Volkswagen Offers $900 Million to German Diesel Owners, Says Lawyers Are Greedy
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.
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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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?