U.S. Sues Volkswagen Over Emissions Scandal--3rd Update
January 04 2016 - 6:50PM
Dow Jones News
By Aruna Viswanatha And Mike Spector
The U.S. Justice Department sued Volkswagen AG on Monday,
seeking billions of dollars in penalties in the wake of an
emissions-cheating crisis at the German auto maker.
The civil lawsuit, filed in federal court in Detroit, reaffirms
allegations environmental regulators made last year that Volkswagen
installed "defeat" devices to dupe emissions tests in 580,000
diesel-powered vehicles sold in the U.S. It significantly ramps up
pressure on the company by putting the case before a federal judge
and formally seeking court-ordered penalties.
The suit, filed by the Justice Department on behalf of the
Environmental Protection Agency, seeks sanctions that could total
more than $18 billion. Whether Volkswagen ultimately faces such a
large penalty would be up to the judge.
The car maker stressed Monday that it is working to ensure its
vehicles will now meet legal standards. "Volkswagen will continue
to work cooperatively with the EPA on developing remedies to bring
the...vehicles into full compliance with regulations as soon as
possible, " the company said in a statement.
The suit isn't likely to be the final step in the U.S.
government's pursuit of Volkswagen, but rather could mark an
opening move that paves the way for other actions. Monday's legal
action doesn't involve criminal charges against Volkswagen or its
executives, and federal prosecutors are in the midst of a separate
criminal probe of the auto maker.
Volkswagen has held discussions with the EPA over how to fix the
cars, but officials said those talks haven't resulted in a deal,
setting the stage for the new lawsuit.
"Recall discussions with the company have not produced an
acceptable way forward," said Cynthia Giles, the EPA's assistant
administrator for enforcement. "With today's filing, we take an
important step...setting us on a path to resolution."
Experts said the lawsuit was an aggressive government effort to
put auto makers on notice about defeat devices. "I think that is
really meant to send a signal to the auto industry generally, but
to VW specifically, that this kind of behavior will not be
tolerated," said Carl Tobias, a product liability law professor at
the University of Richmond.
The suit is the latest in the flurry of legal actions world-wide
enveloping Volkswagen, which admitted last year to using devices on
diesel-powered cars that can cheat emissions tests in the U.S.
Volkswagen faces myriad lawsuits from consumers and dealers, as
well as regulatory investigations in the U.S., Europe and
elsewhere. The company has halted sales of affected vehicles in the
U.S. and said it is cooperating with the probes.
The scandal cost former Chief Executive Martin Winterkorn his
job and prompted Volkswagen to tap law firm Jones Day to
investigate the auto maker's emissions lapses. Volkswagen said in
December the investigation so far pointed to a "chain of mistakes"
leading to the cheating, starting with a diesel push in the U.S. in
2005, and a "culture of tolerance" for rule-breaking that allowed
the deception to continue.
The Justice Department said it would seek to move the suit filed
Monday to a federal court in California, suggesting it could be
consolidated with related cases. That litigation includes scores of
lawsuits by owners of diesel-powered vehicles--who in some cases
spent $6,000 more than they would have for a gasoline-fueled
model--seeking compensation for their car's declining resale
value.
The government's lawsuit alleges that Volkswagen violated the
Clean Air Act by making and selling vehicles that were designed
differently from Volkswagen's assertions in applications for
certification to the EPA and the California Air Resources
Board.
The lawsuit covers vehicles with two-liter engines that were the
subject of initial EPA allegations in September, as well as
three-liter engines that were the focus of separate charges by
agency in November. The three-liter engines were included in some
Audi and Porsche diesel-powered models.
The complaint accuses Volkswagen of obstructing efforts by the
government to "learn the truth about the emissions exceedances and
other irregularities." Volkswagen and Audi, the company's luxury
unit, made material omissions and provided misleading information,
concealing facts that would have revealed the defeat devices, the
lawsuit says.
Monday's lawsuit is part of a civil case, but prosecutors are
also investigating Volkswagen for potential criminal charges.
Barbara McQuade, the U.S. attorney in Detroit, said Monday's
complaint marks only the "first stage" of the government's
efforts.
Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com and Mike
Spector at mike.spector@wsj.com
(END) Dow Jones Newswires
January 04, 2016 19:35 ET (00:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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