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September 30, 2019
Brattle Client Receives Favorable Settlement in Volkswagen Diesel Emissions Class Action

In November 2015, a class action was brought in Australia’s Federal Court against Volkswagen (VW) on behalf of several thousand Australian VW, Audi, and Skoda owners, which claimed that VW had not complied with emission standards on diesel-powered vehicles. The class action alleged that the affected vehicles were fitted with illegal engine-control software (so-called “defeat devices”) designed to cheat emissions tests. The plaintiffs also alleged that the revelation of the defeat device caused affected vehicles to have a diminished resale value and sought to recover damages on behalf of affected motorists.

Brattle Principal James D. Reitzes was retained by the law firm Maurice Blackburn Lawyers on behalf of the plaintiffs. Using econometric techniques and other methods, Dr. Reitzes analyzed the impact of the diesel emissions issue on resale prices for affected VW vehicles.

On September 16, 2019, VW announced that it had reached an in-principle settlement in the litigation, in which it agreed to pay between AUS$87–127.1 million (depending on participation rates) plus legal costs and other payments. Although the amount paid will vary from car to car, this equates to an average amount of approximately AUS$1,400 per vehicle should all eligible motorists participate in the settlement, with the average amount increasing if participation rates are lower. The settlement is subject to approval by the Federal Court of Australia.

Dr. Reitzes was supported in this matter by a team of Brattle economists including Senior Consultant Daniel Gaynor, Senior Associate Nicholas Powers, and Associate Yong Paek.