Former Volkswagen CEO, Martin Winterkorn, recently resigned from his position at the company.1 His resignation comes shortly after it was discovered the company was using a “defeat device” to fool emissions tests.2 The device allowed Volkswagen’s “clean diesel” vehicles to sense when they were being tested and to decrease the pollution they emitted in their exhaust in response.3
Volkswagen’s news follows a series of similar incidents with other large automakers such as General Motors (GM) and Toyota.4 In November of 2009, Toyota was forced to recall cars due to a problem of unintended acceleration caused by sticky gas pedals. (Id.) Recently, in February 2015, GM was forced to issue a recall of its vehicles due to faulty ignitions switches.5
The EPA issued a notice of violation of the Clean Air Act to Volkswagen.6 The Clean Air Act requires vehicle manufacturers to assure the EPA that their products meet federal emission standards designed to control pollution.7 By manufacturing vehicles equipped with defeat devices, Volkswagen has failed to meet these standards, and therefore cannot receive the necessary certification from the EPA to sell vehicles within the United States.8 The EPA plans to hold Volkswagen liable for both civil penalties and injunctive relief for these violations.9
The more complicated issues are raised by the potential criminal charges Volkswagen and company executives could face for conspiracy, fraud, and false statements.10 The Clean Air Act authorizes a criminal prosecution against individuals who knowingly make a false statement to the EPA or who knowingly tampered with a monitoring device used to track emissions.11. However, the Act also contains a loophole that provides car companies a carve-out from criminal liabilities for violations of the act.12. The Justice Department faces pressure to prosecute individual executives for corporate misbehavior as in the past, cases against GM and Toyota only resulted civil fines for the safety violations but no company executives were prosecuted.13 If prosecutors are able to find evidence that the company or its executives intentionally misled regulators or consumers, they may be able to hold Volkswagen liable for traditional criminal fraud.14 However, as most of Volkswagen’s company executives are located in Germany, it may still prove difficult to hold them liable for charges in the United States.15. In the past the Justice Department struck a deal with GM whereby they dismissed criminal charges as they were extremely satisfied with GM’s cooperation in the investigation.16, Volkswagen may also be able to avoid criminal charges if they demonstrate such cooperation, which would entail the company providing the Department with names of individuals who committed violations.17
Michael Biesecker & Eric Tucker, Vokswagen faces major legal trouble in emissions scandal, The Wash. Post (Sept. 28, 2015), http://www.washingtonpost.com/politics/federal_government/volkswagen-faces-major-legal-trouble-in-emissions-scandal/2015/09/28/43710510-65b7-11e5-bdb6-6861f4521205_story.html. ↩
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Paul R. La Monica, Volkswagen has plunged 50%. Will it ever recover?, CNN (Sept. 25, 2015), http://money.cnn.com/2015/09/24/investing/volkswagen-vw-emissions-scandal-stock/index.html?iid=EL. ↩
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Environmental Protection Agency, News Release on California Notify Volkswagen of Clean Air Act Violations (Sept. 18, 2015), http://yosemite.epa.gov/opa/admpress.nsf/6424ac1caa800aab85257359003f5337/dfc8e33b5ab162b985257ec40057813b!OpenDocument. ↩
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Biesecker & Tucker, supra note 1. ↩
Peter J. Henning, The Potential Criminal Consequences for Volkswagen, The N.Y. Times (Sept. 24, 2015), http://www.nytimes.com/2015/09/25/business/dealbook/thepotential-criminal-consequences-for-volkswagen.html?_r=0. ↩
Amy Harder & Aruna Viswanatha, Volkswagen May Not Face Environmental Criminal Charges, The Wall St. J. (Sept. 29, 2015), http://www.wsj.com/articles/volkswagen-may-not-face-environmental-criminal-charges-1443567204. ↩
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Biesecker & Tucker, supra note 1 ↩
Henning, supra note 12. ↩
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