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Claytor v. Volkswagen Group of America, Inc.

United States District Court, W.D. Virginia, Roanoke Division

May 31, 2016

WILLARD CLAYTOR, et al., Plaintiffs,
v.
VOLKSWAGEN GROUP OF AMERICA, INC., Defendant. WILLARD CLAYTOR, et al., on behalf of themselves and all other Virginia citizens similarly situated, Plaintiffs,
v.
VOLKSWAGEN GROUP OF AMERICA, INC. Defendant.

          MEMORANDUM OPINION

          Hon. Glen E. Conrad Chief United States District Judge

         Plaintiffs Willard Claytor, Tammy Woods, Lisa Sleeper, Joshua Davis, Michael DiCarlo, William Albert, and Douglas Lindamood filed these related actions against Volkswagen Group of America, Inc. ("Volkswagen") in the Circuit Court for the County of Roanoke, seeking equitable relief and monetary damages for alleged violations of Virginia statutory and common law. On April 26, 2016, Volkswagen removed the cases to this court, asserting that the court has subject matter jurisdiction over the cases because the plaintiffs' claims for equitable relief implicate a significant federal issue. The plaintiffs have moved to remand the cases to state court. Volkswagen opposes the plaintiffs' motions and has moved to stay further proceedings pending a transfer decision by the Judicial Panel on Multi district Litigation ("MDL Panel"). For the reasons set forth below, the plaintiffs' motion to remand will be granted and Volkswagen's motion to stay will be denied as moot.

         Background

         The following facts are taken from the original complaints filed by the plaintiffs. See Pinney v. Nokia. Inc.. 402 F.3d 430, 443 (4th Cir. 2005) ("Because amendment occurred after removal, we look at the original complaints rather than the amended complaints in determining whether removal was proper.") (citing Pullman Co. v. Jenkins. 305 U.S. 534, 537 (1939)).

         On September 18, 2015, the Environmental Protection Agency ("EPA") issued a Notice of Violation to Volkswagen for alleged violations of the federal Clean Air Act ("CAA"). The EPA determined that Volkswagen had installed software-based "defeat devices" in certain model year 2009. through 2015 diesel vehicles, which "bypass, defeat, or render inoperative elements of the vehicles' emission control systems that exist to comply with CAA . . . emission standards." No. 7:16CV00197 Compl. ¶ 20; No. 7:16CV00198 Compl. ¶ 22. The software senses when the vehicles are being tested for compliance with emission standards, and produces compliant emission results during the testing. At all other times that the vehicles are being operated, the software reduces the effectiveness of the emission control systems. As a result, the vehicles emit levels of pollutants up to forty times above EPA-compliant levels during normal operation.

         In a press release issued on September 18, 2015, the EPA advised car owners that "although these vehicles have emissions exceeding standards, these violations do not present a safety hazard and the cars remain legal to drive and resell." No. 7:16CV00197 Compl. ¶ 26; No. 7:16CV00198 Compl. ¶ 28. The EPA also indicated that "[i]t is incumbent upon Volkswagen to initiate the process that will fix the cars' emissions systems, " and that "[o]wners of cars of these models do not need to take any action at this time." Id.

         The EPA's Notice of Violation listed the Volkswagen models equipped with the software-based defeat devices. Each of the plaintiffs owns one of the models identified in the Notice. The plaintiffs allege that Volkswagen knew about the defeat devices, and yet marketed and sold their vehicles as "clean diesel" models. The plaintiffs allege that they relied upon Volkswagen's false representations regarding the vehicles' environmentally friendly status in electing to purchase their vehicles. The plaintiffs further allege that the Volkswagen vehicles that they purchased cannot be legally operated on the roads of Virginia, and that they are being exposed to criminal charges and traffic fines as a result of Volkswagen's fraudulent actions.

         In April of 2016, the plaintiffs filed two complaints against Volkswagen in the Circuit Court for the County of Roanoke. The first complaint sought individual relief and the second sought relief for all other similarly situated citizens of Virginia. Both complaints include a claim for permanent injunctive relief in the form of an order awarding the plaintiffs immediate rescission of their vehicles' sales contracts, and a motion for temporary injunctive relief in the form of an order requiring Volkswagen to provide loaner or rental vehicles at no expense. The first complaint also includes claims for damages under the Virginia Motor Vehicle Warranty Enforcement Act and the Virginia Consumer Protection Act, as well as a claim for punitive damages for Volkswagen's alleged fraud.

         The plaintiffs' claims for equitable relief, particularly their requests for a temporary injunction, are premised on the assertion that their Volkswagen vehicles are illegal to drive in Virginia under a number of state statutory and regulatory provisions. The statute on which the plaintiffs primarily rely, Virginia Code § 46.2-1048, provides in pertinent part as follows:

No motor vehicle registered in the Commonwealth and manufactured for the model year 1973 or for subsequent model years shall be operated on the highways in the Commonwealth unless it is equipped with an air pollution control system, device, or combination of such systems or devices installed in accordance with federal laws and regulations.
It shall be unlawful for any person to operate a motor vehicle, as herein described, on the highways in the Commonwealth with its pollution control system or device removed or otherwise rendered inoperable.

Va. Code § 46.2-1048.

         On April 26, 2016, Volkswagen removed the plaintiffs' Roanoke County suits to this court. Thereafter, the plaintiffs moved to remand the cases to state court, asserting a lack of federal jurisdiction. The plaintiffs also filed amended complaints in both cases.

         In the meantime, Volkswagen moved to stay the cases pending transfer to the multi district litigation currently pending in the United States District Court for the Northern District of California. See In re: Volkswagen "Clean Diesel Marketing, " Sales Practices, and Products Liability Litigation, MDL No. 2672 (N.D. Cal. 2015). Volkswagen's motions were prompted by the issuance of conditional transfer ...


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