Law professors look at VW's legal troubles

WMU-Cooley Law School Professors Mark Dotson and Paul Carrier are paying close attention to potential legal ramifications facing Volkswagen for rigging millions of cars with deceptive software, which falsifies emission testing results. Dotson teaches Torts and Remedies and has extensive knowledge in consumer protection laws. Carrier teaches a variety of international law courses, which include EU Law, International Business Law, and Public International Law.

Regarding fines that the German automaker faces in the U.S., Dotson said, “Volkswagen is exposed to $18 billion in penalties to the U.S. government for indisputable pervasive fraud. This is not a circumstance where an engineer went rogue, but instead goes all the way to the top of the corporate ladder. The fine will be on the high end, especially since this a foreign corporation dumping pollutants on the mother land. This will be a political nightmare when comes down to the amount of the eventual penalties.”

Dotson does not believe there will be any personal injury litigation, but notes that Volkswagen will realize significant costs fixing the issue.

“Unless attorneys can identify specific health risks from the emissions over the past several years and associate them with Volkswagen’s vehicles, there would be no personal injury civil liabilities,” said Dotson. “Theoretically the consumers will have to get their cars fixed, or turn the cars in. There is going to be significant costs to the company, either through a buy back, or retrofit.”

Volkswagen will face a multitude of law suites and at the same time will have to deal with consumer confidence issues notes Dotson.

“Depending on Volkswagen’s fix, assuming the company can remove the emission problem with a modification, then exposure and liability will turn to how satisfied the customers are with the vehicle.
This will be a test of consumer confidence with the company and its products,” said Dotson. “No doubt there will be class actions lawsuits brought on by consumers emphasizing the fraud. Damages on this could range from costs associated with additional emissions testing, decreased value of the vehicle due to the perception that the cars are environmentally unfit, to punitive damages because of the fraud. If there is one area of law, even though the  loss here is economic in nature, where courts are most willing to impose penalties, whether by a jury’s determination or pursuant to  a statutory consumer protection scheme, it is when it comes to fraud.”

Carrier notes that Volkswagen’s potential litigation in the German courts will not protect the automaker from sanctions in the United States. He also points out that criminal charges could be handed down in Germany and will be harder to prosecute in the United States.

“The German automaker is clearly within the jurisdictional purview of the U.S. Courts and subject to the administrative penalties of the E.P.A. This is not to say that there may not be some state-to-state negotiations and coordination,” said Carrier. “Criminal penalties, if such would apply, would be more diplomatically problematic. There are issues of comity that would move criminality into the diplomatic sphere, such that U.S. Courts could defer to German prosecution pursuant to one or more legal doctrines.”

Carrier also notes there could be issues regarding monetary judgments, “if there is to be any monetary judgments, there could also be issues of enforceability. Unless the U.S. courts have jurisdiction over Volkswagen’s assets or the person, the legal mechanisms of Germany would need to be approached for enforcement,” said Carrier. “There is a recognized respect for international arbitration awards (in large part as a response to difficulties with the enforcement of court judgments). But this does not appear to be an arbitral issue.”