VW looks to the future, but faces legal battles from past scandals 

Full steam ahead to the future – with electricity: After the diesel scandal, Volkswagen is going on the offensive. But the past is casting a shadow over the future. The legal consequences of the diesel emissions scandal still weigh heavily on the German carmaker.

Pouring billions of investments into the future of cars, charging ahead with an electric car offensive, and with major plans for fully networked vehicles, Volkswagen is dead-set on looking forward. At the same time, the car giant is again heading for record-high deliveries despite setbacks in September and October from complications regarding a new test standard.

All of this could make one nearly forget that the diesel emission scandal involving millions of manipulated diesel engines will keep VW busy for a long time yet. The list of legal battles facing the company is a long one. Here is a breakdown VW’s legal problems:

INVESTOR SUITS:

The diesel emissions scandal has already cost VW a good 27 billion euros (30.5 billion dollars). But the affair has also cost investors a great deal of money, for after US investigators uncovered the fraud in September 2015, VW’s share value plunged. At some points the share had dropped by almost half, and investors suffered huge losses. Now they are demanding compensation. The allegation: VW informed markets too late about the diesel scandal. Test legal proceedings are now under way in the Higher Regional Court in Braunschweig.

The defendants are VW and the company’s chief shareholder Porsche SE. The plaintiff is the investment fund Deka Investment. Plaintiffs are seeking around 9 billion euros in damages, the question being how this is possible. The law says that news reports which can influence a company’s value must immediately be published. The plaintiffs said VW failed to do this. VW counters that there had been no concrete indications until September 18, 2015, when the US environmental protection agency (EPA) went public with its allegations. On September 22 the concern then informed the financial industry.

In the Braunschweig test case proceedings so far, however, Judge Christian Jaede has delivered a preliminary finding that the car giant may have been too late in informing capital markets. He cited VW’s own admission to US authorities on August 19, 2015, about having manipulated its diesel engines. This could have been information with bearing on VW’s share value.

CRIMINAL LAW:

Investigations are underway into VW employees, among them former or current managers. A total of 52 people are being investigated, 42 of them on suspicion of manipulating the software covering nitrous oxide emissions, and six in connection with false carbon dioxide and fuel consumption data. In three cases the issue is market manipulation, and in addition one employee is being investigated for allegedly ordering the erasure of data.

Prosecutors are investigating, among others, former VW chairman Martin Winterkorn as well as the current chairman, Herbert Diess, as well as supervisory board chairman Hans Dieter Poetsch on allegations of market manipulation. Winterkorn additionally is suspected of fraud.

CIVIL SUITS:

What would have been the case if Volkswagen had had to pay damages to its customers in Europe the way it did those in the United States over the emissions fraud? According to VW, there are some 28,000 proceedings under way involving diesel owners against dealers or manufacturers. Around 9,000 verdicts have been handed down, but complaints by VW customers have remained “largely unsuccessful.” At the Higher Regional Court level there have been 13 verdicts, all of them coming down on the side of the company or its dealerships.

The US law firm Hausfeld, which is representing VW customers, is demanding that the carmaker must take back the registered diesel cars that have the manipulation software. Last March, the district court of Hamburg ruled that a VW dealer must take back a car with the cheating software and give the customer a faultless new car. But the Higher Regional Court of Hamburg disagreed with this and is expected to rule against the suit.

In another case, the District Court of Augsburg ruled that VW must pay a diesel car owner the full purchase price back, plus interest. VW called the ruling “legally erroneous” and said the carmaker would appeal it. “We expect that the ruling before us will be corrected in the appeals process,” VW said. The carmaker said there is no legal foundation for customer complaints. The customers had suffered neither losses nor damage, while the cars had been safe and in running order.

MODEL PROCEEDINGS:

For parties willing to sue, new possibilities opened up in November with the aid of a model proceedings suit. Consumer protection advocates may now file suit against companies on behalf of many affected parties. The Consumer Protection Association wants to use the new instrument to teach VW a lesson, with consumer advocates demanding that diesel owners must be compensated for the loss of the value of their cars. The ultimate goal is getting the full purchase price returned. VW sees little chance for such aims, and warns that those who opt for a model proceedings suit must reckon with years of litigation.

By Thomas Struenkelnberg

Source: dpa