Volkswagen rejects judge's call to settle German class action on emissions

By Jan Schwartz

BRUNSWICK, Germany (Reuters) - Volkswagen (DE:VOWG_p) on Monday rejected a German judge's call to settle a customer class action lawsuit over its rigging of diesel emissions tests, saying there was no case to answer.

VW admitted using illegal software to cheat U.S. diesel engine tests in 2015, a scandal which has cost it more than $30 billion in vehicle refits, fines and provisions.

"The vehicles are driven by hundreds of thousands of customers every day, which is why we believe there is no damage and therefore no cause for complaint," the German carmaker said.

It was responding to a call by the judge of the Higher Regional Court of Brunswick, which is near the carmaker's headquarters, on the first day of hearings in the case.

About 470,000 car owners have registered to participate in the lawsuit and the Brunswick court booked the local town hall to allow for large numbers of observers.

When the diesel scandal broke 2.4 million cars with defeat devices were on German roads. In the meanwhile, 99 percent have received a software update.

The scandal still casts a shadow over VW, with prosecutors last week accusing its Chief Executive Herbert Diess of holding back market-moving information on the rigged tests.

The VW board has backed Diess, who is leading the carmaker's efforts to reinvent itself as a champion of cleaner driving.

The German class action was made possible after the cabinet approved a draft law last year allowing consumer protection organizations to litigate on behalf of consumers, avoiding the high legal costs that might put people off legal action.

Negotiations were unlikely to be easy but the court would want to support and not impede them, judge Michael Neef said.

State-financed consumer protection organization vzbv has expressed confidence in being able to win or settle the case, pointing to the fact that a majority of local and higher regional courts have so far ruled in favor of motorists.

Vzbv has said it aimed to show that owners of VW, Audi, Skoda and Seat cars with so-called type EA 189 diesel engines have been intentionally harmed by VW's use of software that was used to cheat emissions tests.

VW has said that there was no legal basis for consumers in Germany to seek compensation due to differences in law.

Nearly all U.S. owners of affected cars agreed to take part in a $25 billion settlement in 2016 in the United States that addressed claims from them, environmental regulators, U.S. states and dealers and included buyback offers and additional compensation for about 500,000 owners.

VW had rejected criticism that the compensation for U.S. car owners was not extended to other jurisdictions. Consumers have also brought lawsuits in countries including Switzerland, Australia and Belgium.