Auto Industry Warns of Disruption if Supreme Court Skips VW Case

Feb. 18, 2021, 12:05 AM

The U.S. Supreme Court should consider and reverse a “bombshell” appellate decision against Volkswagen Group of America Inc. “that threatens fundamentally to alter the regulatory environment faced by global automakers,” international auto industry associations told the court.

Uniform, or harmonized, vehicle regulations across countries “have played a vital part in promoting the widespread availability of motor vehicles throughout the world,” the groups said Tuesday in a friend of the court brief.

At issue is a recent decision by the U.S. Court of Appeals for the Ninth Circuit, allowing lawsuits by two counties against VW over post-sale software updates allegedly connected to diesel emissions cheating.

If that decision stands, automakers “would face staggering potential liability; consumers would face confusion, higher vehicle prices, and restricted vehicle choices; and the environment would suffer as manufacturers may avoid or delay improving their emission systems,” the International Organization of Motor Vehicle Manufacturers and two other groups said.

“Global manufacturers also fear that regulation by multiple state and local regulators could give rise to discrimination and arbitrary enforcement,” they said.

Court Review Called ‘Critical’

Another worldwide automakers’ group, the Alliance for Automotive Innovation, together with a U.S. dealers’ association, also asked the high court to take the case. The Ninth Circuit’s decision “will make it difficult (and in some cases, impossible) for the industry to implement essential updates that improve the performance and emissions of in-use vehicles,” they told the court Wednesday.

“This Court’s intervention is critical,” they said.

The Product Liability Advisory Council, which advocates on legal issues affecting manufacturers, and a group of U.S. part makers chimed in as well, saying the appellate decision “represents a significant departure from over 50 years of federal regulation of fleet-wide vehicle emissions.”

It “implicates enormous potential liability because of the sheer number of updates that manufacturers make to vehicles after they are sold,” they said.

Remedy Options Reduced

Four former officials with the Environmental Protection Agency, the California Air Resources Board, and the Department of Justice also urged the court to take the case. By taking away the environmental agencies’ exclusive authority, “the Ninth Circuit’s decision hampers, if not eliminates, EPA, CARB, and DOJ’s ability to remedy violations of emissions standards through settlements with vehicle manufacturers,” they said.

“Such settlements often involve a manufacturer’s agreement to perform remedial measures, fix affected vehicles without charge to consumers, and sometimes pay significant fines. Manufacturers enter into these settlements, which can exceed several billion dollars in total costs, in exchange for the certainty of a final resolution,” said the ex-officials, Jeffrey E. Holmstead, Ronald J. Tenpas, John B. Dunlap III, and Lynn Buhl.

Also on Tuesday, the justices asked the counties, which had waived their right to respond to VW’s petition for certiorari, to file a reply.

Sidley Austin LLP represents the IOMVM and two European industry groups.

Arnold & Porter Kaye Scholer LLP represents Auto Innovators and the dealers’ group.

Mayer Brown LLP represents PLAC and the part makers.

McGuireWoods LLP represents the former officials.

The case is Volkswagen Grp. of Am., Inc. v. Envtl. Prot. Comm’n of Hillsborough Cnty., U.S., No. 20-994, amicus briefs filed 2/16/21.

To contact the reporter on this story: Martina Barash in Washington at mbarash@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Peggy Aulino at maulino@bloomberglaw.com

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