Case MDL No Document 378 Filed 10/20/15 Page 1 of 8 BEFORE THE UNITED STATES JUDICIAL PANEL ON MULTIDISTRICT LITIGATION

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1 Case MDL No Document 378 Filed 10/20/15 Page 1 of 8 BEFORE THE UNITED STATES JUDICIAL PANEL ON MULTIDISTRICT LITIGATION ) In Re: Volkswagen Clean Diesel ) MDL NO Marketing, Sales Practices, and ) Products Liability Litigation ) ) UNITED STATES OF AMERICA S STATEMENT OF INTEREST AND INTERESTED PARTY RESPONSE TO MOTIONS TO TRANSFER Pursuant to 28 U.S.C and Rule 6.2(e) of the Rules of Procedure of the Judicial Panel of Multidistrict Litigation, interested party the United States of America ( United States ) respectfully submits this statement of interest regarding the Motions to Transfer for Coordination or Consolidation pending before the Multidistrict Litigation ( MDL ) Panel. The United States has an interest in this matter because, among other things, the United States, through the Administrator of the Environmental Protection Agency ( EPA ), is charged under the Clean Air Act ( CAA ) with setting emissions standards for light duty passenger vehicles and administering the CAA s certification program to ensure that those vehicles meet the emissions standards throughout their useful lives. That certification program fundamentally relies on the integrity of the emissions testing performed by, and the completeness and truthfulness of the certification made by, manufacturers in connection with their applications for Certificates of Conformity ( COCs ) that allow the vehicles to lawfully be imported and sold in the United States. The United States interest in the cases that are the subject of the pending motions stems from the misrepresentations made to EPA by Volkswagen, which led to EPA s issuance of the COCs that allowed Volkswagen to sell those vehicles in the United States. The United States 1

2 Case MDL No Document 378 Filed 10/20/15 Page 2 of 8 thus shares a common interest with the various plaintiffs in addressing the fundamental misrepresentations that rest at the heart of these matters. Moreover, EPA will be intimately involved in evaluating the efficacy of any fixes to the vehicles in question proposed by Volkswagen. The United States therefore respectfully submits its Response to the pending motions to communicate its view that, given the commonality of the core issues, the pending matters should be coordinated or consolidated to the extent provided by Section 1407, and that the matters should be heard in the Eastern District of Michigan. I. BACKGROUND Congress purpose in creating the CAA was, in part, to protect and enhance the quality of the Nation s air resources so as to promote the public health and welfare, and to initiate and accelerate a national research and development program to achieve the prevention and control of air pollution. 42 U.S.C. 7401(b)(1)-(2). The CAA and its implementing regulations therefore aim to protect human health and the environment by reducing emissions of nitrogen oxides ( NOx ) and other pollutants from mobile sources of air pollution. The EPA administers a certification program to ensure that every vehicle introduced into United States commerce satisfies applicable emissions standards. Under this program, the EPA issues COCs based on information provided and certified as complete and accurate by vehicle manufacturers through a comprehensive application process. The California Air Resources Board ( CARB ) implements a similar certification program with respect to vehicles intended for sale in California. On September 18, 2015, EPA issued a Notice of Violation ( NOV ) to Volkswagen AG, Audi AG, and Volkswagen Group of America (collectively, VW ), after determining that VW manufactured and installed defeat devices in certain model year 2009 through 2015 diesel light- 2

3 Case MDL No Document 378 Filed 10/20/15 Page 3 of 8 duty vehicles equipped with 2.0 liter engines. The NOV stated that software installed by VW on the affected vehicles reduced the effectiveness of the emission control system during normal vehicle operations as compared with emissions produced during emissions testing and that the software bypassed, defeated, or rendered inoperative elements of the vehicles emission control system that exists to comply with CAA emissions standards. Due to the existence of the defeat devices, the NOV stated that the vehicles do not conform in all material respects to the vehicle specifications described in VW s applications for COCs and are not covered by the COCs that were issued. Under the CAA, the sale, offering for sale, or the introduction, or delivery for introduction, into commerce, or the importation into the United States (or the causing of any of the foregoing), of any new motor vehicle not covered by a COC are prohibited. 42 U.S.C. 7522(a)(1). The NOV also stated that the manufacturing, selling, offering for sale, or installing a defeat device (or the causing thereof) are prohibited acts under the CAA. 42 U.S.C. 7522(a)(3)(B). EPA continues to consider whether to request commencement of judicial proceedings in connection with the violations alleged in its NOV. EPA is also statutorily authorized to order a recall and to evaluate Volkswagen s proposals for a recall. EPA also continues to evaluate certification of new model year 2016 vehicles. Given that EPA was a target of the central misrepresentations, its preeminent role in the certification of these vehicles, and its evaluation of Volkswagen s proposals to fix the non-conforming vehicles which may have implications for the amount of lifetime excess emissions from, and the performance of, the vehicles, the United States has a substantial interest in this matter. 1 1 In addition to the violations alleged in the NOV of CAA standards designed to protect human health and the environment, the deception perpetrated by VW on many fronts in connection with the affected vehicles may have violated other federal laws as well. The United States may well 3

4 Case MDL No Document 378 Filed 10/20/15 Page 4 of 8 II. ARGUMENT A. Pre-Trial Coordination or Consolidation is Appropriate Because it Will Serve The Interests of Consistency, Economy, and Convenience. The United States respectfully submits that the pending federal actions arising out the sale of VW s uncertified clean diesel vehicles should be coordinated or consolidated to the extent permitted by 28 U.S.C Coordinated or consolidated pretrial proceedings are appropriate when: (1) the cases involve one or more common questions of fact; (2) transfer would serve the convenience of parties and witnesses; and (3) transfer will promote the just and efficient conduct of the actions. 28 U.S.C. 1407(a). The pending products liability, fraud and false advertising cases indisputably arise out of the same conduct, share common questions of fact, and will involve the same discovery on a wide range of issues, including VW s decision to utilize defeat devices, the development and implementation of the defeat devices, the technical specifications of the defeat devices, and the misrepresentations about the subject vehicles attributes made to consumers and to regulators. To permit the actions to proceed separately in separate jurisdictions would result in unnecessary duplication of effort and expenditure of resources by the parties and the judiciary. Coordination or consolidation of pretrial proceedings will serve the interests of consistency, economy, and convenience. become involved in litigation with VW regarding this matter to vindicate important environmental and other federal interests that are distinct from the private party claims concerning product liability that are the subject of the pending motions. In that event, the United States reserves the right to address whether it is appropriate to transfer any such litigation to the MDL. 4

5 Case MDL No Document 378 Filed 10/20/15 Page 5 of 8 B. Coordination or Consolidation of These Matters in the Eastern District of Michigan Would Best Serve the Interests of Justice, Convenience, and Efficiency. The Eastern District of Michigan is the most appropriate forum for transfer because it is geographically closest to the conduct that gave rise to the pending complaints. EPA s Office of Transportation and Air Quality, National Vehicle and Fuel Emissions Laboratory ( NVFEL ), located in Ann Arbor, Michigan, administers EPA s vehicle certification program. That office reviews COC applications for completeness and regularly interacts with applicants in the course of processing applications. EPA must evaluate and approve any fixes to the non-conforming vehicles that VW may propose or may order a recall. This evaluation will be done primarily out of EPA s office in Ann Arbor. Likewise, VW maintains an environmental and engineering office in Auburn Hills, Michigan, which is responsible for submitting VW s COC applications to EPA. Thus, VW s misrepresentations to, and deception of, EPA in connection with the applications for COCs authorizing the sale of the affected vehicles in the United States occurred in the Eastern District of Michigan. Given this and given EPA NVFEL s significant involvement and regulatory control over the vehicle certification program, this district has a greater nexus to the principal issues involved in this litigation than any other federal district. In re Swine Flu Immunization Products Liability Litig., 446 F. Supp. 244, 247 (J.P.M.L. 1978) (transferring cases to the District of the District of Columbia because of the Department of Health, Education and Welfare s administrative control of the swine flu vaccination program). See also, e.g., In re Air Crash Disaster near Chicago, 476 F. Supp. 445, 448 (J.P.M.L. 1979) (litigation transferred to the district closest to crash); In re Helicopter Crash near Meadview, Arizona, 330 F. Supp. 2d 1366 (J.P.M.L. 2004) (same). The Eastern District of Michigan also serves the convenience of the parties. Significant discovery is destined to occur in the district. As noted, EPA s NVFEL office and VW s office 5

6 Case MDL No Document 378 Filed 10/20/15 Page 6 of 8 that is responsible for submitting COC applications are both located here. Many fact witnesses likely reside or work in the district, and a significant number of relevant documents are likely to be located at EPA s and VW s offices here. Further, the Eastern District of Michigan s location in the middle of the country makes it accessible to owners of affected VW vehicles throughout the country, and Detroit houses a major airport, which will make travel to Germany convenient and closer than, for example, the California districts. In re: Packaged Ice Antitrust Litig., 560 F. Supp. 1359, 1360 (J.P.M.L. 2008) (EDMI offers geographically central location); In re the Upjohn Co. Antibiotic Cleocin Products Liab. Litig., 450 F. Supp. 1168, 1171 (J.P.M.L. 1978) (same). The Eastern District of Michigan docket is also underrepresented in MDL proceedings, with only three MDLs pending before its 24 District Court Judges (as of October 15, 2015). MDL Statistics Report Distribution of Pending MDL Dockets by District, UNITED STATES JUDICIAL PANEL ON MULTIDISTRICT LITIGATION, (last accessed Oct. 15, 2015). See In re: Packaged Ice Antitrust Litig., 560 F. Supp. 1359, 1360 (JPML 2008) (EDMI has favorable caseload conditions); see also In re Phenylpropanolamine (PPA) Products Liab. Litig., 173 F. Supp. 2d 1377, (J.P.M.L. 2001) (district chosen in part because it was not currently overtaxed with other multidistrict dockets ); In re Listerine Total Care Mouthwash Mktg. and Sales Practices Litig., 764 F. Supp. 2d 1354, 1355 (J.P.M.L. 2011) (more open MDL docket supports centralization in a particular district). Moreover, this judicial district has ample experience in MDL litigation, including various MDLs concerning automotive industry-related litigation in particular. See, e.g., In Re Automotive Parts Wire Harness System Antitrust Litig., 867 F. Supp. 2d 1349, 1350 (J.P.M.L. 2012); In re: Ford Motor Co. Speed Control Deactivation 6

7 Case MDL No Document 378 Filed 10/20/15 Page 7 of 8 Switch Products Liab. Litig., 543 F. Supp. 2d 1373, (J.P.M.L. 2008); In re Gen. Motors Corp. Secs. & Derivative Litig., 429 F. Supp. 2d 1368, 1369 (J.P.M.L. 2006). Thus, in short, the Eastern District of Michigan has both the capacity and expertise to handle this litigation. III. CONCLUSION For the reasons stated above, the pending actions arising from the improper sale of the subject VW clean diesel vehicles should be coordinated or consolidated to the extent permitted by 28 U.S.C. 1407, and the matters should be heard in the Eastern District of Michigan. Respectfully submitted, Dated: October 20, 2015 JOHN C. CRUDEN Assistant Attorney General Environment and Natural Resources Division United States Department of Justice /s/ Joshua Van Eaton BETHANY ENGEL JOSHUA VAN EATON DANICA ANDERSON GLASER Trial Attorneys Environmental Enforcement Section Environment and Natural Resources Division United States Department of Justice 601 D Street N.W. Washington, D.C (Ph) ; ; (Fax) bethany.engel@usdoj.gov josh.van.eaton@usdoj.gov danica.glaser@usdoj.gov 7

8 Case MDL No Document 378 Filed 10/20/15 Page 8 of 8 BEFORE THE UNITED STATES JUDICIAL PANEL ON MULTIDISTRICT LITIGATION ) In Re: Volkswagen Clean Diesel ) MDL NO Marketing, Sales Practices, and ) Products Liability Litigation ) ) Proof of Service In compliance with Rule 4.1(a) of the Rules of Procedure for the United States Judicial Panel on Multidistrict Litigation, I hereby certify that copies of the foregoing Statement of Interest and Interested Party Response and Proof of Service were served on all interested parties electronically via the Panel s CM/ECF system on October 20, 2015: Respectfully Submitted, Dated: October 20, 2015 /s/ Joshua Van Eaton Joshua Van Eaton Trial Attorney Environment and Natural Resources Division United States Department of Justice P.O. Box 7611 Washington, DC Telephone: (202) Facsimile: (202) josh.van.eaton@usdoj.gov Attorney for Interested Party, the United States 8