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German-based Volkswagen AG, which also owns the Audi brand, is facing multiple class-action lawsuits in Canada and the United States.

Akos Stiller/Bloomberg

An e-mail sent out by a Regina-based law firm trying to convert thousands of angry Volkswagen and Audi diesel car owners across Canada into clients last month was potentially "misleading" and in violation of a court order, an Ontario judge said on Wednesday.

Justice Edward Belobaba of the Ontario Superior Court said the Jan. 22 e-mail sent by Merchant Law Group LLP appeared to be an attempt to "poach, scoop and grab" members of a potential Ontario class action that was launched against Volkswagen AG over its emissions-testing scandal.

The e-mail was sent to about 9,500 car owners, all of whom had subscribed to updates on the VW litigation from the website of Merchant Law Group.

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The e-mail, signed by senior partner Joshua Merchant, says the firm has filed class actions against Volkswagen in provinces across Canada. But it also says that class actions are subject to "long delays and imperfect settlements."

And it urges recipients to sign an attached retainer agreement to authorize Merchant Law Group to decide whether to opt them out of any class action and sue VW individually as part of a "joinder legal action" for a 15-per-cent cut of any compensation. The e-mail says a rash of individual cases will "force Volkswagen to take VW/Audi owners more seriously."

However, the e-mail was also sent to about 3,500 VW or Audi owners in Ontario and never mentions that, according to a court order from December, Merchant Law Group is not one of the law firms actually running the class action in Ontario. What is known as carriage of the case was awarded to a consortium of other class-actions firms.

"That for me is a plain-vanilla breach … of a court order," Justice Belobaba said.

Merchant Law Group is still vying to control the litigation in other provinces, including Saskatchewan, where it is in court on Thursday facing a move by VW to have the case there stayed.

In a Toronto courtroom on Wednesday, lawyers for the class-action consortium urged Justice Belobaba to issue an injunction barring any future similar e-mails from Merchant Law Group and demanded as much as $100,000 in legal costs. Justice Belobaba declined to issue an injunction, saying any further breaches could instead result in findings of contempt of court against Merchant Law Group, and reserved his ruling on costs.

One of the lawyers for the consortium, David O'Connor of Roy O'Connor LLP, told the court that the Merchant Law Group e-mail was "completely inappropriate," "confusing," "misleading" and "outrageous," as he said it leaves recipients with "misinformation," such as the impression that to participate in a class-action lawsuit, they need to retain a lawyer.

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Anthony Tibbs, a lawyer for Merchant Law Group, told Justice Belobaba that his firm had already agreed to send out a clarification e-mail. The judge said it should be drafted jointly by both him and Mr. O'Connor, and then submitted to the court for approval. This clarification e-mail was expected to refer any inquiries about the litigation to the consortium, and to be sent by Friday.

Mr. Tibbs also said only 150 people in Ontario had actually sent in the retainers, and that his firm no longer intended to execute any of them. He also said the firm was now also unlikely to execute retainers sent in from other provinces.

In an interview, he denied the e-mail was inaccurate, saying people are free to sue outside a class action if they wish: "I think we agree that more information will help people make a decision, but what was there was accurate."

German-based Volkswagen AG, which also owns the Audi brand, is facing multiple class-action lawsuits in Canada and the United States, as car owners demand compensation after revelations that millions of VW's cars were equipped with software designed to make their exhaust systems appear much more environmentally friendly only while being tested for emissions. Court heard Wednesday that more than 100,000 cars in Canada could be affected.

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