Monday, September 21, 2015

This Might Be the Mother of All Class Action Lawsuits

The operative principle is that fraud vitiates (negates) consent. When a person is induced to enter a contract on the strength of fraudulent misrepresentation, the standard remedy is rescission of the contract. The contract is deemed rescinded and the parties are restored to their position prior to entering into the contract.

Now we have a situation involving vehicles equipped with Volkswagen's vaunted "Clean Diesel" or TDI engine.There are many like me who bought the vehicle because of its advertised low emissions and fuel economy. It turns out we were sold a bill of goods.

Volkswagen used a software trick to contrive the low emissions and fuel economy. When emissions testing equipment was being used the engine detected what was going on and responded by turning on the full emissions-control system. In ordinary operation part of the emissions-control hardware was deactivated to give increased performance and fuel economy.

It was a deliberate deception. Government regulators were deceived and so too were purchasers of the Volkswagen vehicles.

VW was exposed by the US Environmental Protection Agency which ordered half a million vehicles recalled and slapped the company with a multi-billion dollar fine. Presumably criminal prosecutions will follow. Somebody hatched this scheme. Software was written and installed in these vehicles. Results were fabricated to mislead regulators and customers alike.

And what of those half-million plus customers? There will be no cheap and dirty fix for this. Their vehicles, once highly regarded, are now infamous in the sort of way that tears the bottom out of market values. They too have been defrauded. They too will claim damages from the manufacturer, possibly the dealers also.

CBC News is reporting that Volkswagen Canada has issued a directive to dealers to stop selling certain models effective today. That's a start.

I'm figuring there'll be one if not several class action lawsuits filed against VW. Where do I sign up?

13 comments:

Anonymous said...

Apparently, this Spring, WV was calling its Canadian customers for fix to ECU software. After update customers noticed lower performance and higher fuel consumption.
BTW, diesels always pollute more than equivalent gasoline engine.
The diesel trade-off is less CO2 for more NOx...
A..non

ThinkingManNeil said...

Shit, meet Fan...

N.

Dana said...

VW/Audi probably isn't alone in this. And industry wide it's probably not limited to diesel.

deb Scott said...

wow.just.wow!

Anonymous said...

Anyong said: When a person breaths in diesel emissions, they remain in the lungs forever.

The Mound of Sound said...

I issued a standard demand notice to the dealer this morning, pointing out that it's well settled law that the remedy for fraud is rescission and that a fraudulent representation is not laundered into a mere negligent misrepresentation because it is made to the customer by the dealer and not directly by the manufacturer.

It took less than an hour for me to receive a very gentle reply from the dealer, begging a bit of forebearance while the company informed dealers what compensation it is prepared to extend. The dealer's response acknowledged the fact of what has happened and that the resale market for these vehicles has cratered. Nice admissions should this proceed to litigation but also very wise because an arrogant response is just the sort of thing that gets judges thinking about punitive damages.

Toby said...

This is fraud. The perpetrators, including the CEO, should be criminally prosecuted. I would suggest jail time. Until CEOs are treated like the criminals they are they will keep doing this stuff.

Anonymous said...

Diesel engines have another Achilles heel, which I forgot to include as it was not mentioned in the press. It is PM10 / PM2.5. Such small particulate matter is invisible to human eye and is so small that, in case of PM2.5 and below, can pass through alveoli directly to the blood stream. The very reason why big European cities (London. Paris, Milan, etc.) have horrible smog problems is NOx and PM from (perhaps old or maladjusted) diesels.
A..non

The Mound of Sound said...

Yes it is fraud. Some 11-million VW customers were defrauded as were the environmental agencies of most governments. I still have the VW advertising literature from when I bought the car. It proclaims the miraculous new "blue technology" diesel as not only powerful and incredibly fuel efficient but utterly clean, a breakthrough for diesel engine technology. Now it turns out it was all a deliberate scam.

Toby said...

Apparently Volkswagen CEO Martin Winterkorn has resigned. He's probably hired a lawyer to keep himself out of jail. Somebody will be running the shredder by now.

Purple library guy said...

I was absolutely aghast when I heard it. I too have a VW diesel, but it's old, a 2003, which I believe is before the scam started, so I won't be involved in all the, um, fun.
I don't see how they figured nobody would ever notice this.

. . . So, this is the German advantage over those lazy Greeks?

The Mound of Sound said...

I think the Americans will want to see more than one VW honcho cooling his heels in a fine US prison cell.

@ PLG - yes, this is the "German advantage" those idle Greeks will never possess.

Anonymous said...

Marin Winterkorn will get off with a slap on the hand. That will be about it.