Here’s what will decide Volkswagen suits – Salt Lake Tribune

Posted: Friday, December 04, 2015


All signs point to an early settlement since “the company has admitted liability” and promised to fix the problem or compensate consumers, said Erik Gordon, law professor at the University of Michigan. Depending on whether it just covers the premium paid for “clean diesel” or a full buyback of the cars, the payout could range from $1.5 billion to $8.9 billion, according to Bloomberg Intelligence.

Volkswagen has about $20.5 billion cash on its balance sheet. Bloomberg News reported this week it plans to secure a $21.4 billion bridge financing deal to show it can cover the widening scandal.

Since news broke Sept. 18 that deceptive software had duped emissions testers to approve small cars for sale, regulators have ordered a recall of larger vehicles, including those made by Volkswagen’s Audi and Porsche units.

In addition to the consumer suits — which now number over 400 — there are criminal and regulatory probes as well as the recalls and fixes themselves to pay for.

“At this time we are unable to comment on pending or active litigation,” Jeannine Ginivan, a spokeswoman for the carmaker, said in an email.

By the end of the month, the judges in New Orleans will probably decide where the cases will be consolidated and which federal judge will preside. Then comes a series of preliminary hearings and filings to decide lead counsel and other procedural issues.

At Thursday’s hearing, 22 lawyers in a packed room argued for their favorite districts. When it came to second choices, Detroit appeared to be the leader.

Several attorneys argued for putting the cases before District Judge Gerald E. Rosen there, including those from northern and southern California and for Volkswagen.

Consumer lawyers asked for the cases to be consolidated in places including California, close to the state agency that first discovered VW’s diesel vehicles were rigged to pass emissions tests; Virginia, near the company’s U.S. offices; and New Jersey, where the U.S. unit is incorporated.

Lawyers urged the panel to send the cases to Texas, Illinois, Tennessee, Ohio and Alabama.

Volkswagen’s attorneys asked the court to send the cases to Alexandria, Virginia, or Detroit, near Volkswagen’s former U.S. headquarters.

“We believe the scale has tipped towards Eastern District of Michigan,” said Jeff Chase, a lawyer for the carmaker. Chase said that court district has a structure in place for mediation.

The real negotiations will focus on the settlement amount. The plaintiffs are claiming various wrongs: deceptive trade practices, breach of warranty, breach of contract, false advertising, fraud and others.

Nearly all the states with the largest number of affected vehicles allow them to claim more than just their loss, some as much as three times the amount.

But those state rules would come into play only if the cases reach trial. Since Volkswagen’s early admission of the cheating makes it likely to settle before then, the local laws will be more of a hammer to hold over the company during negotiations.




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