Altroconsumo v. Volkswagen Aktiengesellschaft and Volkswagen Group Italia S.p.A

In 2016, an Italian NGO (Altroconsumo), representing over 63,000 individuals who had bought Volkswagen, Audi, Seat and Skoda vehicles in the relevant period, started a class action against Volkswagen Aktiengesellschaft and Volkswagen Group Italia S.p.A ("VWAG" and "VWGI", together "Volkswagen") before the Court of Venice, seeking a declaration that they engaged in unfair commercial practices against Italian consumers. The case is the Italian spin-off of the so-called "Dieselgate scandal" which exploded in 2015, when the [US] Environmental Protection Agency (EPA) notified the German carmaker of an alleged emissions standard violation. It was later discovered that, between 2009 and 2015, Volkswagen had employed a particular piece of software (the so-called "defeat device") that allowed some vehicles with diesel engines to pass emissions standards tests that they would otherwise have failed. The Italian class action followed the decision of the Italian Competition Authority ("ICA"), which held Volkswagen liable for unfair commercial practices under Articles 20, 21 and 23 of the Italian Consumers Code and issued a fine of €5 million. Altroconsumo claimed that Volkswagen (i) falsely stated the level of the polluting emissions of Volkswagen-branded EA 189 diesel vehicles (by installing the so-called "defeat devices" to falsify the result of the emission tests) and (ii) engaged in advertising campaigns presenting its vehicles as having specific green features able to protect the environment by reducing CO2 emissions: such "green claims" were false and deceptive, and constituted a misleading commercial practice prohibited by the Unfair Commercial Practice Directive no. 2005/29/CE (implemented in Italy by Legislative Decree no. 145/2007). Altroconsumo therefore argued that Italian consumers' right to freedom of contract was breached and that they had suffered direct financial loss, equal to the decrease in value of the vehicle(s) they had bought because it did not possess the promised green qualities. Volkswagen denied Altroconsumo's allegations and raised a series of preliminary objections which were all rejected. The Court of First Instance upheld Altroconsumo's claims and found that the defendants were responsible for using misleading, and at times false, "green claims" in their marketing and advertising activities. The Court awarded damages amounting to €3,000 for each member of the class action in financial damage, plus €300 in moral damage (over €200 million in total), plus legal expenses. According to the Court of First Instance, Volkswagen's conduct potentially misled consumers, and such potential effect was enough to draw a causal link between Volkswagen's behaviour and the damage suffered by the consumers, as it was presumed – in the absence of evidence to the contrary – that consumers were influenced in their commercial choices by Volkswagen's "green claims". To reach its conclusions, the Court of First Instance relied on reasoning expressed by the Italian Supreme Court in prospectus liability cases where a similar presumption applies. Volkswagen appealed the decision issued by the Court of First Instance before the Court of Appeal of Venice. With a decision published on 16 November 2023, the Court confirmed the existence of unfair and deceptive business practices perpetrated by Volkswagen, although it partially upheld Volkswagen's appeal in relation to the pecuniary damages. In particular, the Court did not deem proven the pecuniary damage, already liquidated by the Court in €3,000.00 for each consumer, considering the free corrective actions offered by the manufacturer. On the other hand, the Court of Appeal confirmed the amount of non-pecuniary damages for €300.00 for each of the 63,136 consumers who opted into the class action. The decision was not yet final and binding, as the parties had six months from publication to appeal before the Supreme Court. Eventually, in May 2024, Volkswagen and Altroconsumo reached a settlement agreement that put an end to the specific Italian class action initiated in 2015. Under the settlement, Volkswagen agreed to allocate over €50 million to compensate approximately 60,000 Italian consumers, with individual payments of up to €1,100 for eligible participants.