Heinz-Josef Friehe
By far the largest case of a class action lawsuit is that of the Federal Consumer Association (VZBV) against Volkswagen. This poses major challenges for the Free Office.
(Photo: Uta Wagner for Handelsblatt)
Bonn The President of the Federal Office of Justice, Heinz-Josef Friehe, expects an increase of model declaratory actions, Free Authority maintains the register of class actions that have been possible since November 1, 2018. Just over a year after the introduction, there are seven cases with a total of 451,626 plaintiffs, including several proceedings against city and district savings banks. This is shown by the latest data from the Free Office.
By far the biggest case the lawsuit of the Federation of German Consumer Organizations (VZBV) against Volkswagen, This poses major challenges for the Federal Office. Friehe assumes that VW no isolated case remains. “I can well imagine that such a case will happen again,” he told the Handelsblatt. In his first major interview, he announced that the office would be better equipped for such mass proceedings by the end of 2020 with new software.
Friehe criticized the carmaker VW. The company has long had all the necessary data for a comparison, said the head of the agency. Volkswagen had long blocked an out-of-court settlement – also with reference to the Federal Office.
In the proceedings before the Braunschweig Higher Regional Court, VW had described a comparison in November 2019 as “hardly imaginable”. Only when a current and complete register excerpt from the Federal Office is available, you want to take a closer look at “whether we consider settlement negotiations to be practical at all”, VW said at the time.
“I would like to say very clearly: In our opinion, it was and is very easy to estimate what a comparison would cost,” said Friehe. In particular, VW also has the list of plaintiffs and can search for how many VW vehicles were registered for the lawsuit,
VW has since entered into comparative talks. “Obviously, it has now been calculated when you hear that VW offered 830 million euros,” said Friehe. VW can surely cope with minor blurring from the calculation of legal withdrawals.
In no case, however, are more than 400,000 plaintiffs. Even if 1,000 plaintiffs would receive more than 10,000 euros each, that would be only ten million euros. “What is the size of a group with an annual profit of several billion?” Says Friehe.
Read the full interview here:
Mr. Friehe, what kind of car do you actually drive? But here in office we did have diesel vehicles.
From VW? No, but when we sold them, we also found that prices could not be as good as before the diesel crisis.
Even if you don’t drive cars from the VW group, your office is said to be drowning because of VW. You register the claims of plaintiffs against VW in the model declaratory action. But it is said that they still do not know how many legitimate claims you have, so I think I have to clear up a few misunderstandings. We cannot give any information about how many claims VW is ultimately exposed to.
We don’t check the content of the applications for the register of complaints, we only register them. We do not check whether there is an effective claim. Whether someone is with you BMW-Diesel has registered or there is an unrecognized insane person or a fictitious registration, for example from Donald Duck from Entenhausen, we cannot clarify this.
So the number remains 446,000? Yes. We did our job and reported to the Braunschweig Higher Regional Court how many registrations there were the day before the hearing. That was 446,000.
But don’t you have to at least clean up the register for withdrawals? We are currently working intensively on this. Where redemptions have been declared, a note is made in the register.
When will you be done with that? It’s only a matter of weeks.
For the plaintiffs, the whole thing feels like an eternity … The model declaratory action is a new procedure that presented us with major technical and personnel challenges. When the Volkswagen case got underway, we first had to act with a provisional registration form. There was no reasonable database yet. We are working on that, by the end of 2020 there will be much better IT for it.
Wasn’t the law also half-baked? The legislature wanted a solution that was as consumer-friendly as possible, and that there should be no obstacles to participating in a model declaratory action. I can understand. However, this has certain disadvantages. We also receive numerous registrations by conventional mail, some handwritten and difficult to decipher. There is also no obligation to provide a business sign when you log out. This makes the assignment extremely difficult for us. I would like the legislature to make improvements.
And what number of plaintiffs will you end up with? We have now clarified 46,000 of the 77,000 withdrawals. That means: There will be no more than 400,000 applicants in any case.
Consumer association VZBV and VW have negotiated an out-of-court solution. But that seems difficult. A first attempt failed, now try again. Are you surprised by this back and forth? It was always open whether a comparison would come about.
What do you have to say about VW’s reasons for withdrawing after the first attempt at comparison? Whether you make a comparison or not is always the result of an overall assessment; at VW this is apparently negative. Or maybe just for now? After all, there is yet another hearing before the Braunschweig Higher Regional Court.
Before, VW had repeatedly emphasized that without an exact number of plaintiffs, you could not get involved in a settlement, and I would like to say very clearly: in our opinion, it was and can be very well estimated what a settlement would cost. In particular, VW also has the list, can search for how many VW vehicles are specified. Can also clarify which of the people has a sales contract. In our opinion, there is absolutely a basis for calculation. And obviously it was also calculated when you now hear that VW offered 830 million euros.
But VW pointed at you … I never understood that. There may be some blurring left. But even if it were a matter of 1,000 entries: If 1,000 people more than calculated were to receive 1,000 euros each, that would be one million euros more, with 10,000 euros compensation it would be ten million euros. What is the size of a group with an annual profit of several billion?
Regardless of the fact that VW is now offering its diesel customers compensation and wants to organize its own procedure for this, the model declaratory action remains pending. The VZBV has declared that it intends to continue operating it. So nothing changes for the Federal Office of Justice: The register is still needed, namely for all those VW diesel customers who do not want to get involved with the solution offered by VW.
Wouldn’t the Higher Regional Court be overwhelmed to deliver 400,000 settlements? I cannot assess that. Where deliveries fail, there is still the possibility of public delivery.
The VW case is exceptionally large, also in comparison to other model declaratory actions. What will come to your office in the future? There is currently no case comparable to that of VW. So far we have cases from the financial sector, the energy sector or tenant matters. It is about a few hundred or a thousand people affected. However, I can well imagine that a case on the order of VW will occur again. We are preparing for this.
About a class action lawsuit against Daimler? I don’t want to speculate about that. Sometimes something like that is only set up as a threatening backdrop.
In terms of personnel, you are also well equipped with 1200 employees … because the Federal Office of Justice has many other important tasks in addition to the organization of model declaratory actions. For example, the largest department has to ensure that German companies disclose their figures.
What does that mean? Germany 1.3 million companies that have to disclose their annual accounts: GmbHs, GmbH & Co KGs, all those with limited liability. However, 200,000 of these companies do not immediately meet this requirement.
Most of the time, it’s based on negligence. But people should know how much capital is still available in a limited liability company. And that’s why we have to send around 200,000 threats every year. Many then quickly respond to this threat. But there are around 60,000 left, against which a fine has to be fixed.
Upward trend? Well, we have had good economic activity in Germany recently. This has led to numerous start-ups. And they are not yet well established.
What is the number of malicious people? There are fundamental refusals who don’t want to be looked at. But that number is very small. And she goes back.
So are German companies transparent? Yes, the majority of German companies are honest and transparent. If 90 percent disclose, that’s a high rate.
And how do you evaluate the behavior of internet networks like Facebook or Linkedin in case of complaints? Your authority is also responsible for the Network Enforcement Act. We currently have 1,300 procedures that are initiated, for example, when a user logs in and says that I found critical content and that my complaint did not get through to the network.
That sounds like a lot, we check it and then conduct fine proceedings. But they do not always have what users report. There are also other obligations of the networks, such as appointing a person authorized to deliver complaints. Some don’t. We also looked more closely at how well or how badly a user can make a complaint. In two clicks or maybe he needs ten or twelve. We still see deficits there.
How many fines do you have? This is a two-digit number. So far, however, there has only been one fine.
Against FacebookYes, the decision has been issued. But the affected network does not agree.
And what happens next? We are currently examining whether we can remedy the objection or continue.
You manage millions of data yourself. Have you already been the victim of cyberattacks? None that we would have recognized.
Is that a good sign or a bad sign? I think we are well secured. At least I have a good feeling.
Mr. Friehe, thank you for the interview.
More: Volkswagen and consumer advocates are again negotiating a settlement