VW sued by Mass., Md., N.Y. over pollution linked to diesel cheating device

LAWSUITS FILED BY THREE STATE ATTORNEYS GENERAL allege that Martin Winterkorn, CEO of Volkswagen at the time, orchestrated an elaborate coverup when the company's attempts to evade pollution standards on diesel-powered automobiles came to light.  / BLOOMBERG NEWS FILE PHOTO/JASON ALDEN
LAWSUITS FILED BY THREE STATE ATTORNEYS GENERAL allege that Martin Winterkorn, CEO of Volkswagen at the time, orchestrated an elaborate coverup when the company's attempts to evade pollution standards on diesel-powered automobiles came to light. / BLOOMBERG NEWS FILE PHOTO/JASON ALDEN

NEW YORK – Volkswagen AG is facing new lawsuits by New York and at least two other states over the environmental damage caused by devices designed to help the carmaker’s diesel vehicles cheat pollution-control tests.

The suits will include claims that former VW CEO Martin Winterkorn and other top company executives orchestrated an elaborate coverup when the scam came to light, N.Y. Attorney General Eric Schneiderman said Tuesday in a statement.

VW’s legal woes are far from over, as evidenced by the states’ suits and ongoing criminal probes, despite its $15.3 billion settlement with regulators and customers in June. The German company admitted in September to using so-called defeat devices to systematically rig environmental tests since 2009. The devices hid the fact that its diesel vehicles were emitting far more pollutants than allowed under U.S. law.

The allegations “reveal a culture of deeply-rooted corporate arrogance, combined with a conscious disregard for the rule of law or the protection of public health and the environment,” Schneiderman said. “Substantial penalties must be imposed on the Volkswagen companies, above and beyond the amount they have to pay to make American consumers whole.”

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The suit also will name VW’s Audi and Porsche units, as well as their U.S. divisions. According to the complaint, numerous VW employees destroyed incriminating evidence after they were tipped off by a senior in-house lawyer in Germany and then repeatedly failed to disclose to regulators the true reason for the discrepancies.

In total, there were six variations of the defeat device installed by VW and Audi starting in 2008, with Porsche implementing them later, according to Schneiderman’s office. VW used the devices even after the U.S. Environmental Protection Agency began looking into the software to determine its purpose, according to the complaint, which will be filed Tuesday in state court in Albany.

Maryland, Massachusetts

Md. Attorney General Brian Frosh said in a separate statement on Monday that he’s acting in coordination with New York and Massachusetts to file a parallel lawsuit against VW. A press conference is scheduled for Tuesday in Baltimore.

“Volkswagen, Audi and Porsche defrauded thousands of Massachusetts consumers, polluted our air, and damaged our environment and then, to make matters worse, plotted a massive cover-up to mislead environmental regulators,” the state’s attorney general, Maura Healey, said in a statement.

VW tried to cover up the problem through sham recalls that the company knew would not meet the required standards and then only confessed to the defeat devices “when they knew the regulators had the goods on them,” according to Schneiderman’s statement.

“These actions highlight how stubborn and unrepentant the culture at Volkswagen is that gave rise to the systematic cheating and deception described in this complaint,” New York says in the complaint.

VW agreed in June, as part of its efforts to address diesel-cheating complaints, to pay $603 million to address consumer and environmental claims by 44 U.S. states.

That didn’t resolve any of the claims for civil penalties that New York, Massachusetts and other states, as well as the EPA, may bring for the companies’ flagrant violations of state and federal environmental laws and regulations, nor did the settlements cover all of the vehicles equipped with emission-control defeat devices.

Maryland’s suit will hold the German company accountable “for the pollution they’ve caused and for violating Maryland’s environmental laws as a result of defrauding regulators by using ‘defeat devices’ for emissions control,” according to Frosh’s statement.

Auto-industry record

VW’s settlements in June set an auto-industry record and the total cost is expected to rise as criminal probes and suits on three continents roll ahead. The agreements didn’t bar states from suing individually over environmental damage from the added pollution.

The origin of the defeat devices may go back as far as 1999, when VW’s Audi unit encountered emissions-related engineering challenges while developing large diesel luxury cars for the European market, according to the New York suit. Audi’s engineers developed “pilot injection” technology to eliminate clattering sounds from the diesel engines, but then caused the engine to exceed emissions standards, according to the complaint.

“In 1999, Audi used a defeat device to solve the problem during testing,” New York said. Audi referred to the defeat device as “the acoustic function” when it deployed the software in diesel cars in Europe from 2004 to 2008, according to Schneiderman’s office.

VW also faces lawsuits by investors in the United States, as well as parallel suits, including consumer complaints, in Germany. Future expenses will also include perhaps hundreds of millions of dollars in fees for the lawyers who secured the deal for car owners. More penalties, along with further damage to VW’s reputation, may yet spring from criminal probes in the U.S., Germany and South Korea.

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