Bauer Business Focus

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Matt Festa | July 8, 2016

Published on July 8, 2016

On Bauer Business Focus – a conversation on the implications of Texas’ recent settlement with Volkswagen.

Houston College of Law Professor Matt Festa stopped by Bauer Business Focus to discuss the lawsuit against Volkswagen for emissions testing evasion.

“The vehicles were diesel fuel passenger cars that were sold and marketed as clean, as being environmentally friendly,” Festa said. “And that was part of the marketing push to get consumers that were interested in more environmentally friendly cars. It turns out that there was some software in the cars that modified the emissions rate because the software could tell when they were being tested or inspected. It was emitting nitrous oxide at a lower rate while being tested, but on the highway when they were on the road, a much higher rate – in fact a rate that was several times that.”

When the software was discovered, Texas, along with 43 other states, sued Volkswagen for damages. The company recently agreed to a $15 billion settlement.

“About $10 billion of that will go directly to the consumers who bought these cars for buy-backs or for damages. The states are splitting up about $500 million, and Texas is getting about $50 million out of that. A lot of that is calculated for damages under the Deceptive Trade Practices act, and it allows for not just compensation, but extra damages and attorneys fees for anybody that essentially commits fraud or misrepresents business products to a consumer,” he added.

Recently, Harris County recently decided to pursue a separate lawsuit against the company, which has yet to be settled.

“With a lot of industry and a lot of pollution, Harris County suffers when it gets hit for having high ozone levels and other forms of air pollution. So I think the basis of the Harris County separate suit is that we’ve suffered maybe more environmental damage from any business practice that has resulted in more emissions than is legal or is represented,” Festa said. “So I think they have a bit of a unique position. But of course, it’s partly about the money.”

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