VW waives right to appeal over ‘dieselgate’ decision

Volkswagen last week waived its right to appeal after a German court forced it to buy back a cheater car from one of its customers, marking the first time it has waved the white flag on a domestic “dieselgate” case.

The carmaker had made it a point to contest every negative judgment to the highest possible courts until the Arnsberg court in North Rhine Westphalia ordered it to refund a dieselgate victim.

The customer had demanded that Volkswagen buy back his Passat and his court success could have far-reaching implications for the carmaker, with the court insisting its repairs did not “fulfil its obligations to the customer”.

The court slated Volkswagen’s defence, insisting it had violated its obligations under disclosure rules, misrepresented its case fraudulently and had “inadequate operational procedures”.

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Market

The court also insisted Volkswagen had “illegally placed the vehicle on the market”, with German legal experts expecting the verdict to open buy-back floodgates across Volkswagen’s homeland.

Volkswagen insists 75 per cent of the 350 dieselgate court decisions in Germany have fallen in its favour, though settled cases are not included in that statistic and it has 3,500 complaints yet to be finalised.

In its 17-page decision, the Arnsberg court judges insisted its treatment of its customer was illegal.

The plaintiff, Frank Knoche, owned a €37,000 Passat, complete with an EA 189 turbodiesel four-cylinder engine, that his mother had bought for him in 2012. He drove it for three years before the emissions scandal came to light.

In April last year, Mr Knoche wrote to Volkswagen insisting he should be refunded for the vehicle, minus compensation for kilometres driven, which Volkswagen refused, insisting he would be covered under its action plan.

Citing reliability and economy concerns rumoured to be caused by Volkswagen’s dieselgate fixes, Mr Knoche declined and reiterated that Volkswagen should buy him out of the car.

“The vehicle was deficient at the time of delivery,” the judges wrote, insisting there was an “objectively legitimate buyer expectation” that the car would be legal and compliant with all road rules.

“Otherwise the state regulation of permissible nitrogen oxide discharges would be waste,” the judges said, before turning more pointedly on Volkswagen.

It had “fraudulently deceived” buyers, its verdict found. “With regard to this software there was an obligation to inform the defendant,” the verdict read, insisting customers had no choice whether to buy a manipulated, cheating diesel engine or not.

Argument

The court also flatly rejected Volkswagen’s argument that it didn’t tell Mr Knoche about the software cheat to manipulate emissions levels because the carmaker itself didn’t know. Instead, the judges said the question of “which concrete people in the defendant company had knowledge of the installed software and whether the contract broker had knowledge of it” was an open one.

Regardless, Volkswagen “had a duty to organise its communication properly.”

Effectively, the judges said that even if some people at Volkswagen knew and didn’t tell the rest of the company, that lack of communication was Volkswagen’s problem, not the customer’s problem.

The judges ordered Volkswagen to take back the car and deduct €14,221.60 from Mr Knoche’s mother’s purchase price for three years’ worth of driving and return the rest to him. It also awarded him €1,200 in lawyers’ fees and five percent above the base interest rate in Germany.

Less than a month ago, though, the official Volkswagen position on negative court judgments was that "the few court-of-first-instance judgments, which have not shared the opinion of VW, will not be valid upon appeal. We have appealed in all cases in which Volkswagen AG lost in the court of first instance."

But just because the car-making giant hoisted a white flag in Mr Knoche’s case doesn’t mean it’s opened the gates to hordes of lawsuits in Germany.

“Volkswagen AG examines every single case; because of possible peculiarities it will not appeal every court-of-first-instance decision,” it wrote in response to the court decision.