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Class-Action Suits Happen Everywhere; Delaying VW's Return to Normal?

As pressure grows in the U.K. to get firmer timeframes on Dieselgate decisions, class-action suits are occurring all over. Are they delaying a return to normal for VW?
Posted: September 2, 2016 - 3:21PM
Author: Marc Stern


The Dieselgate scandal continues to have more twists than an anaconda with its dinner. Just when you think it is safe to start thinking about Volkswagen getting back to its central reason for being – cars – its self-inflicted emissions scandal jumps out all over again. This time, the venues are the U.K., where officials are pressuring the automaker for firm recall and compensation deadlines and speedier response, and Australia, where a consumer agency has charged the automaker with fraud.

Class-Action Suits Facing Volkswagen All Over

In the U.K., Europe’s second-largest market, a committee of Parliament – the Environmental Audit Committee – has called for a speed-up. “There has been a worrying inertia from ministers tackling the VW scandal” and whether they should decide “to take action,” Mary Creagh, quoted in Automotive News, said yesterday. She is head of the environmental panel. “It has been almost a year since we discovered VW had fitted cars with cheat devices, but [the] government has still to decide what action to take against the company.”

Various Organizations Criticized

The panel has criticized the U.K.’s Department for Transport, Serious Fraud Office and Competition and Market Authority for taking so long to make decisions on penalties against VW.

Volkswagen has just begun the recall process in the U.K. About 1.1 million vehicles were affected by the cheatware that VW installed in its turbodiesel vehicles so they could pass emissions tests.

The Dieselgate affair, as it is known, began just about a year ago – Sept. 18, 2015 – when the automaker admitted to the U.S. Environmental Protection Agency (EPA) that it had installed what it called a “defeat switch” to reset engine controls. By resetting the engine controls, the turbodiesel powerplants seemed as if they were able to pass emission tests for oxides of nitrogen (NOx).

The ruse had its beginning in 2006 when engineers realized that unless the exhaust was doped with urea formaldehyde, there was no way they could clean up the exhaust. Because the urea process had to be licensed from outside the company, they decided not to use it, preferring, instead, a form of extreme lean burn technology.

Part of the ruse, the engineering team apparently knew that its plan would not pass muster. Indeed, lean burn had been disproven some years before. However, the engineering team still adopted it as their panacea. In the background, the team had also decided to install the cheating software so that it looked as if their engines were clean. Using this software, engineering was able to keep its ruse alive for six years until they were undone by a group of independent university researchers.

Researchers Shine Light

The research team was trying to determine how VW was able to achieve a truly “clean diesel.” In seeking VW’s “clean diesel,” the research team found a secret they had not imagined. They came across the cheatware that the automaker had installed.

The researchers did tell the automaker of their findings in the hope that VW would find a real solution to emissions problems that resulted when the cheatware was turned off. And, the automaker did go through the motions creating a fix for the problem. That fix, though, was quickly found to be ineffectual. The research team notified the Environmental Protection Agency (EPA) which began its investigation that ultimately resulted in the automaker’s admission that it had cheated. EPA issued a Notice of Violation, and the Dieselgate affair took off. In the end, 11 million vehicles worldwide were impacted by Dieselgate. Also, the scandal has cost billions.

In Australia, Thursday the nation’s consumer watchdog sued the automaker for intentionally selling more than 57,000 vehicles with scamming software installed. Rod Sims, chair of the Australian Competition and Consumer Commission (ACCC), said that the allegations “involve extraordinary conduct of a serious and deliberate nature by a global corporation.”

Also, the ACCC is seeking a public declaration from VW that it had “engaged in multiple breaches of the Australian consumer law by concealing software in their vehicles to cheat emissions testing and misleading consumers about the vehicles’ compliance,” the chairman said. “Consumers rightly expect that their vehicle’s emissions would operate as advertised during their day-to-day use and we allege that this is not the case.”

Already A Costly Problem

Automotive News said that the move increases an already costly problem for the German automaker which faces class-action lawsuits around the world for emissions fraud, as well as penalties from other agencies. In Australia, for instance, the law firm of Maurice Blackburn is seeking more than $75 million from the automaker, as well as the full replacement cost for 90,000 vehicles.

So far, Dieselgate has proven a huge drain on the automaker. As a result of a major class-action suit settlement, VW has set aside more than $16 billion in compensation costs. Also, the automaker just agreed to pay more than $1.2 billion to settle dealer issues.