By on February 14, 2020

Volkswagen has had to spend mountains of money since being caught using illegal software to hide excessive diesel pollution during regulatory testing five years ago. As if millions of vehicle buybacks and repairs weren’t costly enough, VW also had to contend with billions of dollars in regulatory fines and countless consumer lawsuits — and the hits keep on coming.

While the United States enacted swift justice upon VW, Europe has been slower to take action. That, in addition to EU laws making it much more difficult for class-action suits to get off the ground, meant Europeans received nothing as VW’s American customers saw checks cut to the tune of $20,000 apiece. Germany has only allowed class-action lawsuits since 2018, providing an opportunity for Volkswagen to continue playing legal hardball. But it’s been backpedaling all across Europe.

Citing a breakdown in negotiations with German consumer association VZBV, which was attempting to reach a settlement deal for German customers attached to its class-action suit, the automaker said Friday it is willing to offer €830 million (about $899 million). 

It also looks to be the manufacturer’s final offer.  In a roundabout way, VW is claiming the lawyers attached to the case are too greedy. While money-grubbing lawyers isn’t exactly a novel concept, the manufacturer thinks it’s sufficient grounds for it to stick to its original sum.

From VW:

A settlement of up to €830 million had previously been reached with the federation. Nonetheless, no binding agreement could be negotiated. The talks broke down as a result of unwarranted demands of the litigation attorneys who sought a flat fee of €50 million to carry out the settlement. The federation’s legal advisers were asked multiple times to provide sufficient justification for this fee, but failed to do so. The attorneys have also refused to allow an independent third party to review their request.

Volkswagen is also trying to consolidate the damage and move past the issue as quickly as possible. Civil suits sprung up across Europe, forcing the automaker to spend time and money trying to avoid spending ⁠… well, more time and money. It’s a losing proposition, and one it claims doesn’t serve either the company or the affected customers.

“We have said from the very beginning that a fair and practical solution for our customers was a top priority in these negotiations. This is why we now want to offer the previously negotiated settlement terms to our customers,”said Hiltrud Werner, the VW board member responsible for Integrity and Legal Affairs. “The lawyers’ unwarranted demand for €50 million was unacceptable. The purpose of a class-action suit is to efficiently and cost effectively achieve legal certainty. Nonetheless, we believe that the settlement solution as such is in the interest of our customers ⁠— they will receive their one-time payment easily and quickly. The business practices of the plaintiffs’ attorneys should not have a negative impact on the customers.”

Don’t feel too sorry for VW, though. The company’s legal team has spent the better part of the winter trying to convince UK courts that it’s not liable in the biggest class action lawsuit the nation has ever seen. The automaker’s defense is that the software doesn’t constitute a illegal defeat device because it was always intended to improve vehicular emissions — and just happened to act erratically during testing procedures. That’s not what VW confessed to in the United States when it said it was guilty of “participating in a conspiracy to defraud the United States and VW’s U.S. customers and to violate the Clean Air Act by lying and misleading.”

[Image: U.J. Alexander/Shutterstock]

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9 Comments on “Volkswagen Offers $900 Million to German Diesel Owners, Says Lawyers Are Greedy...”


  • avatar
    Lorenzo

    I’m not normally in favor of companies that have tried to pull a fast one on their customers, but government fines don’t help the customers, and protracted legal proceedings delay restitution and cut into the amount.

    What all auto companies should be doing is aggressively challenging government regulations, demanding proof that the enviro or safety regulations actually achieve their purpose. They should also be bending over backward to mollify their customers, reacting quickly to complaints. Keeping customers happy should be their first task.

    It was the government that turned customers happy with their vehicles into unhappy ones, claiming that excessive pollution required fixes, reducing the value of the vehicles they were happy with, and forcing dealer visits and difficulty with registration.

    The government too should have the best interests of the buyers of the vehicles as their first duty, not their usual instinct for punitive measures to protect their authority to set standards, whether or not those standards achieve a rational purpose.

    • 0 avatar
      Kendahl

      Given how many manufacturers have been caught cheating on emissions, I wonder if their alternatives were that or trying to sell vehicles customers would reject due to poor performance. I could see prospective buyers saying, “What I’ve got runs better than a new one. I’ll keep mine until the wheels fall off. Then, I’ll stick them back on and keep it even longer.” That would be a catastrophe for the manufacturers but also for the regulatory agencies. Instead of a fleet that would continue to improve, albeit not as rapidly as they would prefer, they would get a stagnant fleet that deteriorates with age and poorer maintenance.

      I’m in the same quandary with respect to the nannies that have become standard equipment. At age 74, my years of driving are numbered. The question is whether the vehicles I have now, which have only ABS and ESC, will last long enough or whether I should replace them before the nannies become even more objectionable. Save the autonomous vehicles until I’m too decrepit to qualify for a drivers license.

    • 0 avatar
      HotPotato

      What you call for already exists: an extensive protocol ensures that regulations achieve their purpose and are worth the cost involved, including data reviews, comment periods, revisions, and specific requirements that must be met or they can be overturned in court.

      That doesn’t mean they’re perfect. And ironically, “deregulation” really means “more complicated regulation.” For example, the government could have simply mandated hybridization — for sure that would have gotten them to the MPG and emissions targets they had in mind. Instead, they just set the targets and let the manufacturers meet them however they saw fit. But automakers chose turbo fours with GDI rather than hybridizing, and the result has been a whole generation of gasoline engines with the deadly fine particulate pollution of diesels (and the occasional puff of dark smoke at heavy throttle too) but no DPF. The only way to fix it is more regulation. Perhaps the heavy hand of the state saying “thou shalt build 25% hybrids” would have been simpler, more sensible, and more effective — just as Glass-Steagall saying “thou shalt not mix consumer banking and investment banking” was simpler, more sensible, and more effective than the “deregulation” that produced volumes of regulations in its place that nevertheless failed to prevent the Great Recession due to finance firms getting a little too “innovative” at “unleashing financial innovation.”

      Anyway, I digress. The only party to blame here is VW. They could have hybridized like Toyota or installed actual diesel emissions controls like Opel. Instead they lied and cheated. That’s nobody’s fault but theirs.

  • avatar
    SCE to AUX

    50 MM Euros out of 830 MM Euros seems like a very low percentage, even if the lawyers can’t or won’t substantiate it.

    If VW really wanted to get off this bubble, they’d pay out and be done with it.

  • avatar
    Mike-NB2

    As a lawyer I feel it is incumbent on me to point out that 90% of lawyers make the rest of us look bad.

  • avatar
    gasser

    In lieu of these fines which hurt shareholders, and in lieu of class action suits which enrich who knows, perhaps society would be better served by the firing of the entire upper echelon of management with no golden parachutes or payouts, but with some hefty jail time.
    Once we have accepted the plan to limit emissions, cheating just steals from all of us in the form of less clean air. The real losers are the sufferers of respiratory ailments who are made worse, or even suffer shortened lifespan. Emissions cheating is NOT a victimless crime which should be overlooked, just because the cars were “running just fine” when in violation of standards.

  • avatar
    thornmark

    Past is prologue:

    Volkswagen Offers $9 Billion to German EV Owners, Says Lawyers Are Greedy
    By Al Smithee on February 14, 2030

  • avatar
    Crosley

    This whole saga has been badly mishandled. The people within the company responsible for the fraud (a small handful) should have seen jail, a large fine paid by the company, and everyone move on.

    The idea of rounding up all of these vehicles to crush seemed an incredible waste of resources if the goal was making the environment better. Something like reflashing the ECU to mitigate it would have been good enough. It would honestly make more sense to just have a bigger fine than a refund for everyone.

    At a certain point though, how much do you harm a company that provides a lot of jobs and supports a lot of retirements to get your pound of flesh when probably less than 50 people in the company knew what was going on?

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