Former owners and lessees of Volkswagen "clean diesel" vehicles can proceed with their lawsuit even though the customers got rid of their diesel vehicles before anyone knew the emissions systems were illegal.
The former owners who sold their cars before the scandal went public filed their lawsuit against VW and Bosch alleging violations of racketeering, fraud and consumer protection laws.
The lawsuit was filed after Volkswagen diesel customers received buybacks and compensation after VW sold "clean diesel" vehicles marketed as low-emission and friendly to the environment. But the automaker concealed illegal software that altered the emissions systems when the vehicles were undergoing emissions certifications.
The public learned of the fraud in September 2015 and attorneys started filing hundreds of lawsuits against Volkswagen and Bosch, the supplier for some of the diesel engine components.
VW and Bosch agreed to settle the multidistrict litigation for billions of dollars, but excluded from the settlement were consumers who “owned, leased, or otherwise acquired” an affected vehicle but who “no longer owned, held an active lease for, or otherwise had a legal interest in that Eligible Vehicle on or after September 18, 2015.”
The plaintiffs claim they were "injured" by VW’s emissions fraud because owners overpaid to purchase and lease the diesel vehicles that in fact didn't have low emissions.
In addition, the plaintiffs contend they paid financing and leasing fees for the diesel vehicles, "which they would not have paid, or which would have been less, had they known about the cars’ actual emission levels."
And finally, the former owners claim they never would have bought or leased the cars in the first place if they had known about the fraud.
The judge found the lawsuit a "unique situation" because the former owners "resold the class vehicles before VW’s emissions fraud was public knowledge. So even though they purchased the cars at a price that did not take into account the fraud, they also sold them at a price that did not take into account the fraud."
The former owners acknowledge the price of the cars was likely inflated when they purchased them, but that means the resale price was also inflated when the cars were sold because no one knew about the illegal emissions systems.
Volkswagen says the case is nothing more than trial attorneys trying to suck more money out of the automaker that has already paid more than $25 billion for its emissions sins.
Former owners claim only a portion of the low-emissions premium paid for the cars depreciated because the premium was for a feature the cars never had. The owners allege the extra depreciation is a loss completely attributable to Volkswagen's emissions scheme.
Volkswagen argues if anything depreciates, it's a new car as soon as it's driven off the dealer lot. However, the judge ruled the plaintiffs have indeed alleged a real injury, at least enough at this stage to survive VW's motion to dismiss for a lack of standing.
But the judge also said, "Whether this depreciation-based injury can be accurately quantified and whether the former owners’ losses are more than de minimis remains to be seen."
U.S. District Judge Charles Breyer ruled racketeering claims against Bosch can proceed, but Judge Breyer noted false advertising claims were on shaky ground because the lawsuit doesn't specify if the plaintiffs saw specific advertisements about the clean diesel vehicles.
Concerning claims the owners wouldn't have purchased the diesel vehicles if they would have known about the illegal emissions systems, the judge said owners couldn't proceed with their claims because they received their money when they sold the cars. However, the judge ruled lessees could proceed with those claims.
Volkswagen says all the claims are worthless and hypothetical, something the judge allegedly saw when he narrowed some of the plaintiffs' claims.
The lawsuit includes these diesel models:
2-Liter Diesel Vehicles
- 2009-2015 Volkswagen Jetta
- 2009-2014 Volkswagen Jetta SportWagen
- 2012-2015 Volkswagen Beetle
- 2012-2015 Volkswagen Beetle Convertible
- 2010-2015 Audi A3
- 2010-2015 Volkswagen Golf
- 2015 Volkswagen Golf SportWagen
- 2012-2015 Volkswagen Passat
3-Liter Diesel Vehicles
- 2009-2016 Volkswagen Touareg
- 2014-2016 Audi A6 Quattro
- 2014-2016 Audi A7 Quattro
- 2014-2016 Audi A8
- 2014-2016 Audi A8L
- 2014-2016 Audi Q5
- 2009-2016 Audi Q7
The Volkswagen "clean diesel" lawsuit was filed in the U.S. District Court for the Northern District of California - In Re: Volkswagen "Clean Diesel" Marketing, Sales Practices and Products Liability Litigation (Nemet v. Volkswagen Group of America, Inc).
The plaintiffs are represented by Hagens Berman Sobol Shapiro LLP, and the Paynter Law Firm, PLLC.