IN RE VOLKSWAGEN “CLEAN DIESEL” MARKETING, SALES PRACTICES, AND PRODUCTS LIABILITY LITIGATION,
No. 16-17060
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
Filed July 3, 2018
D.C. No. 3:15-md-02672-CRB
OPINION
Appeal from the United States District Court for the Northern District of California Charles R. Breyer, Senior District Judge, Presiding
Argued and Submitted December 7, 2017 Pasadena, California
Filed July 3, 2018
Before: A. Wallace Tashima, William A. Fletcher, and Marsha S. Berzon, Circuit Judges.
Opinion by Judge Berzon
SUMMARY*
Intervention / Clean Air Act
The panel affirmed the district court‘s denial of a motion to intervene, filed by a disgruntled owner of a 2012 Volkswagen, in the federal government‘s Clean Air Act enforcement action against Volkswagen.
The government‘s suit arose from the car manufacturer‘s installation in some of its cars of “defeat devices” that allowed Volkswagen to cheat on emissions tests. The parties reached a final proposed consent decree, and the government filed its enforcement action with the court.
The panel held that the Clean Air Act‘s citizen suit provision,
Thе panel held that movant could not intervene as of right under
COUNSEL
James Ben Feinman (argued), Lynchburg, Virginia, for Movant-Appellant.
Brian C. Toth (argued), Washington, D.C., for Defendants-Appellees.
Sharon Nelles (argued), New York, New York, for Defendants-Appellees.
BERZON, Circuit Judge:
Ronald Clark Fleshman, Jr., the disgruntled owner of a 2012 Volkswagen Jetta, appeals the denial of his motion to intervene in the federal government‘s Clean Air Act suit against Volkswagen, AG and several of its subsidiaries (collectively Volkswagen or VW). The government‘s suit arose from the car manufacturer‘s installation in some of its cars of “defeat devices“—surreptitious pieces of software that allowed VW to cheat on emissions
I
A. The Clean Air Act
The Clean Air Act “protect[s] and enhance[s] the quality of the Nation‘s air resources so as to promote the public health and welfare and the productive capacity of its population.”
As to enforcement, the Act also grants “any person” the right to bring a civil action challenging the violation of “(A) an emission standard or limitation under this chapter or (B) an order issued by the [EPA] Administrator or a State with respect to such a standard or limitation.”
B. State implementation plans (SIPs)
The Clean Air Act “ma[kes] the States and the Federal Government partners in the struggle against air pollution.” Gen. Motors Corp. v. United States, 496 U.S. 530, 532 (1990). Pursuant to that cooperative scheme, the EPA sets national ambient air quality standards, and the states develop state implementation plans (SIPs), subject to the approval of the EPA, to implement those standards. See id. at 532–33; see also
The SIPs work toward attainment of national air quality standards primarily by regulating “stationary sources” like power plants and factories. See Engine Mfrs. Ass‘n v. EPA, 88 F.3d 1075, 1078–79 (D.C. Cir. 1996); Jensen Family Farms, Inc. v. Monterey Bay Unified Air Pollution Control Dist., 644 F.3d 934, 938 (9th Cir. 2011). Regulation of “mobile sources” is the province of the federal government. In fact, the Act prohibits the states from setting emissions standards for new automobiles; only the EPA may do that.2 See Engine Mfrs. Ass‘n, 88 F.3d at 1079;
A. Discovery of “defeat devices” & ensuing litigation
In May 2014, researchers at West Virginia University published a study showing that two of Volkswagen‘s 2.0-liter “light diesel” models emitted significantly higher quantities of pollutants during normal road operation than during emissions testing.3 Following publication of the study, Volkswagen represented to the EPA and to the California Air Resources Board (CARB) that the identified discrepancies were caused by “technical issues and unexpected in-use [driving] conditions.” Testing by the EPA and CARB demonstrated that Volkswagen‘s explanations did not account for thе disparate emissions levels. Unsatisfied, the two agencies threatened to withhold certificates of conformity for Volkswagen‘s 2016 model year light diesel cars, without which the company could not sell the cars in the United States.
Under that pressure Volkswagen confessed: its 2.0-liter light diesel models released between 2009 and 2015 contained a “defeat device.” The device was designed so that when it sensed—and only when it sensed—the precise driving conditions of an emissions compliance test, software in the car altered engine performance so the vehicle emitted permissible levels of nitrogen oxide (NOx). Nitrogen oxide reacts with other compounds in the atmosphere to form ozone and smog. When the cars equipped with a defeat device operated under normal “in-use” road conditions, they emitted between 10 and 40 times the EPA-compliant level of NOx.
On September 18, 2015, the EPA sent a “Notice of Violation” (NOV) to Volkswagen stating that VW‘s installation of the defeat device on certain 2.0-liter VW diesel automobiles (the “affected vehicles“) violated the Clean Air Act. Soon after, the EPA issued a press release, which contained the following message for vehicle owners:
Car owners should know that although these vehicles have emissions exceeding standards, these violations do not present a safety hazard and the cars remain legal to drive and resell. Owners of cars of these models and years do not need to take any action at this time.
(emphasis added).
The VW defeat device scheme became front page news across the country. By December 2015, hundreds of private lawsuits against Volkswagen, most of them class actions, were filed in or removed to federal court. See In re Volkswagen “Clean Diesel” Mktg., Sales Practices, and Prods. Liab. Litig., 148 F. Supp. 3d 1367, 1368 (J.P.M.L. 2015). The Judiсial Panel on Multidistrict Litigation (JPML) transferred all pending defeat device-related cases to Judge Charles Breyer in the Northern District of California (district court or MDL court) for “coordinated or consolidated pretrial proceedings.” Id. at 1370.
The government soon joined in. On January 4, 2016, the United States filed a civil enforcement action against VW, under Section 203 of the Clean Air Act,
- Certificates of conformity (COCs). VW imported and sold cars not covered
by a certificate of conformity, because the vehicles equipped with defeat devices did not “conform in all material respects” to the specifications described in the applications for those vehicles’ certificates of conformity, in violation of Section 203(a)(1) of the Act, 42 U.S.C. § 7522(a)(1) . Complaint at 8–9, 20–21, United States v. Volkswagen AG, No. 1:16-cv-10006 (E.D. Mich. Jan. 4, 2016) [hereinafter Gov‘t Compl.]. - Defeat devices. VW manufactured аnd sold vehicles equipped with a “defeat device,” in violation of Section 203(a)(3)(B) of the Act,
42 U.S.C. § 7522(a)(3)(B) . Gov‘t Compl. at 9–10, 21–22; see also40 C.F.R. § 86.1803-01 (defining “defeat device“). - Tampering. VW‘s defeat device was an “auxiliary emission control device” (AECD) that “ha[d] the effect of removing or rendering inoperative devices or elements of design” of its vehicles, in violation of Section 203(a)(3)(A) of the Act,
42 U.S.C. § 7522(a)(3)(A) . Gov‘t Compl. at 9–11, 23–24. - Reporting. VW violated its reporting obligations under the Act by not disclosing the AECD/defeat device in its applications for COCs, in violation of Section 203(a)(2) of the Act,
42 U.S.C. § 7522(a)(2) . Gov‘t Compl. at 11–12, 24–25.
The complaint covered both 2.0-liter and 3.0-liter diesel vehicles. The government sought (1) injunctive relief prohibiting VW from continuing to engage in the conduct alleged; (2) an order mandating appropriate steps by VW, including mitigation of NOx emissions, to remedy the violations of the Act; and (3) civil penalties for each violation of the Act. The JPML transferred the enforcement action to the MDL court on January 15, 2016.
B. The settlement process
Shоrtly after the government filed suit, the district court appointed Robert S. Mueller III as Settlement Master to “to facilitate settlement discussions among all parties to this multi-district litigation as soon as is feasible.” The court selected lead counsel and a 22-member Plaintiffs’ Steering Committee (PSC) to manage consolidated pre-trial litigation for the class. A “government coordinating counsel” was appointed to represent the government‘s interests during pre-trial proceedings and settlement talks.4
The parties to the various cases reached an agreement in principle concerning the 2.0-liter vehicles. On June 28, 2016, the United States filed a proposed consent decree for this civil enforcement action, and the PSC filed a settlement agreement for preliminary approval in the class action. The consent decree established a program by which VW would buy back, permit the termination of leases of, or perform modifications on the emissions systems of all affected vehicles.5 VW would also pay $2.7 billion into a “mitigation trust” to offset the increased NOx emissions caused by
a 30-day public comment period ensued. See Notice of Lodging of Proposed Partial Consent Decree Under the Clean Air Act, 81 Fed. Reg. 44,051 (July 6, 2016).
C. Fleshman‘s attempt to intervene
While settlement talks were well underway in the cases proceeding in California, Fleshman filed suit against VW in the Circuit Court of Campbell County, Virginia.6 At the time Fleshman filed suit, he owned a 2012 model year light diesel Jetta.
Later, when the settlement talks were close to fruition, Fleshman moved to intervene in the class action, “to object to the proposed Consumer Class Action Settlement Agreement and Release.” The district court refused to allow the intervention.
Undeterred, Fleshman moved a week later to intervene in the government‘s enforcement action. He argued that the consent decree “violate[d] Federal and Virginia law” because it did not require rescission of sale for all affected vehicles; instead, it permitted vehicle owners and lessees to keep their unmodified vehicles if they wished. Fleshman also alleged that Virginia‘s SIP prohibited the owners of affected vehicles from driving them, so the buyback should have been mandatory.
The specific SIP provision Fleshman relied upon reads in full: “No motor vehicle or engine shall be operated with the motor vehicle pollution control system or device removed or otherwise rendered inoperable.” 9 Va. Admin. Code § 5-40-5670(A)(3). Under Fleshman‘s reading, this SIP provision prohibited vehicle owners from driving unmodified affected vehicles. Fleshman maintained in his intervention motion that the EPA‘s statement of September 18, 2015, advising that “the [affected] cars remain[ed] legal to drive and resell” was inconsistent with the Virginia SIP. Fleshman sought intervention to “protect his interest as a Virginian[] in enforcing the laws of Virginia . . . incorporated into the Clean Air Act by way of Virginia‘s [SIP].”7 He argued that the Clean Air Act‘s citizen-suit provision provided him with a statutory right to intervene, presumably pursuant to
The government observed in its opposition papers that Fleshman had not appended a complaint to his motion to intervene. In response, Fleshman attached one to his reply brief, and shortly thereafter he filed a First Amended Proposed Complaint-in-Intervention.9 The complaint consisted largely of allegations that the EPA was not adequately prosecuting the action against VW.10 In his prayer for relief, Fleshman sought various declarations and orders against the EPA (e.g., “[f]ind and order that the EPA cannot propose and support a monetary penalty which is an incentive to violate the Clean Air Act“); none of the requested relief was directed at Volkswagen.11
The district court denied Fleshman‘s motion to intervene in this civil enforcement action. The court held that the Clean Air Act‘s citizen-suit provision permits intervention of right only when the intervenor seeks to enforce the same “standard, limitation, or order” as the government does in its action. Because Fleshman sought to enforce Virginia‘s SIP—not the same “standard, limitation, or order” as the Clean Air Act provisions underlying the government‘s complaint—the Act did not permit him to intervene as a matter of right.
Shortly thereafter, the district court entered the proposed consent decree in the government enforcement action.12 Fleshman appeals the denial of his motion to intervene.
III
Under
A. Intervention under Rule 24(a)(1)
Fleshman first argues that he may intervene in the government‘s action by grace of the Clean Air Act‘s citizen-suit provision,
i. Scope of intervention under the Clean Air Act
The Clean Air Act entitles any person to sue for a violation of “an emission standard
No action may be commenced—
(1) under subsection (a)(1) of this section—
(A) prior to 60 days after the plaintiff has given notice of the violation (i) to the Administrator, (ii) to the State in which the violation occurs, and (iii) to any alleged violator of the stаndard, limitation, or order, or
(B) if the Administrator or State has commenced and is diligently prosecuting a civil action in a court of the United States or a State to require compliance with the standard, limitation, or order, but in any such action in a court of the United States any person may intervene as a matter of right.
Our threshold question in deciding whether Fleshman had a right to intervene in this action is whether a citizen who is not barred from bringing his own citizen suit by a diligently prosecuted government enforcement action may nonetheless intervene in that government action. After examining the parameters of
Section 7604(b)‘s two subparts work together to delimit citizen suits against alleged violators of the Act. First, before filing suit, a plaintiff must give sixty days’ notice to the EPA, the relevant State, and the alleged violator.
But not every citizen suit is verboten once the government files suit. The diligent prosecution bar prevents a citizen from suing under
with precision that the diligent prosecution bar forecloses only citizen suits that seek to enforce the same “standard, limitation, or order” as the government enforcement action. See Hooker Chems., 749 F.2d at 978.16 A person suing to enforce a different “standard, limitation, or order” with regard to certain emissions from that invoked by the government in its enforcement action is not barred from doing so by
The diligent prosecution bar in turn defines the right of intervention granted by
to the diligent prosecution bar: you can‘t bring your own suit, but you‘re allowed to intervene in this one. Lastly, “[t]he right to intervene is conferred in the same sentence that limits the rights of citizens who would otherwise bring private enforcement actions, which suggests that Congress intended to confer that right only on those particular citizens.” United States v. Metro. St. Louis Sewer Dist., 569 F.3d 829, 837–38 (8th Cir. 2009) (construing the scope of the Clean Water Act‘s analogous right of intervention).
The phrase “any person” in the intervention clause might appear to broaden
Stone Container Corp. demonstrates how
decree for the remaining, non-duplicative—and non-barred—claims in its complaint. See id. at 1067–68.
Every circuit to consider the
In short, a party may intervene as a matter of right in a
ii. The government was not suing to enforce a “standard, limitation, or order” within the meaning of the Act
Our next question, then, is whether Fleshman aimed to enjoin violations of one of the “standard[s], limitation[s], or order[s]” underlying the government’s enforcement action against Volkswagen. If so, the diligent prosecution bar precluded his action and he was entitled to intervene “as a matter of right” in the enforcement action under
The government brought suit to enjoin four distinct violations of
the government sought an injunction, mitigation of excess NOx emissions, and civil penalties.
The prohibitions contained in
For an example of an “emission standard,” consider
The United States did not sue VW for violations of
iii. Fleshman sought to enforce the Virginia SIP, not the requirements of § 7522
There is an alternative reason Fleshman had no statutory right to intervene in this action. Even if
Fleshman’s first proposed complaint-in-intervention focused entirely on the EPA’s inadequate enforcement of state SIPs. He sought declaratory relief to remedy the inadequacy and unlawfulness of the consent decree flowing from its inattention to state SIPs. In particular, Fleshman’s first complaint—which does not refer to
The government’s enforcement action did not allege that VW had not complied with Virginia’s (or any state’s) SIP, or seek relief connected with SIP compliance. That, indeed, was Fleshman’s central gripe in his original intervention complaint. Because Fleshman’s original complaint alleged violations entirely distinct from those the government identified, Fleshman could have proceeded with his own citizen suit.
In his amended proposed complaint-in-intervention, Fleshman emphasized somewhat different purported violations—namely, the EPA’s failure to demand that all of Volkswagen’s non-conforming cars be removed from the road, all sales be rescinded, and all purchase prices be refunded,
In sum, the government’s enforcement action did not bar Fleshman’s suit under the diligent prosecution bar,
B. Intervention under Rule 24(a)(2)
Fleshman argues—albeit indistinctly—that he is entitled to intervene of right under
The United States asked the court permanently to enjoin Volkswagen’s violations of
- declare that enforcement of
§ 7522 requires the rescission of the sale of each of the hundreds of thousands of affected vehicles; - declare that the EPA had no authority to “annul or repeal” the SIPs of various states, or to “impair or impede” the enforcement of SIPs, by “promоting and endorsing” an allegedly deficient and unlawful consent decree;
- declare that
§§ 7413 and7541 require the EPA to notify other owners and lessees that it is illegal to operate their vehicles in the United States, and to notify the States of “widespread” violations of various provisions of theClean Air Act and numerous SIPs; - and declare that the EPA could not “support a monetary penalty which is an incentive to violate the
Clean Air Act .”24
In short, Fleshman desires a series of declarations that the
But Fleshman lacks standing for such sweeping relief. “[T]he standing inquiry requires careful judicial examination of a complaint’s allegations to ascertain whether the particular plaintiff is entitled to an adjudication of the particular claims asserted.” Or. Prescription Drug Monitoring Program v. DEA, 860 F.3d 1228, 1233 (9th Cir. 2017) (citation omitted). For Fleshman to have standing for these claims for relief, he must show that the threatened harm to him—caused by the government’s failure to enforce the
Moreover, Fleshman’s arguments that the EPA or any state would enforce a SIP against him for continuing to drive his car are entirely speculative. There are no plausible allegations, nor reason to believe from the record, that the EPA or any state will attempt to subject operators of unmodified Volkswagen vehicles to liability. The available evidence indicates the opposite—that “the threat of enforcement” is “chimerical,” rather than “credib[le]” and “substantial.”26 Susan B. Anthony List, 134 S. Ct. at 2342, 2345 (quoting Steffel v. Thompson, 415 U.S. 452, 459 (1974)). Fleshman’s fears of enforcement thus “rest on mere conjecture about possible governmental actions.” Clapper v. Amnesty Int‘l USA, 568 U.S. 398, 420 (2013) (holding that putative injuries depending on the plaintiffs’ surmise about government surveillance activities did not give rise to standing); cf. Lopez v. Candaele, 630 F.3d 775, 788 (9th Cir. 2010) (“[C]laims of future harm lack credibility when . . . the enforcing authority has disavowed the applicability of the challenged law to the рlaintiffs.“).
Further, and critically, Fleshman’s potential future liability for driving his own car does not entitle him to seek, as he does, rescission of all the sales of the affected cars, including those belonging to hundreds of thousands of other people. His own awareness of the theoretical future enforcement problem, and the severe disjuncture between the injuries to himself he asserts and the relief he seeks, underscore that he is, primarily, asserting potential harms to third parties. See Fleshman Compl. at 5 ¶ 14 (“[After the settlement,] the owners and lessees [of the affected vehicles] will learn for the first time their vehicles are illegal to use, but will have already released all claims against the defendants responsible for the illegality.“).27 Absent some exception not here applicable, Fleshman “must assert his own legal rights and interests, and cannot rest his
In short, Fleshman has no standing for the relief he seeks that the government does not, and so may not intervene as of right under
IV
The
Notes
Section 7522(a) provides: “The following acts and the causing thereof are prohibited—
- in the case of a manufacturer of new motor vehicles or new motor vehicle engines for distribution in commerce, the sale, or the offering for sale, or the introduction, or delivery for introduction, into commerce, or (in the case of any person, except as provided by regulation of the Administrator), the importation into the United States, of any new motor vehicle or new motor vehicle engine, manufactured after the effective date of regulations under this part which are applicable to such vehicle or engine unless such vehicle or engine is covered by a certificate of conformity . . . .
- (A) for any person to fail or refuse to permit access to or copying оf records or to fail to make reports or provide information required under section 7542 of this title; . . .
- (A) for any person to remove or render inoperative any device or element of design installed on or in a motor vehicle or motor vehicle engine in compliance with regulations under this subchapter prior to its sale and delivery to the ultimate purchaser, or for any person knowingly to remove or render inoperative any such device or element of design after such sale and delivery to the ultimate purchaser; or
- (B) for any person to manufacture or sell, or offer to sell, or install, any part or component intended for use with, or as part of, any motor vehicle or motor vehicle engine, where a principal effect of the part or component is to bypass, defeat, or render inoperative any device or element of design installed on or in a motor vehicle or motor vehicle engine in compliance with regulations under this subchapter . . . .”