Volkswagen Lawsuits Filed By Vehicle Owners Over Diesel Emissions Problems

A growing number of lawsuits are being filed on behalf of owners of Volkswagen and Audi vehicles with diesel engines, seeking damages for loss of vehicle value, unjust enrichment and other claims stemming from the German auto maker’s admission that it installed defeat devices designed to avoid emissions standards. 

The complaints began to surface almost immediately after the Environmental Protection Agency’s (EPA) issued a notice of violation of the Clean Air Act issued to Volkswagen AG, Audi AG, and Volkswagen Group of America Inc. on September 18, 2015, claiming the automaker equipped certain four-cylinder diesel cars from model year 2009 to 2015 with “defeat devices”, which are software designed to circumvent EPA emissions standards for certain air pollutants.

There are more than 11 million “clean diesel” engine Volkswagen and Audi vehicles equipped with the emissions evading defeat devices, with nearly 500,000 of the impacted vehicles sold in the U.S.

The defeat devices are a sophisticated software algorithm that detect when the car is undergoing official emissions testing and turns full emissions controls on only during the test. The software disengages the vehicles emissions controls under normal operation and allows the vehicles to emit nitrogen oxides at up to 40 times the allowable limit under the Clean Air Act

At least 34 federal lawsuits have already been filed across the nation, alleging that resale values have already been impacted by the emission testing scandal.

One Volkswagen class action lawsuit (PDF) filed in the U.S. District Court for the Eastern District of Michigan on September 23 seeks class action status to represent all individuals nationwide who purchased vehicles with a “defeat device”, including 2009-2015 VW Jetta, 2009-2015 VW Beetle, 2009-2015 VW Golf, 2004-2015 VW Passat and 2009-2015 Audi A3 vehicles.

The lawsuit alleges Volkswagen intentionally misrepresented their “clean diesel vehicles” branding them to be an alternative to hybrid vehicles, indicating that the auto maker reaped significant profits from intentionally misleading consumers to purchase the diesel vehicles at a premium price because of the environmentally-friendly attributes that they were represented to have.

As a result, consumers spent an additional $3,000 to $6,000 to have the allegedly eco-friendly diesel model, rather than purchasing the cheaper gasoline engine model. The plaintiffs alleges that a breach of contract occurred since buyers did not receive the environmentally friendly benefits that were advertised.

“By manufacturing and selling cars with defeat devices that allowed for higher levels of emissions than were certified to the EPA, Volkswagen violated the Clean Air Act, defrauded its customers, and engaged in unfair competition and deceptive and misleading conduct under state and federal laws,” according to the class action complaint, which seeks compensatory damages for all impacted vehicle owners.

In addition to the stream of lawsuits Volkswagen faces, the EPA stated last week that their preliminary evaluation anticipates the automaker could face upwards of $18 billion in civil penalties and fines along with possible repercussions from a potential criminal inquiry that may be opened by the U.S. Justice Department.

EPA spokeswoman Liz Purchia said the agency would be working very closely with the Department of Justice on the investigation but there has been no determination of whether a criminal probe will be opened. However, New York Attorney General Eric Schneiderman said on Tuesday that he and other state’s attorneys would be launching a criminal investigation that would generously offer any information discovered over to a federal probe if one is pursued.

The EPA’s allegations that Volkswagen installed defeat devices in their diesel vehicles were confirmed by the then-acting-Chief Executive, Martin Winterkorn, in a statement released on September 20, 2015. The former CEO, who announced his resignation on Wednesday, just days after the scandal was brought to light, asked the public to forgive him and the company for breaking their trust and that Volkswagen would be cooperating fully with the investigating agencies.

With more than $30 billion wiped off of Volkswagen’s market value in just six days, and a tarnished image to the public, Winterkorn announced on Wednesday that he would be resigning just days before he was scheduled to sign a two-year contract extension. The resigning CEO stated “Volkswagen needs a fresh start in terms of personnel” and that he would begin with himself.

The EPA has forced a recall of the nearly 500,000 vehicles sold in the U.S. with the defeat device software and has also demanded that Volkswagen halt the sales of questioned vehicles until the investigation has concluded. The recalled vehicles sold in the U.S. include model years 2009 to 2015 Jetta’s, Audi A3’s, Golf, and Passat diesel vehicles.

EPA spokeswoman Liz Purchia said the agency would be working very closely with the Department of Justice on the investigation, but there has been no determination of whether a criminal probe will be opened.

Volkswagen has reportedly set aside approximately $7.3 billion to cover the fallout and restore faith in the public, but analysts have claimed that amount could not even cover the expenses the automaker will endure if all 11 million diesel vehicles equipped with defeat devices are recalled.

The company is also facing criticism, lawsuits, and the incident may spark new auto emissions laws in Canada and Europe.