U.S. Supreme Court Rejects Volkswagen's bid to Avoid State Lawsuits Over the 2015 ‘Dieselgate' Scandal
The U.S. The Supreme Court on Monday rejected German automaker Volkswagen AG's bid to avoid individual state lawsuits filed by officials in three states that are seeking damages as a result of the dieselgate scandal, in which the automaker admitted to tampering with emission control software in millions of diesel-powered vehicles sold in the U.S., Reuters reported on Monday.
The justices refused to hear appeals by VW and its major supplier Robert Bosch LLC of a lower court ruling in both Florida and Utah. Florida's Hillsborough County and Utah's Salt Lake County are seeking to hold VW and Bosch liable under state laws of tampering with vehicle emissions controls which masked excessive emissions from VW's diesel engine vehicles.
The Supreme court also rejected VW's appeal of a similar ruling in Ohio.
As reported by Reuters, a VW spokesperson noted that the court's decision not to hear the appeals was not a "determination of the merits" of the company's legal arguments.
"We are confident in the strength of our factual and legal defenses, including that the software updates reduced emissions, and will contest these claims vigorously as these cases proceed," the spokesperson said to Reuters.
VW has already reached a $20 billion agreement with the U.S. Environmental Protection Agency (EPA) for installing the software in its vehicles that resulted in the increase of harmful pollutants up to 40 times more than allowed in diesel-powered vehicles sold in the U.S.
However, VW subsidiary Volkswagen Group of America Inc has argued that under the landmark Clean Air Act, only the federal government can pursue such claims against it, and not individual states.
The lawsuits in Florida, Ohio and Utah accused VW of deceiving the U.S. EPA, which in turn, violates local state laws.
"We're pleased the Supreme Court recognized that federal environmental law does not give car manufacturers the right to defraud Ohioans," a spokesperson for Ohio Attorney General Dave Yost said to Reuters.
Furthermore, a spokesperson for lawyers representing the counties in Florida and Utah added that the Supreme Court's action reaffirmed that local governments "play a critical role in combating air pollution."
President Joe Biden's administration was asked by the court to weigh in on the dispute, but urged the justices not to hear the matter, saying the Clean Air Act still allows for enforcement of state laws.
In a case in California, Volkswagen sought to overturn a 2020 ruling by the San Francisco-based 9th U.S. Circuit Court of Appeals. The 9th Circuit ruled that the federal Clean Air Act did not preempt local efforts to impose liability on vehicles that VW had tampered with after they were sold.
But in a small victory for Volkswagen, the 9th Circuit agreed that the company could not be held liable under the local anti-tampering laws for actions it took pre-sale.
The 9th Circuit said its decision could lead to "staggering liability for Volkswagen", which would be on top of the billions in fines the automaker already paid.
Volkswagen was also seeking to overturn a June ruling by the Ohio Supreme Court that reached a similar conclusion. VW has said it could face huge damages in the cases and potentially others without a ruling on the matter by the Supreme Court.
Volkswagen announced in September that it agreed to pay $1.5 million to settle similar claims in New Hampshire and Montana.
In 2015, VW admitted that it cheated emissions testing by equipping diesel vehicles with software that falsified excessive nitrogen oxide emissions in order to meet EPA requirements.
In addition, emission control devices were turned off at other times to increase engine power. The software, which was installed in roughly 11 million vehicles, resulted in emissions up to 40 times higher than the permitted levels.
Volkswagen was also accused of misleading the EPA when it started investigating the matter in 2014.
VW also installed cheat software after some of the vehicles were already sold, which prompted the state lawsuits. This was the conduct at issue before the Supreme Court.
At the time, VW did not reveal the true purpose of the software updates. It was later discovered that the updates were intended to refine the cheat software used to mask the harmful emissions when the vehicles were smog tested.
In total, the Volkswagen Group paid approximately $25 billion in penalties and fines in the U.S. It also had to buy back all of the diesel-powered vehicles affected.
Volkswagen CEO Herbert Diess, acknowledged at a 2019 press conference last year that the automaker "lost a great deal of trust," as a result of the emissions cheating scandal and that it would take years to restore public confidence in the company.
Volkswagen is now undergoing a transformation and is no longer offering diesel-powered vehicles in the U.S. as its looks to compete with electric vehicle pioneer Tesla, which is now the world's most valuable automaker.
In March, VW announced updated plans to electrify 70% of its global model lineup by 2030. In the U.S. and China, Volkswagen aims for 50% of its vehicles to be fully-electric by 2030.
The moves are part of the VW's updated "ACCELERATE" Strategy, which will prepare the automaker for a changing auto industry that's quickly moving towards electrification, connectivity and autonomous driving.
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