Lawyers who specialize in consumer class actions are gearing up for what promises to be one of their biggest paydays in years as Volkswagen digs itself deeper into the fraud scandal rocking the automotive industry.
Eleven million owners of faulty diesel vehicles made by VW and Audi around the world, about 480,000 of them in the United States alone, were duped into purchasing what they believed were environmentally friendly cars and SUVs. They learned last month that VW had purposely manipulated the emission data--concealing the true pollution levels caused by their diesel engines.
In the wake of the exposure of the rigged data, VW CEO Martin Winterkorn promptly resigned, and VW replaced him with Matthias Müller, formerly of Porsche, a VW subsidiary. Müller announced in the German newspaper Allgemeine that the company would begin a global recall in January 2016 and attempt to complete repairs by the end of 2016.
HOW CAN VOLKSWAGEN FIX THESE ENGINES?
A number of competing proposals for the recall are out there. Some suggest that a simple software update will fix the problem, while others argue that it will require the installation of new components including catalytic converters and fuel injectors. Most likely, because of the sheer number and different kinds of vehicles involved, no one simple solution will work across the board. Either way, the modifications will affect the vehicle's speed and performance.
Most likely, VW will have to replace many of the cars with new ones because many owners have a legitimate claim for the loss of value of their cars, known as a diminution of value.
What has many consumer claims lawyers excited is that unlike most cases involving automotive product defects, the evidence here points to a knowing and calculated commission of a fraud, rather than a simple mistake. Whenever a company intentionally commits a tortious act, such as misleading or manipulating data, they are potentially subject to punitive damages. Punitive damages are meant not just to compensate a victim, but rather to punish the wrongdoer, and awards can range to many times the amount of actual compensatory damages
LAWSUITS AGAINST VOLKSWAGEN
Lawyers have already begun filing lawsuits across the country. Most likely there will be several moves to consolidate the cases into class actions, followed by a Multi-District Litigation (MDL), which is essentially a class action comprising several other class actions.
Cases like this can take years and years to sift their way through an already overcrowded and inefficient the legal system. For example, the BP Oil spill claims are still pending over five years after the tragedy of the Deepwater Horizon explosion in the Gulf of Mexico off the coast of Louisiana. In fact, just this week the United States Justice Department and five states announced a $20 billion final settlement of environmental damage claims. In this proposed settlement, a judge would resolve all pending civil claims against BP.
This means that owners of Volkswagen vehicles and their lawyers will need to gear up for what will be a long, expensive, and drawn-out civil legal battle. I hope that VW will also be subject to a lengthy criminal investigation, since all manufacturers should understand that any data manipulation, from emissions to safety, should never be tolerated. The consequences of such fraud should cost a company like VW more than just money.