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VW challenges US suit in emissions scandal

business Updated: May 27, 2016 07:57 IST

NEW YORK: Volkswagen has set up a fight with the Justice Department over its diesel emissions scandal, challenging the US authorities’ jurisdiction and contending that the accusations against it do not justify the penalties.

The Justice Department sued Volkswagen in January, saying that the company had installed illegal devices in nearly 600,000 vehicles sold in the United States that impaired emissions controls, increasing harmful air pollution.

Volkswagen admitted in September that it had installed software to cheat on emissions tests in 11 million diesel vehicles worldwide.

But in a response to the Justice Department, filed on Tuesday in San Francisco, the German automaker appeared to back away from its mea culpa, saying that the facts of the case remained unclear and that it was still conducting an internal investigation.

It also challenged the court’s jurisdiction over Volkswagen, and over its subsidiary Audi, saying that cars in the United States were sold through local businesses and not the parent companies. It said that the statute of limitations voided any conduct at Volkswagen before 2010.

Overall, the Justice Department “fails to allege facts sufficient” for any penalties, Volkswagen lawyers said.

The German automaker’s hard-line stance contrasts with that taken by General Motors over its failure to disclose a deadly ignition-switch defect. The Justice Department levied a smaller-than-expected $900 million penalty a year and a half after the defect was revealed, citing the automaker’s cooperation, and held off from bringing criminal charges.

In January, Reuters reported that the Justice Department had sued Volkswagen for up to $48 billion. The report also added that the fine may be far less, citing that Toyota was initially fined $58 billion, but the Japanese automaker had to pay up only $34 million.

Prosecutors have also stopped short of criminal charges against Volkswagen, though the Justice Department has said that the civil suit did not preclude future action, including against specific executives. Prosecutors have said Volkswagen “impeded and obstructed” regulators’ inquiries and provided “misleading information.”

Justice Department officials declined to immediately comment on Volkswagen’s response.

On Tuesday, the federal district judge overseeing the case, Charles Breyer, said that the automaker had made “substantial progress” toward reaching a settlement next month with car owners and the U.S. government.

Breyer also repeated that the settlement would include substantial compensation for owners of Volkswagen and Audi cars in the United States.

The German auto giant had said it has set aside about $8 billion for legal costs worldwide, though they could be higher.