Volkswagen, one of the biggest automakers in the world, was sued by the United States Justice Department on Monday over the sale of 580,000 cars that had illegal devices installed to impair emission control, causing harmful air pollution. These devices sense when a vehicle is being tested and lower engine performance to reduce emission. The complaint was filed in a Detroit court by the U.S. Environmental Protection Agency, and it follows a pledge made in September by the Justice Department to prosecute executives responsible for corporate wrongdoings. The federal prosecutors, however, did not single out any Volkswagen executive in the civil complaint.
Volkswagen, for its part, made a bold move in September by admitting that it had installed software in about 11 million of its diesel cars worldwide to cheat on emission tests. Volkswagen cars were found to emit 40 times the legal limit of nitrogen oxide.
The scandal went a long way in tarnishing the much-respected Volkswagen brand name, and the Volkswagen saga has become one of the largest corporate scandals in the automotive industry, leading to the resignation of its CEO, Martin Winterkorn, and the suspension of nine of its top employees. The auto giant has also begun efforts to provide fixes for said cars amid consumer outrage and threats of litigation.
The lawsuit could see Volkswagen pay a hefty fine of up to $37,500 per vehicle, totaling about $18 billion for all the cars in the United States alone. This amount exceeds Volkswagen’s profit for the year 2014.
Reports suggest that the government might not demand the whole amount(although a considerable amount is expected to paid by Volkswagen).The threat of the fine is believed to be a way of putting pressure on the company to provide prompt and comprehensive solutions for the whole mess. The government has regularly accused Volkswagen of being uncooperative, even with regulators.
Volks-wagen, in a statement, assured stakeholders that it would work cooperatively with the EPA to develop remedies for bringing its diesel vehicles to comply fully with set regulations as soon as possible. The company also added that it was developing an independent, fair, and swift process to resolve private customer complaints relating to the issue.
“With today’s filing, we take an important step to protect public health by seeking to hold Volkswagen accountable for any unlawful air pollution, setting us on a path to resolution,” stated Cynthia Giles, assistant administrator for the EPA’s Office of Enforcement and Compliance Assurance. She also added that discussions with the company had not produced an acceptable way forward so far and that the negotiations would continue in parallel with the federal court proceedings.
If Volks-wagen is indeed forced to pay the amount, it will be the largest fine ever paid by a vehicle maker, the closest amount being the $1.2 billion paid by Toyota in the criminal settlement regarding the sudden acceleration of some of its vehicles.
The Department of Justice will now seek to transfer its case to the Federal District Court in California to join the multi district litigation filed by hundreds of Volkswagen owners and California municipal districts.