Around 800,000 jobs in Germany are either directly or indirectly linked to the automobile industry. Calling it to task for its transgressions is a no-no in German politics.
Merkel has been called "chief lobbyist" for carmakers because of her protective stance. The opposition, and even her coalition partner, the Social Democrats, have tried to introduce legislation that would specifically enable car owners damaged by Volkswagen to sue collectively in court, without success.
The majority coalition party CDU/CSU hasn't even allowed a debate in parliament about a legislative draft prepared by Justice Minister Heiko Maas that would introduce something similar to class-action litigation in Germany. It was stopped cold by Alexander Dobrindt, Germany's transportation minister and lead member of the conservative Christian Social Union. His handwritten comment on the draft read: "We reject this, strike completely!"
In sharp contrast, Volkswagen has entered into a settlement with the U.S. Federal Trade Commission that includes hefty compensation for about 600,000 affected American car owners. Large criminal and civil fines, as well as the cost of buybacks, bring the bill for Volkswagen close to $25 billion. Some Volkswagen employees in the U.S. are even facing jail time. None of this is happening in Europe, where 8.5 million VW customers have purchased diesel cars with the illegal devices. Worldwide, there are 11 million defeat devices.
Several German plaintiff law firms have been ramping up to sue Volkswagen. Their problem is that they need to bring each case to court separately. One Duesseldorf firm has announced plans to file 5,000 cases. "VW is fighting every claim individually," says Ralph Sauer, partner at Dr. Stoll & Sauer. "If they start to offer a big deal like they did in the U.S., they fear 2.4 million people will want the same thing."
The European Commission has issued directives to its member states in the past to implement class-action litigation in order to counter egregious transgressions by businesses against consumers, the last one in 2016. Most European countries have followed the directives and introduced some sort of collective redress in their laws.
Not so in Germany. This and the diesel scandal prompted European Justice Commissioner Vera Jourova in March to threaten Volkswagen with enforcement action if the automaker doesn't offer European consumers compensation for their damages. The European Commission hosted a meeting of 22 consumer protection authorities from across the continent, in which they agreed to prepare collective action against VW.
So Volkswagen has it coming, even if the German authorities are still treating them with kid gloves. It has been an election time, but maybe all the corporate lobbying against class-action lawsuits has reached a wall?
For years, the main arguments were that class actions would burden businesses and promote an "American-style" litigation industry. The worn examples of exorbitant attorney fees, the potential for blackmail and excessive discovery to extract trade secrets don't all work in Germany.
German procedural law does not allow pretrial discoveries nor contingency fees for lawyers. Progressive legal academics have long supported changes to German law that would allow groups of claimants to sue together.
A smart legislative draft that would enable plaintiffs to initiate group actions, without needing sponsorship by consumer protection agencies or other public entities, died in German parliament. It was denied discussion when introduced Sept. 5.
It seems like Merkel still is holding her hands over the automobile industry. Her victory was also a win for the German carmakers.