German Court Orders VW to Pay Diesel Compensation
May 25 2020 - 12:40PM
Dow Jones News
By William Boston
BERLIN--Germany's highest civil court on Monday ruled against
Volkswagen AG in the first case brought by customers seeking
damages in connection with the car maker's emissions-cheating
scandal, a landmark ruling that could herald further litigation
against Volkswagen and some competitors.
The ruling comes more than four years after Volkswagen in 2015
admitted to installing illegal software on millions of diesel
models. The device allowed the cars to pass emissions tests in the
laboratory while emitting much higher levels of toxic pollutants
during normal road use.
Volkswagen pleaded guilty to charges of committing fraud and
deceiving consumers and the U.S. government and has paid more than
$30 billion in fines, penalties and consumer compensation.
Yet in Germany, Volkswagen has until now avoided paying costly
compensation to consumers. That could change with the current
ruling, though it is unclear how many of the large number of diesel
owners in Germany will be able to take advantage of the ruling
because of the statute of limitations covering the fraud.
U.S.-style class action suits are generally not allowed in
Germany, a fact that limits the ability of consumers to seek
redress for corporate fraud. In this case, the court ruled on a
lawsuit brought by a single car owner and found that Volkswagen
must compensate any consumer who unwittingly purchased a vehicle
containing illegal software.
Explaining the judges' ruling, the Federal Court of Justice said
that Volkswagen had not behaved in a way that was "compatible with
the fundamental values of the legal and moral order."
"The defendant's behavior must be considered unethical," Stephan
Seiters, the presiding judge, said in the court's ruling.
Responding to the ruling, Volkswagen said it would offer one-off
payments to some owners of tainted diesel cars who already have
cases pending with the courts. Volkswagen said it did not expect
the ruling to unleash a wave of new litigation.
"This will hardly be a cause for new lawsuits," the company said
in a statement, citing the considerable hurdles to establish a case
under German law and the fact that the statute of limitations on
many claims had already expired.
Generally, claims against fraud in Germany expire after three
years. The ruling could be significant in future litigation against
other car makers who are also being targeted by diesel-vehicle
owners seeking compensation.
Volkswagen recently agreed to pay up to 830 million euros ($904
million) to settle lawsuits with 235,000 car owners in Germany.
About 40,000 of those plaintiffs turned down the settlement, which
would allow them to seek damages under the court's new ruling.
Claus Goldenstein, an attorney who represented the plaintiff in
the Volkswagen case, said the court's ruling sets a precedent for
all future diesel litigation, allowing lower courts to rule in
favor of consumers.
"Now, the diesel scandal is just beginning," Mr. Goldenstein
said in a statement.
Jessica Sier contributed to this article.
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
May 25, 2020 12:25 ET (16:25 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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