ANDREI DAMBULEFF – There exists a heavy feeling, a monster, that waits above you when you slip something into a system you know is not meant to be there, even explicitly is not allowed to be there, and try to go about business as if nothing happened. Many children have snuck a few dollars out of the money jar in the kitchen and run up to their room, closing the door behind them, when they hear mom or dad in the kitchen rummaging through that jar. But imagine it’s not being scolded that is at stake: it’s the livelihood of your multibillion-dollar company.
This is the reality Volkswagen is coping with.[1] As you may remember, Volkswagen admitted that it had installed software in many of its cars that was programmed to fool emissions tests.[2] This is how the scheme worked: the software would recognize when the car was undergoing an emissions test.[3] Upon this recognition, the software would activate the entirety of the vehicle’s emissions systems, resulting in acceptable output.[4] But as soon as the emissions test was over, all the systems would be turned off, and the car or truck would drive around spewing out pollutants at unlawfully high levels.[5] After the company was exposed, the lawsuits began, and the resolution that is going to decide the car manufacturer’s fate rests almost entirely on the machinations of different international laws.[6]
Our home jurisdiction has provided the starting point. On March 10, Volkswagen settled its case filed against it by the Department of Justice, pleading guilty in federal court in Detroit to fraud and obstruction of justice, among other things.[7] One of the charges against Volkswagen was for violating the Clean Air Act.[8] That settlement is probably going to cost the company $4.3 billion, assuming the judge does not deviate too far from the prosecution’s recommendation at the final sentencing.[9] These were not the only American legal or corrective fees Volkswagen had to pay out, though. Since the scandal’s exposure, when accounting for all fines, recall costs and civil and criminal settlements, Volkswagen has shelled out more than $22 billion in the United States alone.[10]
Here’s where things get complicated and potentially catastrophic. Worldwide, there are more than ten million cars Volkswagen made that have or had the illegal software installed in them.[11] Only 600,000 of them are or were in the United States.[12] This leaves more than eight-and-a-half million cars that were bought and used throughout Europe, meaning Volkswagen has tens of other jurisdictions that could rule against it, and hundreds of thousands to millions of citizens who could file suit against the company.[13]
The twist in this story has to do with all those jurisdictions. The laws concerning manufacturer fraud and federal environmental regulations are not exactly the same in European countries as they are in the United States.[14] Europe also does not have a central organization that can easily file suit against Volkswagen, as the Department of Justice did here. Some European countries do not allow for class-action lawsuits, so that may scare or price out individual citizens from bringing claims, lowering the potential costs to Volkswagen.[15] The company was also founded and is based in Germany, meaning the government and citizens there may take a more forgiving approach to the situation.[16]
But none of that means Volkswagen is going to walk out of European courtrooms without being dispossessed of a good amount of money. Some private citizens have already sued.[17] Other jurisdictions may see what happened in courtrooms here and pursue their cases with a little more gusto. For Volkswagen, it seems their plan is to play it tough everywhere but America, fighting tooth and nail to avoid any more big settlements and to preserve the future of the brand.[18]
The price is potentially steep, but it is what comes from violating laws implemented to prevent the planet from getting even unhealthier. Environmentalism is a pervasive and paramount issue for every person and every government. It is the King; come at it and you better not miss.
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[1] Jack Ewing & Neal Boudette, As VW Pleads Guilty in U.S. Over Diesel Scandal, Trouble Looms in Europe, The New York Times, (Mar. 10, 2017) https://www.nytimes.com/2017/03/10/business/volkswagen-europe-diesel-car-owners.html?_r=0.
[2] Coral Davenport & Jack Ewing, VW is Said to Cheat on Diesel Emissions; U.S. to Order Big Recall, The New York Times, (Sept. 18, 2015) https://www.nytimes.com/2015/09/19/business/volkswagen-is-ordered-to-recall-nearly-500000-vehicles-over-emissions-software.html.
[3] Id.
[4] Id.
[5] Id.
[6] Jack Ewing & Neal Boudette, As VW Pleads Guilty in U.S. Over Diesel Scandal, Trouble Looms in Europe, The New York Times, (Mar. 10, 2017) https://www.nytimes.com/2017/03/10/business/volkswagen-europe-diesel-car-owners.html?_r=0.
[7] Nick Carey & David Sheparson, Volkswagen Pleads Guilty in U.S. Court to Diesel Emissions Scandal, Reuters, (Mar. 10, 2017) http://www.reuters.com/article/us-volkswagen-emissionsidUSKBN16H1W4?il=0.
[8] Id.
[9] Where Things Stand in the Emissions Scandal, The Washington Post, (Mar. 11, 2017) https://www.washingtonpost.com/national/energy-environment/where-things-stand-in-the-volkswagen-emissions-scandal/2017/03/11/1ec49068-066c-11e7-9d14-9724d48f5666_story.html?utm_term=.b8b95d9f82e4.
[10] Jack Ewing & Neal Boudette, As VW Pleads Guilty in U.S. Over Diesel Scandal, Trouble Looms in Europe, The New York Times, (Mar. 10, 2017) https://www.nytimes.com/2017/03/10/business/volkswagen-europe-diesel-car-owners.html?_r=0.
[11] Id.
[12] Id.
[13] Nick Carey & David Sheparson, Volkswagen Pleads Guilty in U.S. Court to Diesel Emissions Scandal, Reuters, (Mar. 10, 2017) http://www.reuters.com/article/us-volkswagen-emissionsidUSKBN16H1W4?il=0.
[14] Jack Ewing & Neal Boudette, As VW Pleads Guilty in U.S. Over Diesel Scandal, Trouble Looms in Europe, The New York Times, (Mar. 10, 2017) https://www.nytimes.com/2017/03/10/business/volkswagen-europe-diesel-car-owners.html?_r=0.
[15] Id.
[16] Coral Davenport & Jack Ewing, VW is Said to Cheat on Diesel Emissions; U.S. to Order Big Recall, The New York Times, (Sept. 18, 2015) https://www.nytimes.com/2015/09/19/business/volkswagen-is-ordered-to-recall-nearly-500000-vehicles-over-emissions-software.html.
[17] Jack Ewing & Neal Boudette, As VW Pleads Guilty in U.S. Over Diesel Scandal, Trouble Looms in Europe, The New York Times, (Mar. 10, 2017) https://www.nytimes.com/2017/03/10/business/volkswagen-europe-diesel-car-owners.html?_r=0.
[18] Id.
