Volkswagen on the Hook Again for Emissions Cheating Scandal

SAN FRANCISCO (CN) – Volkswagen must face yet another class action over equipping VW and Audi clean-diesel vehicles with software designed to disguise their high emissions, this time brought by people who owned or leased the vehicles but sold them before the scheme became public.

The German automaker and co-defendants Robert Bosch LLC and Robert Bosch GmbH want the lawsuit dismissed, arguing the plaintiffs fully recouped the premium they paid for the vehicles by selling them before resale prices plummeted once the emissions cheating scandal broke in September 2015.

But on Friday, U.S. District Judge Charles Breyer appeared to side with the plaintiffs, who argue they paid higher prices for an environmentally friendly vehicle they never received.

“After looking at it, I have to say, why aren’t they correct?” Breyer said at the hearing in downtown San Francisco. “They’ve made a plausible claim that there are damages.”

Soon after Volkswagen admitted it had installed software in its TDI clean diesel vehicles to cheat emissions tests, Volkswagen drivers sued the company for fraud, breach of contract, unjust enrichment and racketeering, as well as violations of consumer protection laws in every state.

The cars polluted at 40 times the legal limit despite Volkswagen billing itself as a clean diesel pioneer, according to court documents.

The company settled with two different plaintiff classes in October 2016 and May 2017 for $10 billion and $252 million, respectively, agreeing to provide restitution, buy back vehicles, and repair eligible vehicles. Bosch, the manufacturer of the illicit software, settled for $327.5 million, also in May 2017.

In an August 2017 complaint, plaintiffs from 21 states now say they were excluded from those settlements, and are owed damages for driving the polluting vehicles – some for as long as six years – despite having sold them or ended their leases prior to the scandal.

But Volkswagen attorney Robert Giuffra, with Sullivan & Cromwell, countered Friday that everyone in the proposed class was compensated through the previous settlements, because Volkswagen paid full damages to the people to whom class members had sold their cars.

“What Mr. Berman is trying to do,” Giuffra said, referring to the drivers’ attorney, Steve Berman, “is get a double recovery; to essentially get a windfall for the proposed class.”

Giuffra also called the plaintiffs’ claim that driving overly polluting cars harmed them too “speculative” to proceed, pointing out the plaintiffs hadn’t quantified the amount of damages they believed due to them.

“The whole point of Article III standing is to not recognize speculative injuries,” he told Breyer. “The rule is you have to show concrete and particularized injury, and [Berman] can’t quantify the amount.”

Berman, who is with Hagens Berman Sobol Shapiro, countered his clients only need to make plausible claims, not quantify damages, at this stage of the case.

“We know there is a difference between gas and diesel, and we know Volkswagen promoted the cars based on an environmental package,” Berman said. “The only reason a person would buy a [more expensive] diesel vehicle is to get the benefits of the environmental package.”

Breyer agreed, although he questioned whether the case would survive much longer without a damages figure.

“They just have to have a plausible claim that there have been damages, and it seems to me they have done that,” he said.

“Once it gets to the next stage, it will fail,” he added.

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