they must face the consequences," vzbv head Klaus Mueller said.

The carmaker argues that customers did not suffer any damage as all the cars could be driven and were safe.

VW execs accused of market manipulation

Four years on, the dieselgate scandal still casts a long shadow, and it has reached all the way to the top with top VW executives accused of market manipulation.

For Volkswagen, the emissions scandal remains a major legal battle in several jurisdictions. In Germany alone, there were about 2.4 million cars that had been equipped with software to manipulate emissions tests. Worldwide that figure grows to about 11 million cars, of which 600 000 are in the United States.

Here are the key legal battlegrounds:

1. Criminal investigations

Former CEO Martin Winterkorn was charged by the public prosecutor's office in Braunschweig in April. He and four other executives are accused of serious fraud in relation to the diesel scandal.

In the United States, Winterkorn and several other defendants are accused of fraud and conspiracy, and in May 2018 an arrest warrant was issued against the ex-VW boss. Here, the case focuses on the assumption that he had already been informed about manipulations in the emissions testing of diesel cars before the issue became public in September 2015.

The Braunschweig public prosecutor's office investigated the suspicion of market manipulation against Winterkorn - as well as against Supervisory Board Chairman Hans Dieter Poetsch and the current Group CEO Herbert Diess. All three have now been charged. In addition, several suspects are under investigation for providing allegedly false CO2 and consumption data and in one case for the deletion of data. Investigations also took place in Stuttgart. In Munich, ex-Audi boss Rupert Stadler and three other defendants are charged with "fraud, falsifying certifications and false advertising."

2. Civil suits and compensation

VW has already spent around 30 billion euros dealing with the fallout of the diesel scandal. Diesel drivers in Germany also want to claim compensation. Consumer protection groups are critical of the fact that while in the US a lot of money has been spent on those affected, in Europe injured parties have so far been left empty handed. There are now well over 40 000 individual judgements in private civil proceedings brought by diesel owners as plaintiffs against the company or against Volkswagen dealers - most of which have ended with dismissal. 

At the end of August, there were more than 30 cases before Germany's Federal Supreme Court. Volkswagen often attempts to reach a settlement with the plaintiffs at higher court levels in order to avoid a landmark verdict.

On 30 September, proceedings for a class action suit will commence at the Braunschweig Higher Regional Court. Many individual plaintiffs are pooling their claims against VW in the hope that this will give them a better chance of obtaining compensation for their vehicles in subsequent individual lawsuits. They are represented by the consumer protection groups and around 470 000 car buyers have joined the lawsuit.

In the US, the company reached a settlement with plaintiff car owners and the Environmental Protection Agency (EPA) at the end of August on alleged fraudulent information about fuel consumption for models of several brands.

3. Shareholder suits

The emissions scandal has cost a lot of money - not only to Volkswagen, but also investors. The VW share price collapsed immediately after the fraud became known in autumn 2015 - some preference shares lost almost half of their value. This is why investors like Deka, a subsidiary of the Sparkassen savings banks and a plaintiff in this case, are demanding compensation. The accusation is that VW informed the markets too late about the diesel scandal.

According to the law, news that could influence the value of a company must be published immediately. Volkswagen is accused of having failed to do exactly that.

VW issued a statement in its defence saying that the company had not been informed at a now infamous meeting - referred to in German as the "Schadenstisch" (literally, "damage roundtable") - with Winterkorn on 27 July, 2015 that it was a matter of a shutdown device that was not permitted under US law.

VW also stated that it had expected significantly lower financial risks as a result of the emissions scandal and had initially set aside only 300 million euros for this purpose.

A class action suit at the Braunschweig Higher Regional Court is now revolving around investors' claims for damages running into the billions.

In the United States, the SEC started a new legal case in mid-March. According to the allegations, VW collected more than 13 billion dollars with bonds on the US capital market during emissions manipulations under false pretences. Investors had been deceived, because they were not told that serious violations of US environmental laws were being committed at the time.


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