Class-Action Suit Filed Against Volkswagen in US Court – Wall Street Journal

Posted: Wednesday, February 24, 2016

Volkswagen Passats are pictured at a dealership on Sept. 18, 2015 in Chicago.
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In what is expected to be a high profile civil proceeding, attorneys have filed a consolidated class-action suit in a U.S. District Court in California against Volkswagen AG
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, alleging that the German car maker engaged in widespread fraud, citing federal laws used to curb racketeering.

The filing begins what is likely to be a long and potentially expensive series of civil and criminal court proceedings against Volkswagen in the wake of the disclosure by U.S. environmental authorities last September that the German car maker rigged diesel engines to cheat on emissions tests. Volkswagen has since admitted to using so-called defeat devices to manipulate emissions tests.

The company also faces potential regulatory fines of up to $46 billion and is under criminal investigation in Germany and the U.S. No criminal charges have been filed.


“This case arises out of one of the most brazen corporate crimes in history, a cautionary tale about winning at any cost,” the plaintiffs claim in documents filed on Monday with the court in San Francisco. “Volkswagen cheated its way to the top of the automotive food chain and spared no victim along the way.”

A spokesman for Volkswagen in Wolfsburg, Germany said the filing was expected and that the company wouldn’t comment on the allegations.


Attorneys for the plaintiffs filed three documents with the U.S. District Court Northern District of California on Monday. The complaint alleges that Volkswagen, its units Audi
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and Porsche, and company executives including former chief executive Martin Winterkorn and his successor, Matthias Müller, as well as the auto supplier Bosch, violated federal “RICO” statutes against racketeering.

The plaintiffs in the class-action suit allege that Volkswagen knowingly rigged diesel vehicles in the U.S. to pass emissions tests. The defeat device reduced emissions control during normal road use, allowing the company to spew toxic tailpipe emissions as much as 40 times the legal limit.

The plaintiffs argue that while Volkswagen was cheating on emissions tests, it was also spending huge sums on advertising for its “clean diesel” technology, allowing the company to grab as much as 70% of the nascent diesel-engine market in the U.S.

Attorneys for the plaintiffs argue that the advertising and other promises made to customers and dealers that their diesel engines offered low emissions, high performance and fuel economy constitute deliberate fraud. Attorneys allege that Volkswagen engaged in a conspiracy to commit the fraud with its units Volkswagen Group of America, Audi, Porsche and its supplier Robert Bosch GmbH.

Bosch wasn’t immediately available for comment. The company has denied any involvement in the alleged fraud, saying it sold an engine control unit to Volkswagen, but that Volkswagen was responsible for calibrating the unit.

Volkswagen has hired U.S. attorney Kenneth Feinberg to try to work out a settlement in the civil cases resulting from the emissions-cheating scandal. He has worked as mediator on a number of high-profile compensation cases in the past, including the September 11 victims’ compensation and as administrator of the BP Deepwater Horizon Disaster Victim Compensation Fund.

Write to William Boston at william.boston@wsj.com

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