The Judicial Panel on Multidistrict Litigation (JPML) will hear arguments today in New Orleans concerning whether to consolidate approximately 350 class action lawsuits filed against the automaker Volkswagen.
It is the job of the JPML to determine whether civil actions pending in different federal districts involve one or more common question of fact such that the actions should be transferred to one federal district for coordinated pretrial proceedings. The purpose of centralization is to avoid duplicate discover and prevent inconsistent pretrial ruling as well as to move the lawsuits forward as expeditiously as possible.
A number of federal judges paused cases filed against Volkswagen in the clean-diesel fraud cases in anticipation of a decision by the JPML today. It is anticipated that the number of cases filed will increase substantially after the decision by the panel today and the litigation will move forward.
Volkswagen is in the middle of an emissions cheating scandal that caused the company’s market value to drop by 43 percent since Sept. 18, when the EPA gave notice that VW had rigged about 482,000 diesel cars in the U.S. to pass emissions tests. The notice triggered a global recall to refit the engines to meet clear-air standards. Although it is too early to estimate Volkswagen’s potential liability in litigation by clean-diesel car owners in the U.S., particularly as estimates change of the number of cars affected, the company has reserved $7.3 billion for costs related to the scandal.
Struggling to Meet Sales Goals Led to Emissions Cheating Scandal
Volkswagen has admitted that company managers struggled to meet U.S. sales targets and rigged the emissions of new car engines to sell more vehicles in the American market to meet the goals set by VW CEO Martin Winterkorn. The emissions-cheating software is believe to have been installed on the EA 189 engine sometime before it went into production in 2008, according to a Wall Street Journal report.
While extremely popular in Germany, diesel-engine vehicles made up only five percent of the U.S. car market in 2007, when Winterkorn left Audi to take over as chief executive officer at Volkswagen. In 2008, Winterkorn gave U.S. executives a goal of more than tripling annual sales to at least 800,000 vehicles over the next 10 years.