U.S. Ruling Could Mean a Flood of New Claims Against Volkswagen

Volkswagen, the German automaker that admitted to a decade-long scheme to cheat on diesel emissions tests in the United States and elsewhere, could face a “staggering” volume of claims from local governments after a federal appeals court ruled on Monday that counties in Florida and in Utah could impose local pollution laws on the manufacturer.

Volkswagen has already paid more than $20 billion in federal criminal and civil penalties as well as other legal settlements after the Environmental Protection Agency accused it in 2015 of using illegal software to conceal poisonous emissions. Those include settlements in lawsuits brought by consumers related to its sale of about 600,000 diesel cars equipped with devices that illegally circumvented emissions tests.

But those settlements did not release Volkswagen from claims brought by local governments, some of whom have brought their own suits against the automaker, a panel of the United States Court of Appeals for the Ninth Circuit said in a unanimous ruling.

Volkswagen argued that the Clean Air Act pre-empted those counties’ claims and that the company — as well as Audi and Porsche, subsidiaries that are also accused of cheating — should be regulated solely by the E.P.A. on the matter. In a 2018 ruling, a federal court in California had sided with the automakers, tossing out claims brought by Salt Lake County in Utah and Hillsborough County in Florida.

But the appeals court’s reversal of that ruling now could open the door for those counties, and countless others, to sue the automakers for the harm caused to the local environment and public health by the excess emissions. The three-judge panel found that nothing in the Clean Air Act suggested that Congress wanted automakers to be beyond the reach of state and local governments.

In their decision, the judges wrote that they recognized that their conclusion “may result in staggering liability” for Volkswagen. Together, the two counties had sought penalties of $5,000 a day for excess emissions from at least 6,000 Volkswagen vehicles fitted with the cheating device — an amount that adds up to more than $10 billion a year.

The company said in a statement that it “respectfully disagrees” with the ruling.

“The E.P.A. investigated Volkswagen’s conduct, and the company entered into landmark settlements compensating states and consumers across the country,” the statement said. “We intend to seek further review from the Ninth Circuit and, if necessary, from the Supreme Court. Volkswagen intends to defend these actions vigorously.”

In one of the biggest scandals in automotive history, Volkswagen admitted to programming diesel cars to detect when they were being tested for emissions of nitrogen oxide, a harmful pollutant, and to reduce emissions in response. But on the road, antipollution devices were dialed back to maximize performance and to minimize wear and tear to the car.

Nitrogen oxides are a family of gases that cause asthma, bronchitis and heart attacks. They also contribute to global warming and urban smog.

Six Volkswagen executives were charged in the United States for their role in the cheating scandal, including Oliver Schmidt, a former emissions compliance manager for the automaker in the United States, who was arrested in 2017 as he prepared to fly from Miami to Germany. He pleaded guilty on two charges — conspiracy to commit wire fraud, and violation of the Clean Air Act — and was sentenced to seven years in prison.

Researchers at the Massachusetts Institute of Technology and elsewhere estimated in 2017 that the excess emissions from affected vehicles sold in the United States could cause about 60 premature deaths nationwide. Across Europe, the same team estimated, 1,200 people would die early, each losing as much as a decade of life as a result of excess emissions from just the cars sold in Germany.

Volkswagen is trying to move past the scandal, one of the costliest in automotive history, even as it navigates a severe downturn brought about by the coronavirus pandemic.

But prosecutors in Germany continue to pursue criminal charges against several dozen former Volkswagen executives and engineers, including Martin Winterkorn, the chief executive during the period when the illegal software was being developed and deployed. He denies wrongdoing.

In Germany last week, the country’s highest appeals court ruled that owners of cars with illegal emissions cheating software could demand part of the purchase price back, potentially adding even more to the tune of millions of euros and to the fines and settlements Volkswagen faces.

Jack Ewing contributed reporting from Frankfurt.

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