Federal judge backs some of Volkswagen's claims in class action over 'clean diesel' feature

By Charmaine Little | Oct 17, 2018

SAN FRANCISCO – The U.S. District Court for the Northern District of California recently granted in part and denied in part a Volkswagen motion to dismiss a misrepresentation class action lawsuit.

U.S. District Judge Charles R. Breyer’s decision filed Oct. 3 comes amid VW's ongoing legal battle concerning its alleged falsification of a clean diesel feature on its vehicles. The legal matters date back to September 2015 when consumers found out Volkswagen had been selling diesel cars that included emission cheating software since 2009. 

Basically, VW sold cars it touted as “clean diesel” vehicles, which were advertised as low-emission, eco-friendly, fuel efficient and high performing. But what it didn’t tell buyers was that the auto company had installed software in the cars that made the emission controls act more advantageous during testing and less so during normal driving times, violating the Clean Air Act. 

While VW agreed to settlements for a number of consumers, the remaining consumers filed a class action in which Robert Bosch GmbH and Robert Bosch LLC were also named as defendants. The plaintiffs said they overpaid for the cars but didn’t get the low emissions feature they paid for and that they never would have purchased the vehicle had they known about the emissions software issues.

The plaintiffs claimed that VW and the other defendants violated the Racketeer Influenced and Corrupt Organizations (RICO) Act and that VW violated consumer protection and false advertising laws in 21 states. VW and Bosch filed motions to dismiss.

The court determined the plaintiffs have Article III standing and that their RICO claims against Bosch were pleaded successfully and sufficiently. 

The court also determined state law claims weren’t blocked and said the plaintiffs’ state law claims which encompass VW’s misrepresentations aren’t blocked by the Clean Air Act. It added that the relief the plaintiffs want don’t stand in the way of federal government’s objectives when it comes to monitoring motor vehicle emissions.

Still, it wasn’t all positive for the plaintiffs as the court discovered their state law misrepresentation claims don’t fulfill the requirements of Rule 9(b). It stated the claims don’t have enough detail such as an Alabama plaintiff’s failure to give enough information. Yet, plaintiffs were allowed leave to amend these claims so they are sufficient. The court allotted leave for the plaintiffs to answer these questions and meet the obligations of Rule 9(b).

The court also decided the damages and proximate cause elements were claimed properly as well as reliance. 

Still, the court didn’t rule on this and said the plaintiffs would need to fix their claims to fulfill the requirements of Rule 9(b). For example, the plaintiffs failed to give details on the advertisements they relied on when they made their car purchases. “For even if the state law reliance standards can be satisfied with allegations that are less specific than those needed to satisfy Rule 9(b), plaintiffs must satisfy Rule 9(b) to bring these claims in federal court,” the court pointed out.

The court has yet to make an official ruling on whether the plaintiffs are owed tolling for their claims in Arizona and Oregon. The court advised the plaintiffs to address the issues in their amended complaint. The court also opted out of determining if Mississippi and Utah’s class action limitations were applicable in federal court in the pleading phase.

Still, since plaintiffs failed to comply with their Mississippi consumer protection claims, those were dismissed without prejudice.

When it comes to the claims in Texas and Ohio, the court determined the Texas DTPA (Deceptive Trade Practices Consumer Protection Act) was not abated. Yet, it decided plaintiffs didn’t have enough standing to bring their claims via Ohio’s DTPA.

The court advised the plaintiffs to file an amended complaint within 30 days of the court order. It ordered them to include a separate statement that provides how they will prove the amount of the clean diesel premium that was for a low-emission vehicle and the portion of the premium that depreciated.

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