Lawsuits were filed within hours of Volkswagen’s admission that it had sold 11 million diesel vehicles equipped with a defeat device to cheat emissions standards. In the U.S. alone, upwards of 482,000 buyers were suddenly faced with the prospect of being sold a car in bad faith; that Volkswagen not only knew that its diesel cars wouldn’t meet emissions standards, but that it charged more for them. And now that Volkswagen promises that all these cars will be fixed by the end of next year (without divulging exactly how), it still has some big problems it needs to tackle, among them being how to repay the millions of people it defrauded.
This week, Volkswagen of America executives will be hauled in before a congressional committee and grilled over their involvement. A bipartisan commission of 30 state attorneys general and Washington D.C. have launched their own bi-partisan investigation to look into the matter, and that’s just the beginning of Volkswagen’s problems.
In the U.S., it’s facing fines of up to $18 billion, but that’s just for the EPA. For all those unhappy TDI owners (and there are a lot of them), it’ll likely have to pay more — a lot more. So far, owners in all 50 states have either filed suit against the automaker, or joined one of dozens of class action lawsuits that have been filed against the automaker. Between the recalls, retooling, fines, and lawsuits, some analysts are projecting that Volkswagen could be looking at a $39 billion tab when all is said and done.
As we’ve said before, Volkswagen should bite the bullet, launch a progressive buyback program, and do its best to put the whole damn mess behind it, while alienating as little of the car-buying public as possible. But it probably won’t do that. Instead, it’s likely to run through a gauntlet of angry owners, dealers, legislators, and judges, and reckon with the after-effects for years to come. And the longer it waits to start cleaning this mess up, the more angry owners will be lawyered up.
Among the biggest legal opponents is Hagens Berman, a law firm with proven success going after automakers. In 2013, it won a $1.6 billion settlement against Toyota over unintended acceleration claims. Currently, it’s representing owners going after Hyundai and Kia over their exaggerated fuel economy claims. Hagens Berman is accusing Volkswagen of America of fraudulent concealment, false advertising, and violating federal and state laws. While the law firm may be the most high-profile to get involved, it’s just one of dozens to do so.
On its day in court, Volkswagen of America can do one of two things: It can plead ignorance about the goings on in Wolfsburg — opening itself up for scrutiny by the courts and likely prolonging its legal battles — or it can pay up. Volkswagen is unlikely to invite investigators to poke around for skeletons in its closet (we can’t think of any automaker who would), so look for Volkswagen to try to resolve the matter as quickly and painlessly as possible.
Eventually, all these class-action suits will likely be rolled into one massive suit, though it’s too early to tell whether Hagens Berman or another big-time law firm will handle it. Like most class-action suits, it’s likely to win a huge settlement. And like many of the others, most of the settlement will be eaten by attorneys and legal fees before anything makes it to consumers. Volkswagen TDI owners have been defrauded, and Volkswagen should be made to compensate them handsomely for the charade. Here’s hoping that at the end of the day, it’s the owners who will get taken care of. If Volkswagen had done that at the outset, it wouldn’t be in this mess.
Like classics? It’s always Throwback Thursday somewhere.
Follow Derek on Twitter @CS_DerekS