The U.S. Department of Justice Is Suing VW for Billions of Dollars

Just when you thought that the Volkswagen drama might be over it turned out it’s just beginning, because the US Department of Justice filed a civil lawsuit against the company for installing illegal devices meant to defeat emissions testing, and laid out claims that could push penalties into the tens of billions of dollars -- an opening salvo in a legal battle that could be far more costly for the German carmaker than had been expected.

The civil complaint filed Monday accuses the automaker of four violations of the Clean Air Act and outlines penalties that could amount to as much as $80 billion -- about four times as much as the maximum some legal experts had estimated. While the court is unlikely to come anywhere near that amount, according to a senior Justice Department official, the penalties sought against the company would still be in the billions of dollars, another senior Justice Department official said.

Volkswagen already faces hundreds of private lawsuits in the U.S. for its actions, which have been consolidated in San Francisco federal court. The Justice Department said it will ask for its suit to be transferred to that court as well, borrowing a tactic from its case against BP Plc in the Gulf oil spill litigation, where it worked alongside plaintiff’s lawyers.

Volkswagen is also facing lawsuits from state attorneys general, while regulators in at least seven countries, including Germany, have launched investigations. The U.S. could also bring criminal charges against Volkswagen for lying to the Environmental Protection Agency about the cheating devices.

“The U.S. seeks and obtains larger penalties for environmental violations than any other country, ” said David Uhlmann, a law professor at the University of Michigan and former head of the environmental crimes section of the Justice Department. “VW needs to fix the problem it has created, cooperate with the government investigations and make its victims whole.”

Volkswagen’s preferred shares fell 5.5 percent in Frankfurt, the most in two months, before the suit was revealed on Monday. The shares have dropped more than 22 percent since Sept.18, the day the EPA said the automaker admitted cheating on emissions tests.The carmaker’s shares in the U.S., where they are listed as American depositary receipts, declined 2.8 percent to $30.10 after falling as much as 4.2 percent,the steepest intraday decline in two months.