US court rejects VW’s appeals over ‘Dieselgate’ scandal

Washington — The US Supreme Court on Monday rejected Volkswagen’s (VW’s) bid to avoid lawsuits filed by officials in three states seeking damages stemming from the German vehiclemaker's diesel emissions cheating scandal.

The justices refused to hear appeals by VW and German vehicle supplier Robert Bosch LLC of a lower-court ruling allowing Florida's Hillsborough County and Utah's Salt Lake County to seek to hold the companies liable under local laws and regulations barring tampering with vehicle emissions controls. The court also rejected VW's appeal of a similar ruling in a case brought by the state of Ohio.

Volkswagen subsidiary Volkswagen Group of America has argued that under the Clean Air Act, the landmark US environmental law, only the federal government can pursue such claims. VW noted that it already has reached a settlement of more than $20bn with the US Environmental Protection Agency.

The lawsuits accused VW of deceiving the EPA — and in doing so also violating the local laws.

President Joe Biden's administration, asked by the court to weigh in on the dispute, urged the justices not to hear the case, saying the Clean Air Act allowed for enforcement of state laws.

In one case, VW was seeking to overturn a 2020 ruling by the San Francisco-based 9th US Circuit Court of Appeals. The 9th Circuit decided that the Clean Air Act did not pre-empt local efforts to impose liability over vehicles that VW had tampered with after they were sold. The 9th Circuit, however, agreed with VW that it could not be held liable under the local anti-tampering laws for actions it took presale.

The 9th Circuit said its decision could lead to “staggering liability for Volkswagen”.

VW was also seeking to overturn a June ruling by the Ohio Supreme Court that reached a similar conclusion.

VW says it could face huge damages in the cases and potentially others. Daimler and Fiat Chrysler, part of Stellantis, are facing similar claims.

VW announced in September that it agreed to pay $1.5m to settle similar claims in New Hampshire and Montana. If other states and counties settle at the same amount per vehicle, the total would be just $13m.

In 2015, VW disclosed that it had used sophisticated software to evade nitrogen oxide emissions requirements in nearly 11-million vehicles worldwide. It also misled the EPA, which had started asking questions in 2014.

In addition to equipping vehicles with “defeat devices” before they were sold, VW also installed software updates after sale, which was the conduct at issue before the Supreme Court. At the time, VW did not reveal the true purpose of the updates, which were aimed at refining the software used to control the emissions.

In a brief backing the company, the Alliance for Automotive Innovation, a trade group, said that opening up companies to lawsuits concerning post-sale software updates “will jeopardise auto manufacturers’ ability to make these essential updates and upset the post-sale regulatory regime that has existed for decades.

Lawyers for the local governments disagree, saying that vehicle-makers would not be liable as long as they follow Clean Air Act requirements.

Reuters