As an attorney, I’ve been asked by many friends and family lately “so what do you think about that Volkswagen emissions lawsuit?” with the expectation that I, and every other lawyer, are waiting gleefully to sue the German carmaker into oblivion. The constant daily news updates as more and more vehicles are found to be affected (nearly half-million in the U.S. alone) give the impression that VW is a giant slow-moving and wounded animal with packs of attorneys circling it, looking to pounce and feed off it, collecting big class action fees in the process.
First off, I’m not a mass tort lawyer, so trying cases on behalf of hundreds of thousands of angry diesel vehicle owners from all over the U.S. in a complex litigation matter holds little appeal to me. Still, if I were to pick an almost perfect stereotype of the perfect big company to sue in the consumer class action world, this case doesn’t look bad at all from that standpoint, here’s why:
- Size: Volkswagen is an absolutely massive company, with the revenue to boot. Lawyers love to see “deep-pocketed” consumer brands that have a reputation to preserve, and plenty of cash to make problems go away. They aren’t going to go bankrupt at the first sign of trouble, or close up shop to avoid liability; there is too much at stake for such a massive entity selling in a global marketplace.
- Governmental Pressure: Most times when affected customers of a company sue, it is just them against the company, no outside government office knows or cares. This is different though, with heavyweights with regulatory authority like the EPA and State Air Quality Boards involved, the auto-maker has more than just angry end-users to deal with, they must also placate agencies with the power to literally put them out of business on behalf of citizens and constituents. The Department of Justice has opened up an inquiry, and they could charge those deemed responsible criminally, if they desire to. More importantly, these adversaries have different agendas than the average consumer, who is only seeking financial compensation. Now, those consumers will benefit in negotiating power because governmental actors are set to make an example out of Volkswagen, and they can’t be ignored our bought off as easily.
- Speed: Big corporations involved in numerous class actions or widespread consumer lawsuits can drag out these cases for years and years before paying a single dime in settlement money. This makes it hard for attorneys who are paid on a contingent-fee basis (meaning they work for free, and don’t get a dime until the case settles, if at all). Many attorneys avoid mass tort cases precisely for that reason; they can wait years and years to see if they will even get paid, and have to advance their own money and time in the meantime. The VW emissions scandal is unlikely to be that kind of case though. Volkswagen is already facing the de-certification of their 2016 models by the EPA until this gets resolved, meaning their newest line of TDI diesel cars will be sitting in showrooms or at ports gathering dust until VW can satisfy the government that it’s new models can be sold legally and comply with emissions standards. With their dealers yelling at them about the lost sales and fickle customers finding plenty of alternatives to buy rather than wait, Volkswagen is losing massive revenue for every day the problem continues.
- Culpability: This is the big one, and what will ultimately have a very direct impact on how much these cases are going to cost Volkswagen. Even the worst and most expensive mass tort case in history, the Deepwater Horizon oil spill, all sides acknowledged was an accident; the company didn’t purposely cause the tragic explosion and spill that ultimately cost BP over $53.8 billion in total damages. Now, Volkswagen’s bizarre decision to brazenly “cheat” the emissions standards may not have killed anyone or ruined any local businesses, but their “bad behavior” is clear; this was an intentional act. The perceived arrogance of a company doing something so obviously wrong on purpose, with full knowledge of what they were doing, is the kind of seeming pure corporate evil you would only see in a movie. That type of behavior is going to get punished far more severely than any type of honest mistake, carelessness, or accident. Volkswagen has no choice but to grit their teeth and take their punishment and the financial effect of that corporate malfeasance will be felt long into the future.
All of these factors point towards a quickly-resolving case by mass tort standards. Volkswagen is not negotiating from a position of strength, they have already announced that they are giving away $500 gift cards to affected VW owners, (with apparently no strings attached), just to buy time and calm the angry mob that feels betrayed by their car manufacturer. Time will tell if the gift-card offer gives the German giant the credibility it needs with angry consumers that have seen their resale values plunge while not getting very many answers from VW. For now, the embattled car maker has an expensive road ahead of it to resolve its pending regulatory and legal issues while still servicing its customers and dealers.