VW dealer defies council, sues factory for damages from diesel scandal – Automotive News

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Automotive News
April 6, 2016 – 3:00 pm ET — UPDATED: 4/6/16 4:04 pm ET – adds background

WASHINGTON — 3 Volkswagen dealerships owned by the Illinois-based Napleton Automotive Group sued the automaker Wednesday, defying a VW dealer council initiative to dissuade retailers from using courts to tackle grievances caused by the automaker’s diesel-emissions crisis.

The 111-page lawsuit seeks class-action status and accuses VW of defrauding retailers, according to a statement from Hagens Berman Sobol Shapiro, the Seattle-based law firm representing the Napleton dealerships.

Hagens Berman additionally represents thousands of VW diesel owners that have actually sued the automaker adhering to the 6-month-old scandal.

Napleton’s match accuses VW of engaging in a “criminal racketeering enterprise” along with its diesel emissions violations and says the business violated state and federal laws created to protect dealer franchisees.

The match alleges VW “carried out a systematic, illegal pricing and allocation scheme that beloved some dealers over others and illegally channeled business” to Volkswagen Credit, its captive finance arm, according to the statement.

Second suit

The lawsuit marks the second time in four months that an automaker has actually been sued by Napleton dealerships.

In January, two Napleton-owned Fiat Chrysler dealerships sued FCA US, alleging among others points that the automaker incentivized certain dealers to report false sales. The January lawsuit was never ever served on FCA and was amended in March to include 5 others Napleton-owned dealerships as plaintiffs.

In late March, FCA called the Napleton match “baseless” and an “attempt to smear” FCA in seeking to formally dismiss the case.

In 2014, Napleton additionally filed match versus Jaguar Land Rover after the British automaker exercised its right of very first refusal to block the sale of 5 of its dealerships on Long Island to Napleton.

Rigged vehicles

Volkswagen has actually accepted to rigging some 11 million vehicles global along with software that masks excess emissions in government lab tests. That entails regarding 482,000 VWs powered by 2.0-liter diesels in the U.S.

Also stated in Napleton’s match was its acquisition of a VW dealership in Urbana, Ill., a deal completed simply 3 days prior to the EPA’s Sept. 18 announcement of VW’s emissions violations.

Steve Berman, the attorney representing Napleton’s stores, called the deal a “sickening display of VW’s disregard for its dealer franchisees,” saying in a statement that VW “withheld the naked truth and pushed the sale through, understanding well that Ed Napleton was purchasing a dealership that would certainly almost as soon as possible plummet in value.”

The match marks a boiling over of the long-simmering tensions between VW and its U.S. retailers, that have actually grown increasingly frustrated by exactly what they say is a lack of updates from the factory on finding a fix for the problem. The lawsuit additionally adds a Brand-new layer of litigation facing the automaker, on top of the hundreds of cases filed by consumers, states and the federal government over the emissions violations.

During the National Vehicle Dealers Association convention in Las Vegas last weekend, VW’s dealer council formed a six-member committee to negotiate a settlement for dealers whose businesses have actually been damaged by the crisis. That initiative was created in portion to reduce the risk of a large lot of dealers turning to the courts to recover damages.

Dealers and attorneys said the filing of lawsuits would certainly hinge upon whether VW could convince them that the business had a road map for exactly how it planned to rebuild its U.S. company and exactly how it would certainly make customers and dealers whole.

No such plans were disclosed, according to dealers that attended the meeting.

“exactly what is truly discouraging and led me to file this lawsuit is that Volkswagen has actually wholly failed to respond to dealer comes to in a substantive manner,” Ed Napleton, president of the Napleton Automotive Group, said in a statement. “It has actually talked for months regarding multiple plans, however done nil and left us dealers in the red, and in limbo.”

Alan Brown, chairman of VW’s dealer council, and Jason Kuhn, head of the Dealer Investment Committee formed for the settlement talks, said the lawsuit does not reflect the wishes of VW dealers broadly, an “overwhelming majority” of whom believe it is “vital” to settle their comes to along with VW outside court. Brown is additionally general manger of Lewisville Volkswagen near Dallas, and Kuhn is chairman of Tampa, Fla.-based Kuhn Automotive Group.

“It is not unexpected that a couple of outlier dealers would certainly file a lawsuit versus VW. Some dealers view litigation as an end-game strategy and nil more,” Brown and Kuhn said in a joint statement. “Filing a lawsuit could give a headline or two, however it is substantially longer, much more contentious and a more costly road to a settlement.”

VW is reviewing the complaint, according to a spokeswoman.

“The business is committed to resolving the U.S. regulatory investigation in to the diesel emissions matter as soon as feasible and to implementing a solution for afflicted vehicles, as we job to earn spine the trust of our customers and dealers and the public,” the VW spokeswoman said in a statement.

You can easily reach Ryan Beene at rbeene@crain.com. — Follow Ryan on Twitter