Lawyers backed by US and UK investors have launched a last-minute offensive against Volkswagen, spending tens of millions of euros to lure claimants away from a settlement Volkswagen has offered over the emissions cheating scandal.
In February, the world’s largest carmaker said it would pay up to €830m in total to 260,000 German VW owners whose vehicles were fitted with “defeat devices” to cheat diesel engine emissions tests. The scandal broke in 2015 and drivers had sued VW in the country’s largest collective lawsuit.
The deadline for registering for the settlement is this Monday but the company, which has already been forced to pay out more than €31bn in costs related to “Dieselgate”, including a $10bn settlement in the US, could now face a flurry of new individual claims, as “no-win, no-fee” lawyers sign up tens of thousands of German consumers.
In advertising campaigns on Google and social media, law firms have been targeting VW claimants, offering thousands of euros in upfront compensation, and promising to ultimately win much more overall from the carmaker.
“This sum is far too low,” said Claus Goldenstein, the head of law firm Goldenstein & Partner, of VW’s offer of between €1,350 and €6,257 per car.
The firm represents more than 20,000 claimants and said it is signing up 50 a day who have opted out of VW’s settlement.
Mr Goldenstein insisted it is successful in “almost 100 per cent” of Dieselgate claims, and wins an average of €17,510 in compensation.
Many of Goldenstein & Partner’s claims are funded with the help of US litigation finance business Burford Capital.
At least 250,000 claimants have already registered on Volkswagen’s compensation site but only 130,000 have so far had their applications approved.
However, the coronavirus pandemic is making it harder for law firms to convince claimants to abandon the settlement.
“People are now short of cash, many have been made redundant, or are furloughed, so they are happy for any compensation they can get,” said Christopher Rother, a lawyer who has signed up 12,000 individual claimants, 90 per cent of whom were in the original collective lawsuit.
Mr Rother, who was involved in cases against VW in the US, has raised more than €400m from British and American private equity firms in a matter of months to fund litigation.
The VZBV, a consumer organisation that brought the original case against Volkswagen, has warned claimants “not to blindly trust the advertising promises of litigation financiers”.
It cautioned that these firms may take a large commission, and that their success will depend on the outcome of a case that will be heard at Germany’s Federal High Court on May 5.
If Volkswagen loses that case, it could trigger tens of thousands of new cases, at a time when the company is struggling with the effects of the pandemic.
Last week, Volkswagen announced it was scrapping its outlook for 2020 and reported an 80 per cent fall in operating profits for the first three months of the year.
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April 20, 2020 at 11:03AM
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No-win, no-fee lawyers try to lure VW’s emissions claimants - Financial Times
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