Is Volkswagen Liable for Treble Damages Under Tennessee’s Consumer Protection Act?

Chattanooga is home to Volkswagen’s only North American manufacturing plant. The recent revelations of manipulation of the emission control software on their diesel automobiles are shocking.

According to the EPA, many Volkswagen and Audi vehicles equipped with 4-cylinder diesel engines were programmed to detect when they were undergoing emissions tests. However, during normal operation the software deactivated some of the onboard pollution control equipment. This process apparently helped improve performance but resulted in the vehicles emitting up to 40 times the allowable levels of additional particulates and smog-causing oxides of nitrogen.

“In a statement published by the car maker . . . Chief Executive Officer Martin Winterkorn said, “I personally am deeply sorry that we have broken the trust of our customers.” (from a CNBC report, 9/21/15)

“Volkswagen has ordered an external investigation of this matter,” he said.  German authorities are set to probe Volkswagen for similar emissions manipulation in Germany, according to Dow Jones.

Volkswagen must now work closely with U.S. authorities, the German Transport Ministry spokesperson told newswires, adding that they expect the company to deliver reliable information.

Meanwhile, Vice Chancellor and Economy Minister Sigmar Gabriel told Reuters he was concerned about the “excellent” reputation of German carmakers, saying Volkswagen’s emissions manipulation was a “bad incident,” according to Reuters. Gabriel also called on the company to fully clear up the egregious claims.

VW could face civil penalties of $37,500 for each vehicle not in compliance with federal clean air rules. Some 482,000 four-cylinder VW and Audi diesel cars sold since 2008 are involved in the allegations.  The U.S. Environmental Protection Agency (EPA) said on Friday the software deceived regulators measuring toxic emissions, adding that Volkswagen could face fines of up to $18 billion as a result.”

Volkswagen Could Face Lawsuits by its Customers:

Is Volkswagen guilty of deliberately misleading its customers?  Would they have bought diesel automobiles knowing they would be spewing out “40 times the allowable levels of additional particulates and smog-causing oxides of nitrogen”?

Although Volkswagen will have to recall all those cars, and fix the problem, the vehicles may not perform as well with the emissions controls working correctly.  How will that affect the resale value of the vehicles?

Is Volkswagen guilty of “unfair or deceptive acts”?

The Tennessee Consumer Protection Act is found at T.C.A. § 47-18-101 et seq.  

T.C.A. § 47-18-102 provides that:

“This part shall be liberally construed to promote the following policies, which includes:

(2)  To protect consumers and legitimate business enterprises from those who engage in unfair or deceptive acts or practices in the conduct of any trade or commerce in part or wholly within this state.”

T.C.A. § 47-18-104 makes the following acts, among others, unlawful and in violation of the law:

(2)  Causing likelihood of confusion or of misunderstanding as to the source, sponsorship, approval or certification of goods or services.

(3)  Causing likelihood of confusion or misunderstanding as to affiliation, connection or association with, or certification by, another. . . .

(5)  Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits or quantities that they do not have . .

(7)  Representing that goods or services are of a particular standard, quality or grade, or that goods are of a particular style or model, if they are of another . . .

(21)  Using statements or illustrations in any advertisement which create a false impression of the grade, quality, quantity, make, value, age, size, color, usability or origin of the goods or services offered, or which may otherwise misrepresent the goods or services in such a manner that later, on disclosure of the true facts, there is a likelihood that the buyer may be switched from the advertised goods or services to other goods or services;

Lawsuits can be brought against the offending company by persons harmed by such practices, T.C.A. § 47-18-109:

“(a) (1)  Any person who suffers an ascertainable loss of money or property, real, personal, or mixed, or any other article, commodity, or thing of value wherever situated, as a result of the use or employment by another person of an unfair or deceptive act or practice described in § 47-18-104(b) and declared to be unlawful by this part, may bring an action individually to recover actual damages.”

Treble damages can be awarded under subsection (a)(3):

“If the court finds that the use or employment of the unfair or deceptive act or practice was a willful or knowing violation of this part, the court may award three (3) times the actual damages sustained and may provide such other relief as it considers necessary and proper, except that the court may not award exemplary or punitive damages for the same unfair or deceptive practice.”

The damages may be substantial, if the resale value of a Volkswagen or Audi vehicle is diminished, even after the recall repair work is performed.

Attorneys’ fees may be awarded under subsection (e)(1): 

“Upon a finding by the court that a provision of this part has been violated, the court may award to the person bringing such action reasonable attorney’s fees and costs.”


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