S&C Wins Appeal Dismissing Texas AG’s Suit Against Volkswagen and Audi

December 31, 2020

The Texas Court of Appeals dismissed all claims that the Texas Attorney General had brought against Volkswagen AG and AUDI AG relating to their diesel emissions issues, finding in a December 22 ruling that the state's courts lacked personal jurisdiction over the German-based companies.

The Texas Attorney General alleged that Volkswagen's original installation of defeat device software in its diesel cars, and subsequent, post-sale updates to that software, violated Texas's prohibition against “tampering” with an emission-control device, and sought extensive civil penalties. The trial court previously dismissed all claims arising from the original installation of the defeat devices, leaving only claims based upon post-sale software updates.. The German defendants also contested personal jurisdiction, which the trial court overruled.

Applying U.S. Supreme Court precedent, the Texas Court of Appeals reversed and dismissed all claims against the German defendants. The Court explained that the relevant activities of the German defendants were directed at the United States as a whole, not Texas specifically; that any contacts with Texas were more properly attributable to the German defendants' distributor in the United States; and that the activities of the U.S. distributor were insufficient to establish “purposeful availment” by the German defendants.

The ruling significantly limits Volkswagen's overall exposure in this litigation, including because the Texas Attorney General has been arguing that each entity should be separately penalized for the alleged “tampering.” This decision also will be helpful precedent in other actions brought against the German defendants (and other non-U.S. companies) in courts in the United States.

The team representing Volkswagen and Audi includes Robert Giuffra Jr., Michael Steinberg, William Monahan, Judson Littleton, special counsel William Wagener and associates Michael Murtagh and Nick Menillo.