34 And Maybe More: Class Action Lawsuits Pile Up Against VW

34 And Maybe More: Class Action Lawsuits Pile Up Against VW

2:03pm Sep 27, 2015

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It's time for some number-crunching from our data expert, Mona Chalabi, from fivethirtyeight.com. She has given us this number of the week.

MONA CHALABI: Thirty-four.

MARTIN: This past week, the German car giant Volkswagen admitted to cheating emissions tests with a device built into VW diesel engines. Just hours after the story broke, a Seattle-based law firm filed a consumer class-action suit against Volkswagen. And by Friday, the number of federal suits that had been filed against VW had reached at least 34. That number seems to be climbing. Here to talk through the number of class-action suits is data journalist Mona Chalabi.

Hi, Mona.

CHALABI: Hi, Rachel.

MARTIN: Explain this number. Where did these 34 cases come from?

CHALABI: All over the country, actually. There's been a bit of a gold rush for this - and I can tell you a little bit about the gold kind of later on. But for now, I just want to explain really quickly what a class-action lawsuit is because it wasn't completely clear to me. So it's a type of lawsuit where one or several people sue on behalf of a much larger group. And it's that larger group that is known as the class. And in the case of Volkswagen, almost 500,000 cars have been recalled in the U.S. alone.

MARTIN: Is there any precedent for this?

CHALABI: Yeah, absolutely. So class-action lawsuits of this kind are sort of common. In 2012, Toyota agreed to pay $1.1 billion to settle a class-action suit to car owners who said they lost money because of a fault in their vehicles. It was a really serious flaw as well. The car actually accelerated automatically, and that fault resulted in at least one death.

MARTIN: As you mentioned, Toyota paid out over a billion dollars. Does that mean that individuals can get big payouts in these kinds of cases?

CHALABI: They can do, but not necessarily. So one plaintiff in that particular case, a computer science student called Jonathan Sourbeer, said he got a check for $20.91 from Toyota for his vehicle flaw. And I think what's really striking about that is when you compare those sums to what the lawyers are getting. So in that case, there were 85 plaintiff lawyers who, between them, managed to get $227 million in fees and costs from Toyota.

MARTIN: So is that typical, though, the settlements for plaintiffs would be so low?

CHALABI: It completely depends on the subject area we're talking about here. So according to a study that I looked at by the American Bar Association, the median or typical monetary settlement for an antitrust class-action case is about $ 22 million, which is a hell of a lot more than the typical labor and employment case, which settled for less than $2 million. But remember, again, these sums are really, really big, but they're being paid out among a huge number of plaintiffs in some cases.

MARTIN: How often are these kinds of cases settled?

CHALABI: So here, I'm looking at a different study. This is by a law firm called Mayer Brown. And they found that over the cases that did have outcomes, a third were dismissed outright by federal courts, who had concluded that the lawsuits were completely meritless. About another third were dismissed voluntarily by the named plaintiff. And that might just be because they had made confidential, kind of out-of-court individual settlements. And that last chunk, the final 33 percent, did result in a settlement.

MARTIN: Does that take a long time? I imagine it does.

CHALABI: Yeah, absolutely. These can drag out for quite a while. So I looked at the 148 federal class-action cases that were filed in 2009, and 14 percent of them were still pending four years later. Civil rights cases took quite long, as you'd imagine. So on average, they took 1,373 days, while consumer cases took less than a thousand.

But again, there's quite a lot of variation within that. Unfortunately, I don't have numbers specifically for the car industry, which is, I'm sure, what you're going to ask me about. But given the complexity, actually, of cases within the car industry, I think it's probably fair to assume they're going to take quite a long time.

MARTIN: Mona Chalabi of fivethirtyeight.com. Thanks so much, Mona.

CHALABI: Thanks, Rachel. Transcript provided by NPR, Copyright NPR.

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