Multi-Party (Class Action) Litigation Taking the high number of litigation actions against Volkswagen as an example, Marcus Hanahoe assesses how such multi-party litigation cases fare in other legal jurisdictions as compared to here in Ireland
“O
ur company was dishonest with the EPA, and the California air resources board and with all of you, and in my German words: we have totally screwed up”. Lenny Kravitz and his band were backstage waiting to come on as Michael Horn, CEO and President of Volkswagen Group of America, stood in front of a giant digital screen emblazoned with the Volkswagen logo and humbly delivered his company’s confession to a subdued crowd standing in the Brooklyn Naval Yards in New York on Monday 21st September 2015. The event had been intended to celebrate the launch of the 2016 Volkswagen Passat and Kravitz was hired to headline the gathering. Instead, Horn, tasked with delivering the now infamous ‘we have totally screwed up’ speech on behalf of the German brand was the star of the show and his words would carry the next day’s headlines. Three days earlier the US Environmental Protection Agency had served a Notice of Violation on Volkswagen Group alleging that approximately half a million Volkswagen cars sold in the US between 2009 and 2015 equipped with diesel engines had emissionscompliance “defeat devices” installed that bypassed vehicles’ emissions controls to provide falsified test results. Earlier that day, as Horn was no doubt rehearsing his speech, the value of Volkswagen shares was plummeting over 20 percent. A US federal judge sitting in Detroit would later order Volkswagen to pay a $2.8 billion criminal fine for "rigging diesel-powered vehicles to cheat on government emissions tests". When added to a separate $1.5 billion civil penalty, Volkswagen had agreed to pay a total of $4.3 billion to settle the US Justice Department probe.
42 the Parchment
This sum was dwarfed by the liability resulting from so-called ‘class action’ lawsuits that followed from the scandal. In the United States alone over 500 individual and class-action lawsuits were filed in almost 70 jurisdictions in the aftermath of the announcement. Within less than three months of the Notice, on 8th of December 2015, the Judicial Panel on Multidistrict Litigation, a special body within the United States federal court system, announced that these multiple claims would be consolidated and heard by a judge in the Northern District of California in San Francisco (where the first US suit was filed) under the title In Re: Volkswagen ‘Clean Diesel’ Marketing, Sales Practices, and Products Liability Litigation 15-MD-2672-CRB (JSC). Settlement talks began early and went quickly guided by the court-appointed settlement master, Robert Mueller (of Trump Mueller-probe fame), and agreement in principle was reached in April 2016. On the 25th of October 2016 Judge Charles Breyer, Senior United States District Judge for the Northern District of California, signed an order approving a €15 billion court settlement between Volkswagen and the owners of approximately 475,000 polluting vehicles. By June 2019, the United States Court of Appeals for the Ninth Circuit upheld the settlement under which Volkswagen agreed to offer the class members between $5,100 and $10,000 in compensation, in addition to the estimated value of the vehicle. By contrast to the experience of American owners where settlement for 475,000 vehicles was reached within 17 months of the scandal breaking, the majority of Europeans have not yet received any compensation despite owning approximately 8.5 million of the affected vehicles. This discrepancy in outcome has mainly been attributed to the fact that until now, European plaintiffs did not have a workable class-action type mechanism for redress.
