VW Diesel Woes Mount as EU Court Aide Attacks Defeat Device

(Bloomberg) -- Volkswagen AG's use of technology that helped it to cheat on diesel-engine pollution tests violated European Union rules, an EU legal adviser warned in the second setback for the carmaker at the bloc's highest court this month.

The so-called defeat device “does not appear to be necessary to protect the engine against damage or accident and to ensure safe operation of the vehicle,” Advocate General Eleanor Sharpston of the EU Court of Justice said in a non-binding opinion on Thursday. The Luxembourg-based EU tribunal follows such advice in most cases.

“Only immediate risks of damage which affect the reliability of the engine and cause that vehicle to present a real danger when it is driven may justify the presence of a defeat device,” Sharpston wrote, adding that “the objective of slowing down the aging or the clogging-up of the engine does not justify the use of a defeat device.”

The company is facing a wave of litigation by drivers who want their money back for the loss in value of their diesel cars because of the manipulation exposed by U.S. regulator in September 2015. The scandal has cost the world's largest automaker about 30 billion euros ($32.6 million) so far. Lawsuits from disgruntled investors and consumers are set to drag on for years, with U.S. owners faring far better in settlements than their European counterparts so far.

The opinion has no impact on pending cases as the legal controversy now focuses on whether the software caused drivers losses, which VW denies, said Nicolai Laude, a spokesman for the carmaker. The software was updated and the cars didn't lose value, he said. Volkswagen continues to work with regulators to implement all regulatory requirements.

A U.K. court, in one of the biggest class-action suits filed in that country, earlier this month ruled that VW used such a defeat device. The decision allows 91,000 customers to proceed with a class action against the carmaker.

In a separate case linked to the diesel scandal, the EU court's advocate general said in a non-binding opinion earlier this month that customers claiming their vehicles lost value due to the cheating shouldn't have to sue the German carmaker in its own backyard, but could bring cases in their own countries.

The EU court's decisions in both cases are expected within another six months. National courts are bound by its interpretation of EU law.

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