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Young Law Firm, Beasley Allen, and Gardner Brewer File Suit Against Volkswagen

Rick Tschantz

Rick Tschantz is General Counsel for the Environmental Protection Commission of Hillsborough County.

On Wednesday the Environmental Protection Commission of Hillsborough County (EPC) unanimously approved the initiation of legal proceedings against German automaker Volkswagen for violating EPC rules prohibiting the manufacture, installation, sale or advertisement for sale of vehicles with defective emission control systems. VW has admitted to designing, manufacturing and installing “defeat devices” which work to fool emission testing protocols, making it appear to regulators that certain diesel powered Volkswagens meet emissions standards when in fact they do not.

Affected Vehicles

The vehicles at issue also include diesel models manufactured by Volkswagen subsidiaries Audi and Porsche. Well over 1,000 of the following defective vehicles are believed to be operating in Hillsborough County (list not necessarily exhaustive):

Volkswagen Beetle, Beetle Convertible, Golf, Golf SportWagen, Jetta, Jetta SportWagen, Passat, Touareg

Audi A3, A6 Quattro, A7 Quattro, A8, A8L, Q5

Porsche Cayenne

These VW, Audi and Porsche diesel vehicles emit up to 40 times the permitted levels of nitrogen oxide (NOx) when operating in real world conditions, outside of the testing environment. Volkswagen programmed the vehicles to reduce emissions when operating on a stationary dynamometer. The vehicle’s software could detect that the car was running on a dynamometer, and as such, performance was automatically dialed back by the car’s computer, allowing it to meet emissions standards. Once the car was back on the open road, the vehicle’s computer switched to its higher performance, higher polluting – and thus illegal – mode.

Volkswagen’s Deception

The deception reached the highest levels of the world’s largest automaker, Volkswagen, AG. Volkswagen’s CEO Martin Winterkorn, who was forced to resign after the scandal was revealed, said: “I personally am deeply sorry that we have broken the trust of our customers and the public.” Volkswagen Group of America CEO Michael Horn said, “Our company was dishonest with the EPA … and with all of you.” The German newspaper Der Spiegel has reported that at least 30 management level people in VW knew about the deceit for years, although the company continues to deny that accusation.

Hillsborough County – A legacy of protecting the environment

Les Miller

Commissioner Lesley “Les” Miller, Jr. serves as Chairman of the EPC Commission.

Many newcomers to our area may not realize that the region was once one of the most polluted in the state. Raw sewage was dumped directly into Tampa Bay for decades, and Hillsborough County was one of a handful of EPA “non-attainment” areas for many years, meaning we failed to meet even minimum standards for air quality.

Through the leadership of former Speaker of the Florida House of Representatives, Terrell Sessums, the Hillsborough County Environmental Protection Commission was born in 1967 to address these and other environmental concerns.

Upon the enactment of the Clean Air Act Amendments of 1990, Congress established a link between transportation funding and an area’s ozone status. In response to this federal action, the Hillsborough County EPC, in conjunction with the State Department of Environmental Protection, implemented a plan to reduce transportation’s impact on the Tampa Bay area’s air quality.

Initial provisions of this plan subjected residents of Hillsborough County to mandatory vehicle emissions testing. This testing regime revealed that a significant number of vehicles in Hillsborough County had been modified so that they did not meet emission standards. In fact, it is said that at one time Hillsborough County had the highest incidence of emissions control systems tampering in the nation.

To combat this problem, the following regulations were implemented.

Rules of the Hillsborough County Environmental Protection Commission

Hillsborough Map II

Hillsborough County, which includes the City of Tampa and Tampa Bay, is one of the largest metropolitan areas in the United States.

According to the Rules of the Environmental Protection Commission of Hillsborough County, 1-8.05:

“No person shall manufacture, install, sell or advertise for sale, devices to defeat or render inoperable any component of a motor vehicle’s emission control system.”

As described above, this is exactly what Volkswagen has admitted to doing – “manufacturing devices to defeat a motor vehicle’s emission control system.”

The Enabling Act whereby the Florida Legislature established the Hillsborough County EPC and delegated the authority to promulgate such rules as the above reads in Section 17(2):

“Violation is punishable by a civil penalty of not more than $5,000 for the first offense and of not more than $5,000 for each offense thereafter. Each day during any portion of which such violation occurs constitutes a separate offense.”

Section 18 of the Enabling Act states:

“The commission may institute a civil action in a court of competent jurisdiction to impose and to recover a civil penalty for each violation in an amount of not more than $5,000 per offense …. Each day during any portion of which such violation occurs constitutes a separate offense.”

Volkswagen, by its own admission, has intentionally violated these rules on a massive scale, unlike anything ever seen prior. As such, the Hillsborough County Environmental Protection Commission, as well as the citizens of this county, expect full remuneration from VW, consistent with these rules.

Legal Team

Dee Miles

Dee Miles is a member of the Plaintiff’s Steering Committee, In re: Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation.

The Hillsborough County Environmental Protection Commission is represented by a three firm legal team lead by Dee Miles with Beasley Allen Crow Methvin Portis & Miles PC of Montgomery, Alabama, Tom Young with The Law Office of Thomas L. Young, P.A. in Tampa, and Steve and Truett Gardner with the Tampa firm of Gardner Brewer Martinez-Monfort.

Miles serves as a member of the In re: Volkswagen “Clean Diesel” MDL 2672 Plaintiff’s Steering Committee (PSC) appointed by Judge Charles Breyer in San Francisco. MDL 2672 is the “multi-district litigation” consolidation of nearly 500 lawsuits related to Volkswagen’s deceit. The twenty-two member PSC has been called a “Dream Team” of attorneys.

Young’s practice focuses exclusively on representing businesses and local governments harmed by violations of environmental laws and regulations. He is one of the most active attorneys in the ongoing BP Deepwater Horizon litigation where he was successful in recovering tens of millions of dollars for several Florida counties and municipalities, as well as representing local Chambers of Commerce against BP in the Supreme Court of the United States. Young also represented over 220,000 individuals and businesses where he recovered $337 million in the Halliburton and Transocean settlement allocation proceeding associated with the Deepwater Horizon Disaster. He currently represents businesses affected by the Porter Ranch gas leak in Los Angeles.

Gardner Brewer is a Tampa law firm with a focus in business law, commercial litigation and land use. The firm is annually recognized as being among Florida’s Legal Elite Lawyers, Super Lawyers and Tampa’s Top Rated Lawyers.

Beasley Allen, The Law Office of Thomas L. Young, and Gardner Brewer Martinez-Monfort are ably assisted in this case by Environmental Protection Commission of Hillsborough County General Counsel Rick Tschantz and Hillsborough County Attorney Chip Fletcher.

Read the Complaint in The Environmental Protection Commission of Hillsborough County v. Volkswagen, et al.

Dealers, Fleet Owners Suffer at Volkswagen’s Hands

Lost in the hub-bub about Volkswagen’s deception in fooling regulators is the very real economic damage being experienced right now by a certain group of American businesses. In addition to consumers, local car dealers and corporate fleet operators have been left holding the bag because of Volkswagen’s deception.

The economic impacts are clear. There is a daily cost for holding inventory on a car lot and vehicles lose their value while sitting for an extended period of time. Profit margins for both new and used cars begin to dramatically decline after the vehicles are on lot for more than 30 days.

For fleet owners, the value of fleet assets has decreased and will continue to do so as this scandal expands. When fleet owners look to liquidate affected vehicles, they may do so at a loss. As bad, fleet vehicles often act as collateral in financing arrangements. When the collateral is devalued, creditors may call the loan or otherwise require a pledge of additional First Security Services. All of this increases the cost of doing business and may jeopardize the very existence of lesser operators.

For dealers, there are costs incurred in holding vehicles in inventory. Formulas can be used by dealers to determine the “Days in Stock Break–Even Point” which identifies the number of days a vehicle can remain in inventory before profitability on that vehicle hits “break-even.” Cars that cannot be sold in a certain time period or at a profit are wholesaled at auction or sold to another dealer.

Automotive dealers either pay cash or use debt (a “floor plan” in industry parlance) to finance vehicle inventory. Regardless of which avenue a dealer uses, each day a car sits unsold on a dealer’s lot, there is a daily cost associated with holding that car.

Most dealerships have a low threshold for adversity; liquidity and cash positions are affected very quickly. For example, having $200,000 in cash tied up in ten to twelve recalled vehicles that can’t be sold can cripple a dealership.

Dealers that rely on debt (floor plan) to finance their operations have even less ability to withstand hardship because payments must be made on the balance of the unsold inventory. A dealership should not have any more money tied-up in inventory than is absolutely necessary. This is why dealers sell vehicles to other dealers, even if the sale is at a loss. Doing so eases cash considerations. Excess inventory levels have negative consequences on cash flow and, consequently, on the ability to meet the cash demands of an ongoing business.

Because of Volkswagen’s Stop Sales Orders, dealers were forced to pull popular models from their lots and have not had the opportunity to sell the vehicles to the public, other dealers or auto auction houses. Thus, dealers’ money has been tied up in inventory with no chance of a foreseeable return. If “floor planned,” the dealers will carry interest and other costs associated with holding the cars during the pendency of the recall. If the inventory was financed with cash, dealers are unable to realize a financial return on the cash tied up in the unsold Volkswagen inventory. Automotive auction houses have, likewise, been forced to carry expenses on vehicles subject to the Stop Sale Order. Finally, there is now a stigma associated with all Volkswagen vehicles and their values have dropped. All of these damages have been caused by Volkswagen’s deceptive actions.

These businesses, their employees and retail customers have been, and will continue to be, harmed by Volkswagen’s deceptive acts, and thus deserve compensation for their economic losses. Our law firm represents dealers, Volkswagen and otherwise, as well as fleet operators, and will be filing suit on their behalf.

Greater Tampa Chamber of Commerce American Association for Justice Florida Justice Association