German government approves US-style class action lawsuits against Volkswagen
On Wednesday 9 May 2018, the German government approved a draft law permitting owners of diesel vehicles to join class action lawsuits in Germany. The new law will enable drivers to seek compensation from Volkswagen more than three years after its admission to using illegal software to pass US diesel emission tests.
Once approved, the draft law is expected to take effect on 1 November 2018. Time will then be of the essence for potential claimants as the statute of limitations for claims against Volkswagen is due to expire at the end of this year.
Furthermore, claimants who wish to bring a claim can only do so via an established consumer protection group representing a minimum of 50 claimants. Provided the claims are permitted by the court, a judge will rule whether damages should be awarded without determining the amount. It will then be up to each individual claimant to agree a compensation figure with Volkswagen directly.
The German Justice Minister, Katarina Barley, estimates that up to two million Volkswagen diesel car owners could potentially assert claims in that manner.
The decision by the German government follows the recommendation of a Group Litigation Order (GLO) by the High Court in England and Wales at the end of March 2018, which named Leigh Day and Slater & Gordon as joint lead solicitors to manage the action against Volkswagen. The GLO is subject to formal approval by the High Court.
It is understood that 60,000 claimants have already signed up to what is believed to be one of the biggest joint actions brought in the English courts and significantly more are expected to join. Volkswagen are expected to defend the action robustly, having previously described it as “premature and unfounded”.
Volkswagen are also facing group actions in Switzerland, the Netherlands and Italy. European claimants are likely to have been spurred on by the 2016 class action settlement in the United States, whereby Volkswagen agreed to pay approximately US$10 billion in buybacks and compensation to nearly half a million Volkswagen car owners. Further encouragement is also likely to have been offered by the class action launched in Australia in 2015 and which recently commenced in Sydney’s Federal Court in early March 2018.
The draft law has received a rapturous welcome by consumer groups in Germany, which have described the government’s legislative initiative as "a milestone for consumer protection".
Until now, class actions were not available in Germany - unlike the United States where they are commonplace. This development is predicted to be the start of a wave of new consumer claims. The head of the federal association of consumer protection organisations, Klaus Műller, has described the Volkswagen claims as the “only the tip of the iceberg”.
Car manufacturers worldwide will be watching to see how this global litigation develops over the next few years.