Lawsuits say VW leaders knew about emission cheating

Keith Laing
Detroit News Washington Bureau

Washington — Volkswagen’s top leaders were aware of its efforts to rig hundreds of thousands of cars to cheat U.S. emission standards, according to lawsuits filed by attorneys general of three states.

The lawsuits, filed in courts in New York, Massachusetts and Maryland, argue that Volkswagen executives signed off on the decision to cheat federal and state emission rules because the German auto company was not willing to make cars that could comply with stringent environmental laws in the U.S.

“The decision to install defeat devices was not made by ‘a couple of software engineers,’ ... nor was it confined to the 2.0-liter diesel vehicles that were the focus of the 2014 independent study that led to the exposure of Volkswagen’s fraud to the public,” the lawsuits say.

“Rather, it was the result of a willful and systematic scheme of cheating by dozens of employees at all levels of the company regarding emissions, after Volkswagen was unwilling to manufacture diesel vehicles that would meet federal and state standards in the United States,” the lawsuits continue.“This scheme, which extended over nearly a decade, was perpetrated by Volkswagen AG and its Audi, Volkswagen and Porsche subsidiaries, through dozens of their employees, executives and officers.”

Volkswagen has admitted to rigging 482,000 of its cars to cheat federal emission standards. The automaker has agreed to spend $14.7 billion to settle consumer lawsuits and government investigations under a settlement reached last month with the Environmental Protection Agency, Department of Justice and Federal Trade Commission.

The company did not immediately respond to a request for comment on the state lawsuits.

Former Volkswagen U.S. CEO Michael Horn, who left the company under a “mutual agreement” in March, told members of Congress last fall that he did not become aware of the emission cheating until spring 2014.

“In the spring of 2014 when the West Virginia University study was published, I was told that there was a possible emissions non-compliance that could be remedied,” Horn testified during a hearing of the House Energy and Commerce Committee over the emission scandal in October 2015.

The lawsuits filed in New York, Massachusetts and Maryland allege “Volkswagen implemented the emissions control defeat devices in willful contempt of the environmental laws” of the U.S. and that states that are involved in the legal proceedings, however.

“Volkswagen believed that its deceit would go undetected, and that even if caught, the consequences would be manageable,” the lawsuits say.

The states said they filed lawsuits that are separate from Volkswagen’s deal with federal regulators because “none of these settlements address the civil penalty claims of the state governments ... for Volkswagen’s systematic, repeated and egregious violations of state environmental laws.”

“Indeed, Volkswagen’s liability for appropriately stiff environmental penalties, which is the subject of the present complaint, was expressly left open by New York and other states in their partial settlement with Volkswagen,” New York Attorney General Eric Schneiderman, a Democrat, said in his lawsuit.

Michigan Attorney General Bill Schuette has said that about 10,000 Volkswagen owners in Michigan would receive compensation under the company’s settlement with federal regulators.

When the settlement was announced June 28, Schuette said the $14 billion settlement between Volkswagen and the federal agencies “sets in motion a long overdue fix by Volkswagen, who knowing deceived both consumers and the environmental regulations of this country.

“Cheating to get ahead in this case broke the law and now Volkswagen will be held responsible for their mistakes and Michigan consumers will see the benefits.”

Schuette’s office did not respond to requests for comment on whether Michigan might file an additional lawsuit against Volkswagen.

Auto industry analysts have said the possibility of additional legal action may be the least of Volkswagen’s worries now that its emission cheating has become public.

“Volkswagen killed diesel in the U.S. for the entire industry due to its cheating on emissions. It now has to find a new direction, which will be a challenge since there are few white spaces left to fill,” Michelle Krebs, senior analyst for Autotrader, said after reports that VW is planning to scale back its efforts to market diesel cars in the U.S.

Karl Brauer, senior analyst for Kelley Blue Book, said a move away from diesels would be a “dramatic shift in VW’s drivetrain strategy but not unexpected after the past year’s negative headlines directed at diesel technology.”

But he said the German automaker might not have a choice after the emission cheating scandal.

“For years, European automakers held a skeptical and dismissive opinion of hybrid and electric powertrains, but the reduced cost and improved performance of battery technology is making them a viable alternative to diesel,” Brauer said. “Even before the diesel backlash, VW was giving greater consideration to electric cars.”

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Twitter: @Keith_Laing