More States Pile on VW in Emissions Scandal

MANHATTAN (CN) — Three more U.S. states announced lawsuits against Volkswagen over its emissions-cheating scandal, weeks after the German auto giant entered into a $14.7 billion settlement with federal authorities and California.

Attorneys general in New York and Massachusetts jointly announced their lawsuits on Tuesday morning, in a press release declaring that another case in Maryland was imminent.

Filed in Albany Supreme Court, New York Attorney General Eric Schneiderman's complaint spans 90 pages, and it names Volkswagen, its affiliates Audi and Porsche, and their U.S. subsidiaries as defendants.

"The allegations against Volkswagen, Audi and Porsche reveal a culture of deeply-rooted corporate arrogance, combined with a conscious disregard for the rule of law and the protection of public health and the environment," Schneiderman said in a statement. "These suits should serve as a siren in every corporate board room, that if any company engages in this type of calculated and systematic illegality, we will bring the full force of the law — and seek the stiffest possible sanctions — to protect our citizens."

Volkswagen's headaches began in September when the Environmental Protection Agency told the company to recall nearly 500,000 diesel cars — including 25,000 in New York and 15,000 in Massachusetts — which were outfitted with "defeat-device" software designed to fool emissions inspectors.

Regulators said that a sophisticated algorithm caused the cars to kick into full emissions-control mode during inspections, but spew nitrogen oxides at up to 40 times emissions standards on the road.

Volkswagen's former CEO Martin Winterkorn resigned a week after the announcement, as a flurry of litigation multiplied the German auto giant's liabilities.

Tuesday's lawsuit accuses Winterkorn and other senior executives of orchestrating the cover-up for the "defeat devices," and claims that Volkswagen and Audi's parent companies in Germany ordered U.S. subsidiaries to file false documents with New York and Massachusetts authorities.

"Despite being required under law to disclose the existence of any defeat devices, Volkswagen concealed them for a decade, across multiple Volkswagen, Audi, and Porsche makes and models," the 90-page complaint states.

In a major settlement late last month, the United States earmarked $10.03 billion to compensate consumers and $4.7 billion to invest in green-vehicle technology.

Nearly $1.2 billion of that sum will fund California's air-quality mitigation programs.

At an early afternoon press conference Tuesday, Schneiderman said that letters poured into his office from New Yorkers who felt that Volkswagen's green marketing tricked them into buying their cars.

"We were purposefully deceived. This was fraud," Schneiderman quoted one of these messages as saying.

The lawsuit showcases the company's advertisements touting "clean diesel" with slogans polishing the fuel's reputation.

"Di*sel: It's no longer a dirty word," one come-on says.

In reality, Massachusetts Attorney General Maura Healey said: "This clean diesel was nothing more than a dirty cover-up."

The month after the scandal broke, Volkswagen blamed a "couple of software engineers" who had supposedly gone rogue, but the lawsuit claims those engineers had actually been acting upon tacit instructions from the auto giant's senior attorney.

In August 2015, Volkswagen's counsel from its headquarters in Wolfsburg, Germany warned that an impending litigation hold from U.S. regulators would soon make it impossible for them to destroy or delete documents, according to the lawsuit.

"At least eight employees — all in engineering departments involved in the creation of the defeat devices — got the unmistakable message: they promptly deleted or removed incriminating data about the devices from the company's records," the complaint states. "Some, but not all, of the data has been recovered."

For Healey, Volkswagen Group of America CEO Michael Horn put it best when he said: "We totally screwed up."

"Yes, you have, Volkswagen," she said.

In a statement, Volkswagen said that the company was already making amends and the allegations found in Tuesday's lawsuits "are essentially not new."

"Volkswagen continues to work cooperatively with the U.S. Department of Justice, the Environmental Protection Agency and the California Air Resources Board on a comprehensive national resolution of all remaining environmental issues arising from the diesel matter," spokesman Mario Guerreiro wrote.

Emphasizing the company's progress buying back or modifying affected cars, Guerreiro noted that its payments for environmental remediation and zero-emission vehicles would benefit all 50 states.

"It is regrettable that some states have decided to sue for environmental claims now, notwithstanding their prior support of this ongoing federal-state collaborative process," he added.

But Massachusetts AG Healey believes that Volkswagen's corporate culture remains "stubborn and unrepentant."

Only in April, Healey noted, Volkswagen disclosed paying nearly $70 million in bonuses to the "management team that presided over this cover-up."

The payment came to light in Volkwagen AG's annual report form April, which also disclosed a $10.2 million severance package for Winterkorn, its departing CEO.

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