Three states file lawsuits against Volkswagen, charging executives covered up diesel emissions cheating

Three states are filing lawsuits against Volkswagen, Audi, and Porsche for the automakers’ sale of diesel automobiles – including more than 25,000 in New York, 15,000 in Massachusetts and 12,935 in Maryland – which were fitted with illegal “defeat devices” that hid illegal amounts of harmful emissions the cars emitted and then attempting to cover-up their behavior.

“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,” New York Attorney General Eric Schneiderman said Monday.

The lawsuits allege that a cover-up occurred, which Volkswagen and Audi managed for nearly a year-and-a-half. The cover-up followed a study by researchers at West Virginia University that alerted agencies in the United States that the diesel cars emitted much more nitrogen oxides when driven on the road than they did when undergoing emissions testing by the U.S. Environmental Protection Agency and the California Air Resource Board.

The lawsuits follow the car companies’ partial settlements of claims for consumer relief and deception penalties, as well as their agreement to establish a fund to mitigate the environmental damage caused.

The earlier settlements didn’t resolve the claims for civil penalties that New York, Massachusetts, and other states, as well as the U.S. Environmental Protection Agency, may bring for the companies’ violations of state and federal environmental laws and regulations, nor did the settlements cover all of the vehicles with emission control defeat devices.

The state lawsuits allege the cover-up was orchestrated and approved at the highest levels of the company, up to and including former CEO Martin Winterkorn. Throughout the alleged illegal conduct, in which dozens of employees, officers, and senior executives were involved, the investigation found no evidence that any Volkswagen, Audi, or Porsche employees came forward to blow the whistle.

The lawsuits allege Volkswagen hasn’t reformed its corporate behavior. When the investigation was beginning in late 2015, employees, tipped off by a senior in-house lawyer in Germany, allegedly destroyed incriminating documents.

In June, the Volkswagen Supervisory Board recommended bonuses for the management board that presided over the cover-up of more than $70 million, including generous severance pay to Winterkorn, the lawsuits said. The company’s shareholders approved the recommendation.

The attorneys generals’ investigation also found evidence of unprecedented misconduct by Volkswagen and its subsidiaries Audi and Porsche:

The three affiliated brands made a knowing decision to violate the laws of New York, Massachusetts, Maryland, and other states not just once, but over and over again, according to the lawsuits. There was not just one defeat device that cheated on emissions tests, but six, with the first going back to Audi’s European-market cars in the mid-2000s. The lawsuits allege:

• Starting in 2008, Volkswagen and Audi, and later Porsche, began installing defeat devices in several generations of U.S.-market Volkswagen and Audi diesel engines for a dozen models, including Audi luxury sedans and high-performance Porsche SUVs.

• Despite their reputations for engineering excellence, Volkswagen, Audi, and Porsche resorted to the illegal defeat devices to enable them to equip their cars with shoddy emissions systems that in many cases would have broken down, without the defeat devices, in less than 50,000 miles, contrary to the durability assurances the automakers had falsely given to regulators.

• In other cases – for example, on the high-end V6 diesel engines in the Porsche, Volkswagen, and Audi SUVs and Audi luxury sedans, vehicles that use a urea-based liquid as part of the emissions control system – the automakers installed defeat devices to compensate for the companies’ unwillingness either to make the tanks that hold urea large enough to properly serve the cars’ emissions system, or to reduce the intervals between urea refills in a manner they believed would turn off diesel car owners. In these vehicles, the defeat devices limited dosing of the urea-based liquid into the emissions system, again driving up harmful NOx emissions far past their legal limits.

• Volkswagen and Audi researched the laws in this country and previous enforcement cases before using default devices. They knew what they were going to do was illegal, and if caught they would face government enforcement and sanctions.

The lawsuits make clear that substantial penalties must be imposed on the Volkswagen companies, above and beyond the amount they have to pay to make American consumers whole and redress the environmental harm they have caused, Schneiderman said.

Copyright 2016, Rita R. Robison, Consumer Specialist