There is a class-action lawsuit in Montana by Volkswagen owners that has a different twist. The suit is against JPMorgan Chase & Co., Bank of America Corp., and Wells Fargo & Co. They are seeking to hold the financial institutions responsible for financing vehicles containing the emissions test-cheating software. The Plaintiffs seek rescission of the finance agreements and restitution of the amounts already paid under the agreements. The Plaintiffs further seek to have all members of the class allowed to stop making payments on these auto loans. The Plaintiffs are also seeking injunctive relief to prevent the Defendants from making reports to any credit-reporting agency concerning withholding of payments by class members.
The lawsuit is premised on a rule enacted by the Federal Trade Commission (FTC) known as the Trade Regulation Rule Concerning the Preservation of Consumers’ Claims. 16 C.F.R. §433.2. This rule (also referred to as the “Holder Rule”) allows Plaintiffs and class members to assert the fraud of Volkswagen against the Defendants. As we all know, Volkswagen has recently been the subject of numerous class actions, news stories, and investigations for installing what is known as a “defeat device” on its automobiles to avoid compliance with EPA standards. The software enabled the vehicles to detect emissions testing and pass emissions standards; however, the vehicles actually emitted more than 40 times the amount of nitrogen oxides allowed by the EPA. It will be most interesting to see how this lawsuit turns out. We will watch it closely.