Class Action Against Volkswagen

On February 22, 2016, a proposed class action lawsuit was filed in a California federal district court against Volkswagen AG (“VW”), alleging, among other things, that VW improperly modified or compromised its American diesel vehicles in order to pass government emissions tests. According to one report filed by the Wall Street Journal, the court filings contend that VW “cheated its way to the top of the automobile food chain.”

In Europe, VW has already recalled more than 8 million vehicles, but its efforts here in the United States have not gone well; in January 2016, the EPA rejected the company’s recall proposal to address the issues in some 580,000 vehicles sold in this country. A federal judge has given VW until March 24 to come up with an acceptable fix to the situation.

Class Action Against Mercedes

A few days earlier, on February 18, 2016, a separate proposed class action was filed in New Jersey, accusing it of a different sort of emissions issue. While the alleged Mercedes issue also deals with diesel vehicles, it is actually quite different from the VW situation. The Mercedes suit alleges its diesel powered ML320, ML350, E-Class, S-Class, and GLE vehicles turn off their pollution controls when the outside temperature falls below 50 degrees Fahrenheit, resulting in exhaust containing pollutants far above allowed levels. Lawsuit documents claim that Mercedes did not disclose to purchasers that its diesel engines are “clean” when the weather is warm, but not when it’s cold.

Alleged “Racketeering” Violation

Among the most costly allegations in the VW action is that the company engaged in a “fraudulent scheme and conspiracy” to market its cars. These allegations are designed to bring the case within the federal Racketeer Influenced and Corrupt Organizations Act (RICO). RICO provides for a private cause of action and, under certain circumstances, provides for treble damages.

Class Actions Can Be Effective

Within the federal court system, Rule 23 of the Federal Rules of Civil Procedure governs class actions. Under the Rule, they can be used where:

  •  Piecemeal litigation resulting from separate lawsuits might adversely impose inconsistent standards on the defendant or if such separate lawsuits might detrimentally affect other members of the class.
  •  The class seeks an Injunction or some type of relief compelling the defendant either to cease a certain activity or to perform some other type of action.
  •  There are questions of law or fact common to the entire class that predominate over questions peculiar to each individual plaintiff, and a class action suit is a more efficient means to resolve the controversy.

Strength in Numbers

Class actions recognize that, when it comes to some forms of commercial litigation, the individual may be at a substantial disadvantage in pursuing a claim against a well-heeled corporation. That is to say: The costs that one VW owner might have to bear in pursuing a claim against VW might be prohibitive. If those costs can be shared, the result can be altogether different.

Milwaukee Business and Commercial Litigation Attorneys

Is your business involved in a dispute that could conceivably affect an entire class of similar businesses? Is your business threatened with unusual allegation that appears headed for litigation? Contact the Milwaukee business litigation firm of Kerkman Wagner & DunnWe have over 50 years of combined legal experience representing business owners in Wisconsin. Our firm has big firm talent and provides small firm attention. Call us at 414–278–7000 or complete our online contact form today.

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