The class-action litigation barreling toward Volkswagen is huge. More than 400 class-actions from 60 different districts across the United States have been filed against the embattled car maker, most of which allege that VW deceptively charged a premium for clean diesel vehicles that were outfitted with “emissions cheating” software.
Last December, that list of class-actions was reorganized by a panel of judges in Northern California, who ruled that the bulk of the cases could be centralized and heard in one federal court. Not surprisingly given the significant number of car owners and lessees in California, the court chose the Northern California District Court to hear those dealing with the presence of “defeat devices” in the vehicles. A small number of cases that addressed other claims (such as whether the lessee should have to continue making payments to VW if it allegedly deceived the consumer) were not included in the transfer.
VW initially requested to have the bulk of the class-actions centralized in the Eastern District of Michigan (it also proposed the Eastern District of Virginia, but for some reason, dropped that request later in the hearing). A slew of other districts were also proposed by attorneys representing the plaintiffs — a step that, as the Federation of Defense and Corporate Council noted in its blog, highlighted the number of attorneys that were jostling to be lead council in an unprecedented class-action.
The suit charges VW with violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act, as well as the federal Magnuson-Moss Warranty Act. It also charges the company with violating the consumer protection laws of every state in the Union and the District of Columbia.
An additional factor in the panel’s decision to centralize the class-actions in Northern California was an unusual amicus curae brief filed by the Center for Class Action Fairness. Ted Frank, the founder of CCAF, pointed out that the sheer breadth of filings against VW on this one claim created a “feeding frenzy of me-too lawsuits” spearheaded by “the tremendous windfalls available to the attorneys” appointed to head up a large class. With at least 500,000 U.S. owners and lessees affected by the class-action outcome, the CCAF pointed out, “potential damages are in the billions or hundreds of millions.”
But the CCAF also made some points that caused legal organizations like the Federation of Defense and Corporate Counsel to sit up and take notice. Frank called for the cases to be transferred to Northern California District Court Judge William Alsup, who he asserted “has a unique track record of solicitous concern for absent class members that should be honored here ‘to promote a just and efficient outcome.'”
“CCAF asserts that settlement is the one critical area where plaintiffs’ counsel and defendants have a ‘common but perverse interest,'” explains the FDCC. And that conflict undermines potential relief for the absent class members (those who are represented in a class-action on behalf of the plaintiff launching the class-action).
“[Neither] wishes the transferee court to closely scrutinize the class action settlements that will inevitably be reached to resolve the litigation,” said CCAF in its brief. “[The] structure of class actions … gives class-action lawyers an incentive to negotiate settlements that enrich themselves but give scant reward to class members, while [defendants have] an incentive to agree to early settlement that may treat the class action lawyers better than the class,” CCAF said, hammering home the point with a well-known quote from an earlier class-action that had piqued a judge’s ire.
At the center of this massive class-action will be the question of whether Volkswagen should pay punitive damages, something that is usually not awarded in class-action suits. But as CCAF has pointed out, this case isn’t likely to be treated like just any class-action, since “the defendant has already admitted some wrongdoing and plaintiffs will be able to piggyback off government investigations of Volkswagen’s conduct.”
“This case arises out of one of the most brazen corporate crimes in history, a cautionary tale about winning at any cost,” Top Class Actions summarizes from the lawsuit filed last week. “Volkswagen cheated its way to the top of the automotive food chain and spared no victim along the way, targeting its customers, U.S. and foreign regulators, and even the very air we breathe.” Top Class Action is one of many public websites that notify and promote access to class-action cases.
Whatever the outcome of this particular class-action against Volkswagen, one thing is for sure. It’s liable to be interesting and landmark. This case will not be about the replacement of a box of cereal or a $10 replacement of RAM for a malfunctioning computer, as so many class-actions are these days. And since buybacks and recalls were already being considered in the EPA negotiations with VW, it likely won’t be about just that, either. Hold on to your hats.
Image credit: Rumble Press