VW Expected to Score New Victory in German Test Case

(Bloomberg) -- Volkswagen AG is likely to score another victory in its efforts to deflect claims by owners of diesel cars as an appeals court near its German headquarters said a suit once seen as a kind of test case has a slim chance of success.

Presiding Judge Christa Niestroj at the tribunal in Braunschweig took two hours at a hearing on Tuesday to dissect every argument in the suit. The driver, who had already lost in a lower court, faces a struggle mainly because he didn’t buy his car directly from VW.

His contention that VW is liable because the company issued a certificate stating the car was compliant with European Union emission standards didn’t sway the the three judges on the case, Niestroj said.

“The statement was required under EU rules which didn’t regulate the relation between buyer and carmaker,” she said. "German law is very restrictive when it comes to turning such a document into a guarantee."

The suit is one of several cases the U.S. law firm Hausfeld has filed on behalf of car owners as part of a strategy to skirt Germany’s lack of American-style class actions. The law firm is working with My Right, a website enabling car owners to sign up online to have their claims litigated in cooperating with fund Burford Capital Ltd. Last week, My Right filed a case representing claims of 19,000 customers. The group said it is representing a total of 40,000 vehicle buyers.

Next to the My Right initiative, VW is also facing group litigation by a German consumer association that is suing the carmaker under a new procedural model allowing it to act on behalf of drivers. As of Monday, about 185,000 car owners registered to be covered by that litigation.

The Braunschweig appeals judges will still deliberate on some aspects of the suit and could theoretically change their minds. Niestroj said she expects that her panel won’t have the final say in the case anyway, regardless of what the three judges decide. They scheduled a ruling for Feb. 5.

"We know we won’t be be the last court to look in this suit," she said.

The case is: OLG Braunschweig, 7 U 134/17.

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