Last week, in the U.S. District Court for the Eastern District of Michigan, the U.S. Department of Justice (DOJ) filed a civil lawsuit, on behalf of the U.S. Environmental Protection Agency (EPA), against Volkswagen AG (VW) and other related entities for equipping approximately 600,000 diesel engine vehicles with “defeat device” software designed to evade emissions testing by allowing emissions to exceed EPA standards, resulting in dangerous and unlawful air pollution. United States of America v. Volkswagen AG et al., Case No. 2:16-cv-10006 (complaint available here). The complaint also named Audi AG, Volkswagen Group of America Inc., Volkswagen Group of America Chattanooga Operations LLC, Porsche AG, and Porsche Cars North America Inc. as defendants in this civil suit.
In the fall of 2015, VW admitted that it had been cheating vehicle emissions standards for years by installing software in at least 11 million of its diesel cars worldwide. These “defeat devices” would detect when the vehicles were undergoing EPA emissions testing and would cause the vehicles to operate in a mode utilizing the full emissions controls only during that testing process. However, once the vehicles were in consumers’ hands and out on the road, in normal driving conditions, these controls were substantially reduced, allowing the vehicles to emit levels of nitrogen oxide up to 40 times the EPA standard for compliance. Earlier this week, the EPA and the California Air Resources Board (CARB) rejected the automaker’s plans for a proposed recall, on the grounds that the plan had insufficient detail and the proposed fixes were not specifically described in a way that would allow regulators to evaluate their technical feasibility. This is yet another blow to VW’s voluntary ameliorative efforts. See CARB Rejection Notice, available here.
The lawsuit alleged that Volkswagen violated the Clean Air Act, 42 U.S.C. §§ 7523 and 7524, by selling, introducing into commerce, or importing into the United States motor vehicles that were materially different in design from what was listed in VW’s applications to obtain certification to sell the vehicles in the United States. Notably, the DOJ has stated in a press release that its civil complaint, which seeks civil penalties and injunctive relief, but does not address criminal charges or sanctions, does not preclude the government from seeking other legal remedies. Further, the DOJ plans to seek to transfer its case and participate in the related multi-district litigation involving more than 500 consumer class actions, before U.S. District Judge Charles Breyer in the Northern District of California.
Relatedly, last week, the U.S. House of Representatives passed the Fairness in Class Action Litigation (H.R. 1927) bill, otherwise known as the “VW Bailout Bill” (available here), which would allow companies to escape so-called “no-injury” class action lawsuits by requiring courts to conduct “a rigorous analysis of the evidence” to determine that the class representative and “each proposed class member suffered the same type and scope of injury” before certifying a class under Fed. R. Civ. P. 23(c)(1). The measure is expected to stall in the Senate, and the White House has already threatened to veto it.
Mao Shiokura, Associate
CAPSTONE LAW APC