By William Boston
Governments, investors and car owners around the world are
gaining ground in efforts to pressure Volkswagen AG for settlements
over its emissions-cheating scandal, aiming for terms similar to a
$15 billion U.S. agreement.
From Australia to South Korea to Ireland, governments and
consumers are ratcheting up legal and regulatory demands in part
because such moves in the U.S. yielded a speedy shift to contrition
from combativeness.
In many of the countries where Volkswagen still faces legal
action, it is arguing the so-called defeat device on its diesel
engines wasn't illegal or the car emissions didn't violate local
rules, according to court records and documents reviewed by The
Wall Street Journal.
If the efforts succeed, the costs to resolve the diesel scandal
could rise well beyond the EUR18.4 billion ($20.5 billion) the
company has set aside. Of the roughly 11 million vehicles affected
by Volkswagen's yearslong effort to cheat on diesel emissions
standards, about 10.4 million are outside the U.S.
While outcomes are still unclear, the company's position has
been chipped away by recent decisions. In Germany, the cost could
rise as much as EUR4 billion following a ruling earlier this month
by a court in Braunschweig, near Volkswagen's headquarters. The
court said it would address more than 170 suits filed by hundreds
of Volkswagen investors who allege the company failed to quickly
inform them of the diesel probe. Volkswagen has rejected the
allegation.
Another German court this month dismissed Volkswagen's
objections in ruling that local owners of tainted diesel vehicles
had a right to return their cars to dealers for a full refund
because of Volkswagen's "massive fraud" with its diesel-powered
cars.
South Korea this month banned the sale of 80 Volkswagen models,
affecting more than 80,000 vehicles, and around 4,400 Korean
consumers are suing Volkswagen and its luxury-car unit Audi for
damages from its false emissions claims.
Korean authorities also fined Volkswagen and indicted a local
executive on charges of fraud linked to the diesel scandal. The
auto maker faces additional class-action lawsuits, investigations
by prosecutors and punitive damages in Australia, Brazil, Canada,
Germany, Ireland, Italy, the Netherlands and Spain.
Johannes Thammer, chief executive of Volkswagen's Korean unit,
recently apologized for misleading Korean authorities, saying: "We
will do everything, faithfully, to cooperate with the
prosecutor."
Attorneys outside the U.S. are striving to build on the success
of American legal action against Volkswagen. In the June
settlement, Volkswagen agreed to pay up to $10 billion to
repurchase from consumers affected cars with two-liter diesel
engines, including Jettas, Passats, Golfs and Audi A3s. It also
agreed to devote another $4.7 billion to environmental remediation
and investments in promoting zero-emission vehicles such as
electric cars.
European lawyers working with Michael Hausfeld, a leading U.S.
class-action lawyer who was part of the plaintiff's committee that
won the U.S. settlement, are assisting Australian and Irish
attorneys.
Australia has become a significant battleground because its
vehicle-emission regulations are almost identical to European Union
laws. If an Australian court determines that Volkswagen's emissions
system contained an illegal element known as a defeat device,
Australia could become a precedent for billions of euros in claims
in Europe.
In the U.S., Volkswagen admitted to using a defeat device.
Australian Federal Judge Lindsay Foster, who is presiding over a
class-action suit in Sydney brought by law firms Maurice Blackburn
and Bannister Law, chastised Volkswagen's lawyers at a hearing on
April 29, saying company executives in Germany "obviously think
this is some kind of backwater," according to the court
transcript.
He accused Volkswagen of intentionally stalling to delay a
ruling in the Australian case until it was able to "bed down"
lawyers and regulators in a settlement in the U.S.
"That's what's going on, I think, and I'm not having it," he
said, according to the transcript.
An attorney for Volkswagen denied Judge Foster's charge.
Maurice Blackburn attorney Jason Geisker said the two sides are
fighting over "the definition of what is a defeat device" and
Volkswagen's legal team isn't yielding as it did in the U.S.
"A lot of effort is being put into this case by Volkswagen
because of the broader consequences across Europe," Mr. Geisker
said.
In July, Volkswagen's attorneys in Australia denied the
existence of illegal software to manipulate emissions.
"There is no defeat device. That's our case," Noel Huntley, an
Australian barrister representing Volkswagen, told the court,
according to an official transcript of the hearing.
In Europe, Volkswagen has denied that its customers suffered any
damages and has ignored or denied claims seeking compensation.
European lawyers allege that Volkswagen is stalling. They note
that the one-year statute of limitations for damages suits in many
European countries expires on Sept. 18.
"Before that, Volkswagen will do nothing so that as many claims
as possible will just go away," said Eric Breiteneder, an attorney
preparing class-action suits in the Netherlands on behalf of
106,000 European car owners and funds with more than EUR13 billion
invested in Volkswagen stocks and bonds.
Volkswagen has declined to enter settlement negotiations with
Mr. Breiteneder.
Evan O'Dwyer, an Irish attorney, has filed 20 individual claims
against Volkswagen in low-level Irish courts, seeing damages that
could go as high as EUR15,000 a vehicle. Under Irish law, Mr.
O'Dwyer is not permitted to comment on the cases to the media.
A&L Goodbody, a law firm representing Volkswagen in Ireland,
has threatened to sue Mr. O'Dwyer and his clients for legal fees if
he takes the cases to trial. In a letter dated Dec. 16, Goodbody
urged Mr. O'Dwyer to drop a lawsuit on behalf of Eithne Higgins, a
car owner, saying her complaint was without merit.
--In-Soo Nam in Seoul contributed to this article.
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
August 24, 2016 02:49 ET (06:49 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.