German sues Volkswagen over Dieselgate compensation (or lack thereof)

January 3, 2017

Back in June, some 480,000 American owners of illegally equipped 2.0-liter Audi and VW diesels learned that they'd be receiving a fairly significant payout from Volkswagen. After months of negotiations, the automaker finally agreed to fix the cars in question or buy them back, and it also said that it would pay each owner up to $10,000 in compensation.

But as we reported the following month, Volkswagen doesn't intend to offer such deals to its millions of European customers. That's not sitting well with many German owners, and one has now filed suit in the hope of forcing Volkswagen to make things right.

Most of the suit's specifics haven't been made public. However, we know that the plaintiff is demanding that Volkswagen buy back her/his 2010 VW Eos at the original purchase price, which was around 41,000 euros ($42,600).

Volkswagen: safe or scared?

So far, Volkswagen has defended itself from German owners who've sought compensation in response to the Dieselgate scandal. The company says that German law differs greatly from American law (which is why Volkswagen began installing the defeat devices on "clean diesels" in the first place), and that fixing engines is sufficient compensation in Germany.

But that hasn't stopped around 1,000 of the 2.5 million German owners of tainted Volkswagen diesels from filing suit against the automaker. Roughly 250 of those cases have been successful, though details of Volkswagen's settlements with owners haven't been revealed. 

Why haven't more owners followed suit by filing suits? It might be because Volkswagen has a significant legal advantage in German courtrooms, where the notion of a class-action lawsuit doesn't exist. (For a primer on that, check this informative article.) 

In other words, if plaintiffs want to sue Volkswagen in Germany, they have to do so one-by-one.

What's worse--for Volkswagen owners, that is--is that under German law, the loser of a case pays all court fees. That probably keeps frivolous lawsuits to a minimum, but it also deters many plaintiffs with legitimate grievances. 

In sum, for a German to take on Volkswagen, that person has to be willing to stand alone before a judge and pony up a tidy sum if she/he loses.

New game plan

Luckily for German Volkswagen diesel owners in search of compensation, there's a less daunting solution on the horizon. The U.S.-based law firm Hausfeld has partnered with the German website (warning: iffy Google translation ahead) to simplify the process of filing suit against the automaker.

In a nutshell, is encouraging Volkswagen owners to sign up as plaintiffs against Volkswagen, promising that owners will bear no financial risk if they lose--and that they could receive up to 5,000 euros ($5,200) in compensation. The site will act as a mediator on behalf of those who register, so although they'll be dealing with many individual cases, the effect will be similar to a class-action suit.

Will prevail? That depends on how the above-mentioned court case goes. If the plaintiff wins her/his day in court, that could set an important precedent that would not only make similar cases more likely to succeed, but also make Volkswagen more likely to consider settling such cases before they go to trial. Stay tuned.

Note: for purposes of clarity, "Volkswagen" has been used to refer to the Volkswagen Group parent company, while "VW" has been used to refer to the company's popular mass-market brand of automobiles.

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