Federal statutes and regulations on auto emission standards do not preclude New Jersey plaintiffs from pursuing consumer fraud and related claims against Volkswagen that stem from the carmaker's diesel emissions scandal, a state appeals court ruled on Monday.
A three-judge Appellate Division panel affirmed the decisions by two trial judges Union County Superior Court Judge Camille Kenny and Bergen County Superior Court Judge Charles Powers Jr. to deny Volkswagen's motions to dismiss on summary judgment.
The cases, brought by Volkswagen customers who opted out of recent settlements resulting from the scandal, were consolidated on the appeal.
Plaintiffs David Felix and Eduardo Deang were two of the millions of people worldwide who purchased Volkswagen and Audi cars that had been equipped with a "defeat device" software code. The code was designed to show that diesel cars passed emissions tests, but would interfere with emission controls during road use and lead to emissions that exceeded standards set by the federal Environmental Protection Agency.
The scandal has led the Volkswagen Group, which owns Audi, to agree to settle class actions brought by buyers in the U.S. In the first settlement, $14.7 billion has been set aside for 475,000 buyers of 2-liter diesel cars, and $1.2 billion was set aside for 75,000 buyers of 3-liter diesels.
In April, U.S. District Judge Sean Cox of the Eastern District of Michigan ordered Volkswagen to pay a $2.8 billion fine after the company pleaded guilty to conspiracy.
Both Felix and Deang opted out of the class-action settlements to pursue individual claims.
According to the decision, both Felix and Deang purchased cars from a dealership in Fair Lawn: Felix, a 2014 VW Passat equipped with a 2-liter diesel motor, and Deang, an Audi Q7 with a 3-liter diesel. Their suits allege violations of the state Consumer Fraud Act, the federal Magnuson-Moss Warranty Federal Trade Commission Improvement Act, and breach of warranty.
Volkswagen sought to have their lawsuits dismissed, contending the claims were pre-empted by the federal Clean Air Act.
The CAA, Volkswagen argued, bars states from enforcing federal emissions standards, in order to avoid a nationwide patchwork of statutes and regulations that would interfere with interstate commerce and unduly burden auto manufacturers.
Both Kenny and Powers denied the summary judgment motions, saying the CAA was not meant to pre-empt state consumer fraud claims since they did not involve enforcement of federal emissions regulations. Volkswagen appealed.