Our firm is representing Hillsborough County, Florida (Tampa Bay Region) in a case against Volkswagen (VW). VW has asked the Ninth Circuit to hold off on allowing two counties, our case and Salt Lake City County, Utah, to restart litigation claiming the automaker’s use of emissions-cheating devices violated anti-tampering laws, saying it wants the U.S. Supreme Court to resolve conflicting rulings on the preemptive scope of the Clean Air Act.
VW wants to hit pause on the two counties’ litigation so that it can promptly petition the nation’s high court to smooth out dueling Ninth Circuit and state appellate court decisions concerning the preemptive scope of the CAA. At stake is a world of regulatory chaos and potentially billions in pile-on penalties for automakers, VW says. The Ninth Circuit has essentially freed state and local governments to regulate changes to vehicles as soon as they leave a dealership’s lot. VW claims that flies in the face of the Environmental Protection Agency (EPA)’s exclusive authority to oversee how manufacturers carry out modelwide, in-use changes and software updates to cars to improve performance and emissions. The counties contend they have the right to regulate those vehicles after they leave the lot by virtue of their own lawful county ordinances.
VW is hoping the Supreme Court will grant certiorari to smooth out conflicting court rulings on the preemption question. The Ninth Circuit ruling veers from several state courts, including Alabama, Illinois, Missouri, Minnesota and Tennessee, which have sided with VW on the CAA preemption argument. Those earlier wins for VW had reinforced the federal government’s authority to regulate motor vehicle and emissions standards. But some courts haven’t bought into VW CAA preemption defense.
The lawsuits all stem from the EPA’s investigation into VW’s 2015 admission that it rigged more than 500,000 “clean diesel” vehicles in the U.S. with emissions-cheating software known as defeat devices. VW has accused the states and counties of “piggybacking” on the federal probe to demand pile-on penalties for conduct that the EPA already redressed nationwide. Even the Ninth Circuit panel acknowledged that its decision heightened VW’s legal exposure, including potentially “staggering” and “unexpected and enormous liability.” According to VW’s petition, the two counties seek penalties of up to $11.2 billion annually.
Salt Lake County and Hillsborough County have argued throughout the litigation that VW was caught red-handed selling cars to unwitting consumers on the false promise of clean fuel and clear air, and now claims “it has atoned and has been sufficiently chastened.” “Volkswagen now asks the court to hold, in effect, that it is too big to be held fully accountable, that it can only be regulated by the federal government, at the national level, and can be held to account no more,” the counties have said in their Ninth Circuit briefs.
In enacting the CAA, Congress never said that it intended for only the EPA to regulate “modelwide” changes to in-use vehicles, they said. “Congress based preemption on the nature of the vehicle (‘new’ versus ‘registered or licensed’), not on the identity of the violator (‘manufacturer’ versus ‘owner’) or the scope of the violation (‘modelwide’ versus a few dozen vehicles),” the counties said. VW’s view of the CAA would mean that the EPA can penalize everyone, but the counties can only penalize local dealers, garage owners, and car owners, and foreign businesses are treated better and entitled to more protection than local businesses, according to the counties’ January 2019 brief.
Ultimately, manufacturers shouldn’t be given “perverse incentive to systematically violate the law” with the notion that the greater the misconduct, the less likely the manufacturer will be subject to state and local laws and enforcement actions, the counties said.
Dee Miles, our Consumer Fraud & Commercial Litigation Section Head and the lead lawyer for Hillsborough County, said that the county opposes VW’s motion. He “firmly believes the Ninth Circuit correctly ruled that the county has the right to proceed with its claims against VW for tampering with emissions-control standards of post-sale vehicles.” Dee is confident the U.S. Supreme Court will agree with the Ninth Circuit’s ruling and the that Ninth Circuit court should deny VW’s request, as should the Supreme Court on VW’s certiorari petition.
Colin P. King of Dewsnup King Olsen Worel Havas Mortensen, a lawyer for Salt Lake County, is also confident the Supreme Court will deny a certiorari petition in this case. He says:
For one thing, we think the Ninth Circuit sees this as something that is not opening the tsunami flood gates…This is a very unusual exception. There aren’t other cases like this pending, and there are zero other federal appellate decisions and federal district court decisions that are contrary to this.
In addition to exaggerating the impact of the various court rulings, King said VW is “overhyping the potential regulatory chaos” that could come from the Ninth Circuit decision. He added:
That’s just not going to pass muster for the Supreme Court to see it as important enough .., for it to get involved. We predict the Supreme Court will deny certiorari because of the lack of really an authentic split of authority among the federal circuits.
The counties are also represented on these appeals by Peter K. Stris of Stris & Maher LLP.
This story appears in the October 2020 issue of The Jere Beasley Report. For more like this, visit the Report online and subscribe.