‘Dieselgate’ law firm accused of misleading claimants in Brazil

Pogust Goodhead is suing car companies, including Mercedes, Ford, Nissan and Peugeot, for installing devices in diesel cars which manipulated emissions control systems to perform better in tests. The firm acts for millions of people who could each receive at least £10,000 for every diesel vehicle they owned.

On 6 October a three-month trial begins at the high court in which the car makers face paying billions of pounds in damages if they lose. Volkswagen has already settled a claim for £193m, after it admitted in 2015 that up to 11m diesel cars had “defeat” software designed to manipulate emissions tests. Nearly 10m cars are thought still to be on the road, emitting high levels of nitric oxide and nitrogen dioxide.

More claims against VW, Porsche, BMW, Vauxhall, Jaguar Land Rover, Toyota, Hyundai, Mazda, Fiat Chrysler and Suzuki are yet to be heard.

The stakes are also high for the loss-making Pogust Goodhead. Last month, the firm replaced its CEO, Thomas Goodhead, after he clashed with its main funder, Gramercy, and co-founder Harris Pogust resigned. Last week it lost its first case when a court dismissed a claim against Norsk Hydro over allegations of environmental harm in Brazil.

Now allegations, contained in a court judgment seen by The Observer have emerged about the firm’s treatment of its clients in a £36bn class action lawsuit against the mining giant BHP.

The case concerns 620,000 claimants who are seeking compensation from BHP after the Fundão dam collapsed in Brazil in 2015. This year Brazilian state prosecutors filed a civil lawsuit against Pogust Goodhead over the conduct of its litigation against BHP. They claimed that clauses in the contracts between the UK law firm and Brazilian victims “contained abusive clauses, placing them at an excessive disadvantage”.

The judgment said Pogust Goodhead’s contracts with affected claimants imposed disproportionate penalties for withdrawal and prevented access to national compensation schemes. It claims “contracts were written in a vague manner, impeded access to information and placed excessive obligations on those affected by the disaster”. It was further alleged that the law firm was engaged in “misleading advertising”.

Pogust Goodhead said on social media that the “English lawsuit seeks to ensure you are fully compensated for the damages you have actually suffered”. But the judge ruled: “There is no clear and objective information regarding this form of proof or how this will occur and this is therefore propaganda.” It claims that Brazilian prosecutors are serving the interests of the mining firms by trying to weaken a UK class action seeking fairer compensation. Pogust Goodhead claimed the lawsuit was “another chapter in a continued campaign of lawfare against the victims of the dam collapse”.

The second phase of the trial over the Brazilian dam disaster will take place next year and will deal with damages. But more broadly there is unease in legal circles over whether claimants will receive appropriate compensation when represented by law firms like Pogust Goodhead, backed by litigation funders.

These firms cover legal costs for claimants who can’t afford lawyers – as in last week’s Dieselgate class action lawsuit against the car manufacturers. But the Civil Justice Council noted in a recent review of litigation funding that experts fear financial backers are using these cases to seek “excessive profits” if claims succeed.

Photograph by Christophe Simon/ AFP, Getty