Victory Against Volkswagen: Ninth Circuit Holds that States and Counties can Sue VW
June 3, 2020 Case Study
In re Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation
On Monday, June 1, the U.S. Court of Appeals for the Ninth Circuit ruled that the Clean Air Act does not preempt state and local governments from penalizing automobile manufacturers that use recall programs to tamper with emissions control devices following the initial sale of a vehicle. This important decision, which has been covered by the national media, adopted the position advocated by Beck Redden in an amicus brief filed on behalf of Harris County, Texas.
Harris County was the first governmental entity in Texas to file a suit against Volkswagen after it was revealed that the German auto manufacturer had tampered with emissions control systems on their diesel-powered vehicles so that the devices showed the vehicles complied with clean air requirements when they did not. The County seeks civil penalties against Volkswagen for the estimated 2,000 Harris County vehicles tampered with after they were sold.
As lead appellate counsel for Harris County, Beck Redden partner Russell Post authored the Ninth Circuit brief with the assistance of Beck Redden appellate attorney Owen McGovern. Beck Redden also took the lead in appellate proceedings related to the preemption issue in the Texas litigation, presenting the preemption argument to the Texas trial court in the first instance and later persuading both the Austin Court of Appeals and the Texas Supreme Court not to adopt the position urged by Volkswagen.
“This opinion reaffirms the rights of state and local authorities, such as Harris County, to enforce penalties for post-sale tampering with automobile emission control devices and to proceed against Volkswagen for its unlawful conduct,” said Houston attorney Richard Mithoff. In 2015, Mithoff was retained to lead the team of lawyers representing Harris County, including Post, Earnest Wotring of Baker Wotring, and Bennie Agosto of Abraham Watkins.
After Harris County and many other state and local governments sued Volkswagen, the company claimed in court that the Clean Air Act gave the federal government sole discretion to enforce laws tampering with emission control devices. A lower federal court agreed with the company. However, adopting the position of Harris County, the Ninth Circuit ruled that even if federal law exclusively covers tampering on cars before they are sold, it does not prohibit local governments from enforcing local regulations on vehicles that were tampered with after they were sold.
“We applaud this ruling recognizing the role local governments play in enforcing local laws to protect our residents,” said Harris County Attorney Vince Ryan. “Harris County, with its massive traffic and petrochemical industry, has had difficulty in meeting federal clean air requirements. Volkswagen’s deceitful acts have damaged the county’s ability to improve air quality, reach clean air attainment status, and protect our citizens.”
The Ninth Circuit explained that its ruling “is caused by the unusual and perhaps unprecedented situation before us. In drafting the Clean Air Act, Congress apparently did not contemplate that a manufacturer would intentionally tamper with the emission control systems of its vehicles after sale in order to improve the functioning of a device intended to deceive the regulators.”
The Court explained that Volkswagen realized that some of its diesel engine vehicles would not be able to meet heightened clean air standards while still operating at a performance level that could attract customers. “Therefore, beginning in 2006, Volkswagen employees developed and installed two defeat devices that would enable its diesel engine vehicles to pass federal emission tests, even though the vehicles could not actually meet” the standards while in use on the street.
However, some customers began reporting operating problems with the vehicles that were, unknown to them, caused by the tampered emission systems. So Volkswagen issued a “recall” that not only repaired the operational problems but also installed software devices to the emissions systems that did not affect the operation of the vehicle but still gave false readings showing the cars were in compliance with the Clean Air Act.
It is this post-sale recall tampering that allowed these vehicles to continue polluting and that the Ninth Circuit Court ruled local governments can penalize, consistent with the Clean Air Act.
“We intend to request a trial setting as soon as practical,” Mithoff said.
“Volkswagen’s illegal tampering, occurred after the vehicles left the showroom and under the guise of fixing a problem brought unsuspecting buyers back into the dealership,” said County Attorney Ryan. “It only makes sense that the jurisdictions where this tampering took place and which were home to the communities that suffered from the resulting pollution should be able to hold VW accountable.”