Volkswagen Proving More Reliable in Court Than on the Road

  • Carmaker avoids appeals court hearings in suits by car owners
  • Tactic may indicate VW is trying to avoid a high court ruling

Volkswagen AG is developing a reputation for reliability -- at least in German courts.

Faced with about 2,000 lawsuits filed by German car owners affected by the diesel scandal, Volkswagen and its dealers have followed a pattern: settle cases before an appellate court hearing.

The six cases that were set to be reviewed at a hearing by appellate judges were settled, on a few occasions just a day or two before the scheduled meeting, according to court officials surveyed by Bloomberg News. The company is resolving the lawsuits when hearings are scheduled to avoid an adverse ruling that might sway courts throughout the country.

"If an appeals court is scheduling a hearing, that could be a sign the judges consider something wrong with the verdict,” said Manfred Wolf, a litigator at Senertz Schaefer, who isn’t involved in the cases. “That’s not ideal."

The settlements in individual cases come as the company continues to fight any sort of a pan-European deal for consumers. While VW reached a deal that allows U.S. car owners to claim as much as $10,000, the carmaker has summarily rejected efforts by European Union officials to come up with a similar pact.

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That stance has been met with fury from Europe, where drivers have been offered a free repair with a bit of rubber pipe and software updates after navigating an 8.5 million vehicle recall. Some drivers have instead turned to courts in a bid to force VW to buy back their cars or seek other compensation.

The German branch of U.S. law firm Hausfeld and online platform My-Right have said they have collected claims of 20,000 German car owners and intend to file suits later this year.

Volkswagen stressed that it has won 75 percent of cases filed and that it won at least two appeals where no oral hearing was scheduled.

“VW expects that the few lower-court rulings against the company will be overturned,” said Andreas Meurer, a company spokesman. “The company doesn’t comment on settlements in appeals courts. Each individual case is viewed separately.”

While the civil cases filed by consumers and investors have become more prominent, criminal probes have continued to weigh on the automaker more than a year after the first revelations of emissions cheating. On Wednesday, more than 100 police and prosecutors took part in searches at locations run by the company’s Audi brand in Ingolstadt and Neckarsulm as well as seven other locations across Germany. The company said Thursday that the offices of its law firm, Jones Day, were also searched.

Shares of the Wolfsburg-based company rose 25 euro cents to 140.50 euros in Frankfurt trading.

No ‘Don Quixote’

Lawyers for customers in the civil lawsuits say VW routinely rejected settlement requests before suits were filed and during proceeding in the lower courts. But that seems to have changed at the appeals courts, much to the chagrin of consumers.

"Of course I would settle, I’m not Don Quixote,” said Uwe Schoop, a journalist who lost his suit against VW in Braunschweig and is appealing. “I simply want what customers in the U.S. got. I don’t want to harm VW or its workers, and I like the cars. I just don’t like to be betrayed."

There are more cases to come and the next hearing in a VW appeal is scheduled for March 22 in Munich. But a court spokeswoman said the parties are already in settlement talks and the proceeding will likely be canceled. Wolf says just the fact that the court planned to hold an oral hearing is usually cause for concern and it’s often better to settle to preserve a lower court victory.

That philosophy may have helped out a VW Tiguan owner who lost at a Bochum court and challenged the verdict. The appellate judges scheduled a Feb. 14 hearing, saying they wanted to hear from a witness on whether the diesel scandal hurt the car’s value. One month before the hearing, the parties settled.

‘Afraid’

Dietrich Messler, the attorney in the case, said his client is highly satisfied with a deal in which he “dictated the terms.”

"They were afraid of an appeals court ruling like the devil is of holy water," Messler said.

And even more important than keeping the case away from regional appeals judges is preventing the issue from reaching Germany’s top civil court, which could set a precedent for the entire country.

An adverse ruling there could prompt owners of the remaining 2.5 million cars affected in Germany to sue.

"You never know how you will fare in the top court," Wolf said. "There’s always the risk that you’re going to be locked into a view of the law that may be inconvenient. You’d lose the leeway that you had if you kept the situation open as long as possible."

Apart from litigation, settlements are also a way to avoid inflaming the diesel scandal -- which has been in the headlines nearly non-stop for 18 months -- even further.

"A public hearing is like an invitation to the press to once more write about the subject," Wolf said. "Keeping the media away is always very important."

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