Volkswagen Emissions Scandal Spurs Class Action Suits

In the wake of Volkswagen’s admission on Tuesday, September 22, 2015, that 11 million of its vehicles worldwide were equipped with software that could be used to dupe emissions control tests, the German auto manufacturer is facing a barrage of class actions, as well as investigations by U.S. authorities that could lead to as much as $18 billion in civil penalties.

The Volkswagen emissions scandal initially gained widespread media coverage after the U.S. Environmental Protection Agency issued a notice of violation of the Clean Air Act to Volkswagen AG, Audi AG, and Volkswagen Group of America, Inc. on September 18, 2015.

In the notice, the agency alleged “the four-cylinder Volkswagen and Audi diesel cars from model years 2009-2015 include[d] software that circumvent[ed] EPA emissions standards for certain air pollutants.” In particular, the EPA contended that Volkswagen manufactured and installed software in some of its vehicles that could sense when the car was being tested for compliance with EPA emissions standards. Purportedly, the software knew when the vehicle was being tested based on various inputs, including the position of the steering wheel, vehicle speed, the duration of the engine’s operation and barometric pressure. Thus, during testing the software produced compliant emission results, but otherwise emissions of nitrogen dioxide (NO2) increased by a factor of 10 to 40 times EPA compliant levels. The notice provided that the affected vehicles included: Jetta Sportwagen (MY 2009-2014); Beetle (MY 2012-2015); Beetle Convertible (MY 2012-2015); Audi A3 (MY 2010-2015); Golf (MY 2010-2015); Golf Sportwagen (MY 2015); and Passat (MY 2012-2015)

According to Reuters, less than four days after the announcement that Volkswagen cheated on its emissions tests, at least 25 class actions were filed on behalf of claimants from all 50 states. The plaintiffs in the cases allege the automaker is liable for fraudulent concealment, false advertising, and violations of federal and state laws.

Further, the U.S. launched a criminal investigation into the automaker, which is headed by the U.S. Justice Department’s Environmental and Natural Resources Division. Pursuant to the investigation, Volkswagen could face civil penalties of $37,500 for each car that is not in compliance with the Clean Air Act. Thus far, the EPA has identified 482,000 four-cylinder vehicles that could be in violation of emissions standards, which would lead to a total penalty of $18 billion. New York Attorney General Eric Schneiderman is also investigating the company.

Volkswagen has retained Kirkland Ellis LLP, the firm that defended British Petroleum in legal proceedings arising from the 2010 Deepwater Horizon oil spill, as its counsel.

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