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US court consolidates VW lawsuits

December 9, 2015

The embattled German auto giant is facing an avalanche of lawsuits in California after a US judicial panel ordered hundreds of lawsuits be tried in a district court. VW could be facing billions of dollars in penalties.

Greenpeace activists use the VW logo to spell "CO2" outside the company headquarters in Wolfsburg, Germany
Image: Reuters/F. Bimmer

The Judicial Panel of Multidistrict Litigation, based in New Orleans, Louisiana, on Tuesday issued a decision to consolidate more than 500 individual and class-action consumer lawsuits over Volkswagen's emissions cheating.

Volkswagen spokeswoman Jeannine Ginivan pledged to "vigorously defend the company in these cases."

The Wolfsburg, Germany-based carmaker was exposed in September for having rigged as many as 11 million of its purported "clean diesel" engines so they would pass pollution tests, drawing the wrath of millions of disillusioned customers around the globe, who accuse the company of fraud and breach of contract.

In a statement, the US court panel said the cases would be tried centrally in a San Francisco district court, noting that while the litigation is "international in scope," nearly a fifth of the cases filed so far were brought in California. The California Air Resources Board played a key role in uncovering fraudulent emissions test results that involved at least 482,000 Volkswagen vehicles nationwide.

Not just VWs

While VW's namesake car brand makes up the lion's share of the tainted fleet, many of Volkswagen Group's other brands, such as Audi, Seat and Skoda, are also affected.

Compliance Management: Window Dressing?

The iconic company's image took another hit last month, when an internal investigation revealed that close to 100,000 petrol-powered vehicles had also been equipped with the emissions cheating software.

Volkswagen has already set aside more than 6.5 billion euros ($7.1 billion) to cover resultant recall costs. But the final bill could be more than triple that figure, as the US Environmental Protection Agency has warned that the automaker could be facing penalties of up to $18 billion in the US alone.

Suspended from sustainable index

In a further blow to VW's reputation - and possibly to its balance sheet - the company was suspended from the widely-followed FTSE4Good sustainable index series on Tuesday. The index lists companies that meet certain environmental, social and governance (ESG) criteria. According to FTSE Russell, which launched the index in 2001, more than 100 of its clients worldwide use the list to make investment decisions.

"The company is deemed to have misled government agencies and consumers over vehicle emissions through the application of software designed to circumvent test requirements," FTSE Russell said in a statement.

"The suspension follows an assessment of Volkswagen through FTSE's Controversy Monitor, which considers the significance of crises or controversies; how the company has responded; and the extent to which it impacts wider industry," according to the statement.

The suspension means VW will be "benched" through December 2017, when it will be eligible to apply for reinclusion on the list.

pad/jz (AP, dpa, Reuters)