German Courts Hand Down Rulings in Dieselgate Cases

Germany’s highest federal court rules that automakers must compensate owners of diesel vehicles equipped with illegal emission-manipulation devices.

In a separate but related case stemming from the 2010s-era Dieselgate emissions scandal, a German court hands former Audi Chairman Rupert Stadler a suspended sentence of one year and nine months for fraud by negligence in the diesel emissions scandal.

The high court’s decision follows a class-action lawsuit brought against Audi, Mercedes-Benz and Volkswagen by diesel vehicle owners in Germany.

The court’s decision overturns earlier dismissals by state courts, which referred diesel car owners’ claims to lower courts of appeal.

In handing down the ruling, Germany’s federal court says the burden of proof lies with the automakers to demonstrate that their diesel emission-manipulation devices are not illegal.

The court says owners can claim between 5% and 15% of the purchase price of their diesel vehicles fitted with illegal emission-manipulation devices in the case, which has direct implications for similar lawsuits brought against other automakers in Germany.

Owners had argued the value of their diesel vehicles was negatively affected by the spectre of them using illegal devices.

Among the diesel emission-manipulation devices cited by the judge were so-called “thermal window software programs” claimed to be used by Audi, VW and Mercedes-Benz.

The term “thermal window software program” describes a device that reduces or switches off the nitrous-oxide filtering effect of the selective catalytic reduction system in diesel exhaust systems within a certain temperature band.

When diesel vehicles are started in cold conditions, they run the risk of condensation build-up in their selective catalytic reduction filter system.

Audi, Mercedes-Benz and VW have argued the use of thermal window software programs to reduce or completely switch off the filtering effect helps reduce condensation and the risk of rust build-up, thus protecting the eengine.

The outcome, however, is significantly higher nitrous-oxide and particulate emissions than those claimed.

When questioned on the ruling, VW denied its diesel emission systems were illegal, saying it expects the court to continue to reject any compensation claims.

Mercedes-Benz says European regulators considered so-called thermal window software programs to be permissible up until July 2022, and as such using them could be seen as a ground for negligence.

Ex-Audi Chief Stadler, Two Co-Defendants Sentenced

Besides the suspended sentence, Stadler (pictured, below left), who headed Audi from 2007 until 2018, also was fined €1.1 million ($1.2 million) in the ruling handed down today.

According to prosecutors, Audi manipulated diesel engines with software that allowed them to comply with EU-mandated exhaust emission values on the test bench but not in real-world driving conditions.

Stadler was accused of harboring knowledge of the diesel manipulation methods used and of failing to stop the sale of the diesel models after the scandal eventually called Dieselgate became known in 2015.

Stadler’s sentencing comes after he entered into a plea deal under an agreement with the judge and prosecutors in May. It provided for a suspended sentence instead of jail time in addition to a monetary fine in return for a thorough admission of guilt.

By entering into the plea deal, Stadler became the first former Volkswagen Group board member to admit knowledge of the diesel manipulation measures through the use of illegal software, admitting regret and failure to stop manipulated cars from going on sale.

Stadler’s co-defendants in the case are Wolfgang Hatz, the former Audi board member responsible for drivetrain development, and former Audi drivetrain development engineer Giovanni Pamio. They have been similarly charged with fraud by negligence in matters relating to Dieselgate.

Hatz was handed a two-year suspended sentence and a fine of €400,000 ($438,000), while Pamio received a suspended sentence of nine months and a €50,000 ($55,000) fine.

In plea deals similar to that reached by Stadler, both Hatz and Pamio admitted to guilt in the manipulation of diesel emissions in engines developed and produced by Audi.

The public prosecutor’s office in Munich reacted positively to the sentencing of Stadler.

According to spokesperson Andreas Grape, the court acted within the parameters of the plea deal reached in May. She says the prosecutors had already consented to the suspended sentence and fines for Stadler and Pamio.

However, in Hatz’s case, the prosecutors say they will review the sentencing before a possible revision, having sought a prison sentence of three years and two months.