Volkswagen has agreed to pay close to £200 million (and probably a lot more once the final legal bills are settled) to end the long-running class action in England and Wales over its ‘Dieselgate’ emissions-cheating scandal.
In an official statement this week, the Volkswagen Group has confimed that it will pay £193 million to the 91,000 claimants in an out-of-court settlement. In addition, “a separate contribution is being made by the Volkswagen Group towards the claimants’ legal costs and other fees.” Given than this action involves more than 91,000 claimants and three law firms, and has been going on since the start of 2017, the “legal costs and other fees” will certainly be another very big number.
The case was due to head to court next year, and Volkswagen’s official view is that “… the legal costs of litigating this case to a six-month trial in England, and then in relation to any further appeals by either party, were such that settlement was the most prudent course of action commercially.”
Even by the going rate for a London law firm, suggesting that a trial and any appeals would cost more than £200 million seems a bit rich…
Inevitably, the payout has been made despite Volkswagen still refusing to make any admission of “liability, causation or loss”. Fortunately, pretty much the entire world is well aware that Volkswagen cheated emissions tests for years. A near-£200 million settlement (plus the billions paid out in other countries around the world) simply reinforces what we already knew.
How much will the claimants actually get?
Exact numbers are obviously confidential, and the claimants will be bound to keep their payout figures to themselves, but it’s not as simple as dividing £193 million by 91,000 claimants and everyone getting a bit over £2,000 each.
According to the official statement this week, the money “… will be allocated between the claimants in proportions agreed amongst the various claimant solicitors’ firms and those from whom they take instructions.”
Of course, the biggest winners will be the legal firms. It has been suggested that they will swallow up 30-40% of the payout, depending on which firm is representing each claimant, which works out to between £58 and £77 million of the total.
Despite the confidentiality issues, claimants have already been discussing their settlement letters in online forums. Some are annoyed that they will only see a few hundred pounds once the lawyers take their share, with the settlement described by one claimant as “derisory” after more than five years of waiting. On the other hand, others are pleased to have got anything at all.
When will claimants get their money?
Slater and Gordon, which is representing about three quarters of the 91,000 claimants, suggests that there’ll be a cheque in the mail in about four to six weeks. The company also asks that claimants don’t chase them up for more information just yet as they’re still working their way through more than 70,000 cases.
Can I still make a claim if I wasn’t part of this action?
The closing date for joining this class action was years ago, so you can’t help yourself to a share of the jackpot unless you were already signed up. You’re welcome to bring your own case against Volkswagen, but your chances of success are probably slim.
What about other car manufacturers with class actions for emissions cheating?
There are several other class actions underway against other car manufacturers, notably Mercedes-Benz. These are still in very early stages and there is no guarantee that this result will improve the likelihood of any other actions proceeding to court or a settlement.
It’s more than two years since the UK High Court ruled that the Volkswagen Group installed illegal ‘defeat devices’ in selected VW, Audi, SEAT and Skoda vehicles sold in the UK. A similar ruling has not been made against any other car manufacturer, so there’s still a long way to go until we find out whether claimants against Mercedes-Benz or any other car company will ever see any compensation.
What exactly did Volkswagen do wrong?
In September 2015, Volkswagen was caught with illegal software and hardware in some of its diesel-engined cars in America.
This equipment was what is called a ‘defeat device’. Basically, it switched off all of the car’s emissions equipment to improve performance and economy – but, in the process, meant that the car spewed a lot more pollution into the air. And by ‘the car’, we actually mean millions of Volkswagens, Audis, SEATs and Skodas.
Using various sensors, the car was able to detect whether it was undergoing an emissions test. If so, then all of the anti-pollution kit worked normally and official emissions were in line with what Volkswagen claimed. But if the car recognised that it was actually on a road being driven normally (which was about 99.99% of the time), then the anti-emissions gear was deactivated and toxic emissions rose to as much as 40 times the legal limit.
Within a few months, it was conclusively determined that the Volkswagen Group had fitted ‘defeat devices’ to millions of diesel cars sold around the world over many years. Most of the attention has focused on an engine called the EA189, which is a four-cylinder diesel engine, although there have been cases covering diesel V6 and V8 engines as well, which were also used by Porsche and Bentley.
More than 11 million cars were built with the hidden defeat devices according to Volkswagen’s own admission, including 1.2 million here in the UK. The company was eventually embarrassed into recalling the affected UK cars, although there were many reports (and about 17,000 formal complaints) that the ‘fix’ had negatively affected the vehicles, including cars breaking down or going into ‘limp home’ mode literally minutes after being ‘fixed’.
Throughout the whole saga – and even before being caught – Volkswagen has generally acted deplorably in covering up, then denying, its behaviour. Through a ‘research group’, it even gassed people as well as monkeys with diesel car fumes to try and work out how they affect health. Yes, you read that right – 70 years after WWII, the car company founded by the Nazis decided it would be a good idea to gas people with a diesel engine…
Although it has been forced to pay billions of pounds in fines around the world, the reality is that the company has been largely unaffected. A more effective punishment would have been to ban Volkswagen Group brands from sale, but no government was brave enough to do so.