Long-shot consumer group suit could yet prove test case

Volkswagen was facing legal action in Germany on Tuesday in a new attempt to make the carmaker repurchase millions of vehicles that used software to cheat diesel emissions tests.

Auto analysts see the case brought by Myright, an internet-based consumer rights group, as unlikely to succeed. Should the action prove successful, it could cost the carmaker untold billions of euros in damages while altering the way consumer lawsuits are brought in Europe.

VW has set aside €18.2bn for the emissions scandal, after admitting in September 2015 to equipping 11m cars worldwide with software to cheat tests.

In the US, where the cheating was discovered and where emissions laws are more strict, VW has agreed to repurchase half a million cars at their September 2015 price, in addition to giving consumers more than $5,000 each in compensation. But while nearly 9m of the VW cars involved were in Europe, the carmaker has not been forced to pay any consumer compensation or meaningful fines, despite EU authorities pressuring the carmaker.

VW has long maintained that its actions were not illegal in Europe and it has ruled out paying consumers compensation. Last month, Germany’s federal motor transport authority, the KBA, gave the green light for VW to “fix” the cars by modifying their engines to be compliant with the law. “Once modified, the vehicles will also meet all legal requirements and the applicable emissions standards,” VW said at the time.

The Myright lawsuit, filed in Brunswick, near VW’s Wolfsburg headquarters, rejects the idea that the KBA has any authority to approve the fixes and make them legally compliant.

US-style class-action lawsuits do not exist in Germany, but the lawyers involved in the Myright case believe that if their suit — filed on behalf of a single person — succeeds, it should apply to all owners of the affected cars.

“If in fact the KBA did not have the authority to grant a waiver, then it applies to each and every vehicle,” said Michael Hausfeld, whose US-based law firm is pursuing VW in the US in addition to setting up the Myright case in Europe.

Mr Hausfeld said VW had only succeeded in receiving “type approval” for its cars through fraud and was therefore demanding the carmaker provide a full purchase-price refund for all of the vehicles.

Volkswagen acknowledged on Tuesday that Myright had announced plans to pursue it, but only added: “As they have not yet been served on us, we are currently unable to say anything about the substance of the lawsuits.”

Myright was founded last year. Consumers do not have to pay it any fees, but the service aims to take 35 per cent of any compensation won.

Analysts see the case as a remote risk to the carmaker. Despite news of the filing on Tuesday VW’s stock rose more than 1 per cent.

“VW’s diesel vehicles complied with European emission regulation with or without the cheat device,” said Arndt Ellinghorst, analyst at Evercore ISI. “What’s the basis for legal civil action in Europe? In my view, in Europe this is a normal recall.”

Source: The Financial Times