After it had already paid out hefty fines for rigging its cars to cheat on federal emissions tests, Volkswagen said in court papers that it will appeal to the U.S. Supreme Court last month’s Ohio Supreme Court ruling that allows the state to sue for hundreds of billions of dollars more over the same claim.
The news comes after European regulators fined German automakers Volkswagen and BMW a total of 875 million euros ($1 billion) for colluding to prevent the use of emissions-reducing technology they pioneered. Volkswagen will pay 502 million euros; BMW, 373 million euros.
“This is a first,” European Union competition policy chief and Executive Vice President Margrethe Vestager told reporters. “We have never had a cartel whose purpose was to restrict the use of novel technology.”
In the United States, Volkswagen has already paid out more than $33 billion in fines and settlements after it was found to have used software to trick U.S. diesel emissions tests. Some refer to the scandal as “Dieselgate.”
Citing a legal complaint, Volkswagen said in a brief that “Ohio’s unprecedented claims seek up to $25,000 for ‘each day of each violation,’ for each of the ‘approximately 14,000’ cars allegedly registered in Ohio, which could total $350 million per day, or more than $127 billion per year, over a multiyear period.” [Italics original.]
The German company filed a motion July 8 to stay the June 29 state Supreme Court’s 6–1 ruling pending appeal to the U.S. Supreme Court. Dave Yost, Ohio’s Republican attorney general, “does not object to the requested stay,” a motion filed in the Ohio court states.
In a separate appeal, Volkswagen filed a petition with the Supreme Court on Jan. 21 of this year seeking review of a June 1, 2020, federal appeals court decision. That case, still pending, is Volkswagen Group of America Inc. v. Environmental Protection Commission of Hillsborough County, Florida, court file 20-994.
The federal appeals court’s ruling is wrong, the company argues in its petition, because the Clean Air Act grants the U.S. Environmental Protection Agency (EPA) “broad and exclusive authority to enforce auto manufacturers’ compliance with [the law’s] standards over the entire useful life of their vehicles.” Section 7543(a) states that “no State or any political subdivision thereof shall adopt or attempt to enforce any standard relating to the control of emissions from new motor vehicles.”
According to the Ohio Supreme Court’s ruling, beginning about 2009, Volkswagen programmed its vehicles with software enabling them to perform better on federal emissions tests than they otherwise would have.
The software, known as a “defeat device,” would identify when a vehicle was being tested by regulators for compliance with emissions standards and during the test would trigger equipment within the vehicle that would temporarily reduce the vehicle’s otherwise unacceptably high emissions to an acceptable level to pass the test.
Years later, the company discovered that the software was malfunctioning and adversely affecting performance. Around 2013, Volkswagen updated the software to fix those problems and continue cheating on emissions tests.
“Without telling its customers the true reason why, Volkswagen also installed the updated software in its older vehicles through a voluntary recall program and when its customers brought their vehicles in for routine maintenance,” the decision stated. Eventually, the U.S. Environmental Protection Agency (EPA) uncovered the scheme, Volkswagen admitted what it did, and agreed to pay a $2.8 billion penalty.
In 2016, the state sued Volkswagen, alleging it violated Ohio’s Air Pollution Control Act. The trial court agreed with the company’s argument that the suit was preempted by the federal Clean Air Act and dismissed it. The state appealed, and Ohio’s 10th District Court of Appeals ruled against the company.
The Ohio Supreme Court then rejected Volkswagen’s arguments, holding that the federal law “does not suggest that Congress intended to shield vehicle manufacturers from state-law emissions-control-tampering liability.”
“If Congress had wished to preclude states from punishing companies or persons for emissions-control tampering, it could have said so.”
In his dissenting opinion, Justice Michael P. Donnelly writes that if “states and municipalities are permitted to sue motor vehicle manufacturers based on admissions made when settling civil actions with the EPA, manufacturers will be deterred from making such admissions.”