There are no shortages of ways that auto manufacturers try to sleaze out of responsibility for placing defective cars on the road. Bankruptcy laws seem to work well for them, for example. In the original 2009 bankruptcy plans filed by Chrysler and GM proposed that families driving GM or Chrysler cars then on the road (more than 40 million vehicles), whose occupants were severely injured in a collision or otherwise because the car was not made safely, would have no recourse against the company. Eventually the companies partly gave in, wiping out rights only if the crash happened before July 2009. Of course, this allowed GM to later fight in court victims of its ignition switch scandal – a scandal the company knew about in 2009 but covered up as it was seeking immunity from the bankruptcy court.
Now there’s a new one – forced arbitration clauses. (Recall our recent post following an extraordinary New York Times series exposing these clauses for what they really are – immunity for wrongdoers). We’ve already seen these clauses popping up in car dealer financing and rental car agreements. (And check out this poor guy who bought a defective used car. His video, below, has already been viewed by over a million people. )
As reported the Los Angeles Times,
Volkswagen is offering $500 in cash and $500 in VW dealer credit to owners of its diesel cars, a first step in compensating them in the wake of a global emissions-test cheating scandal.
The “goodwill package” is a stopgap measure while the automaker works on a way to fix the cars, which contain software designed to evade U.S. pollution regulations.
The automaker says customers don’t have to give up their right to sue the company – as thousands already are – but some attorneys are disputing that and warning customers not to sign an arbitration clause required to get the money.…
VW said the arbitration clause, buried in clause 11 of its lengthy “Goodwill Package Cardholder Agreements” – is part of the bank terms for the gift cards and is not designed to fool consumers into waiving their legal claims against Volkswagen.
But [attorney Amy] Williams-Derry cautioned that “the clause is worded extremely broadly, and the courts have history unfortunately of interpreting these clauses expansively.”
Another issue to consider is the arbitration venue and the impact this might have on cases.
The fine print on the gift card agreement reads, "In the event of any dispute or claim relating in any way to this agreement, customer agrees that such dispute shall be resolved by binding arbitration with the American Arbitration Association, utilizing the rules and procedure of such arbitration service, further, any such arbitration shall take place in Sioux Falls, South Dakota and the laws of the State of South Dakota shall apply."
The question, said attorney Patrick Bernal of Witten, Woolmington, Campbell & Bernal, P.C. in Manchester Center, is whether his clients in a class-action lawsuit against VW would be signing away their rights to a jury trial in the lawsuit by accepting the gift cards.
"The gift cards could be one of the issues in the class-action lawsuit, and they could leverage it to put the class action lawsuit in South Dakota," Bernal said Wednesday. "I'm not the only person who has that concern. A lot of other plaintiff's attorneys across the country have the same concern."
Personally, I like the response of U.S. Sens. Richard Blumenthal (D-CT) and Edward J. Markey (D-MA), who "blasted the package.”
“This offer is an insultingly inadequate amount – a fig leaf attempting to hide the true depths of Volkswagen’s deception,” they said in a statement. “The company should state clearly and unequivocally that every owner has the right to sue. It should offer every owner who wants to keep her car full compensation for the loss of resale value, fuel economy, and other damage caused by its purposeful deception.”