Ontario Superior Court allows Volkswagen and Audi diesel emissions class action to proceed

The Ontario Superior Court of Justice has granted partial certification in a class action lawsuit against Volkswagen and Audi over allegations that certain diesel-powered vehicles were equipped with illegal defeat devices to cheat emissions tests.

The dispute in Mackinnon v. Volkswagen Group Canada Inc., et al., 2024 ONSC 4988 concerned allegations that certain diesel-powered Volkswagen and Audi vehicles, known as TDI vehicles, were equipped with illegal defeat devices designed to cheat emissions tests. These devices allowed the vehicles to pass emissions tests while emitting nitrogen oxide (NOx) at levels far above the legal limits during normal driving conditions.

The court originally denied certification of this lawsuit in 2021, ruling that there was insufficient evidence of compensable harm or a methodology to calculate damages on a class-wide basis. However, the Ontario Divisional Court overturned this decision in 2022 and sent the case back for reconsideration by a different judge, excluding the questions of class-wide harm and methodology for measuring damages, which had already been addressed.

The class action was brought on behalf of Canadian residents who owned or leased the affected Volkswagen and Audi TDI vehicles, particularly those excluded from earlier settlements related to the emissions scandal. The vehicles were marketed as offering superior fuel efficiency, performance, and low emissions but were later found to exceed NOx emissions standards due to the installed defeat devices.

The lawsuit sought to hold Volkswagen and Audi accountable for misrepresenting their vehicles' emissions performance to consumers and regulatory authorities. The court certified claims of negligent misrepresentation, deceit, and breaches of the Competition Act and the Canadian Environmental Protection Act (CEPA). Additionally, claims under provincial consumer protection legislation in Ontario, Manitoba, and several other provinces were certified against specific defendants, including Volkswagen Credit Canada Inc. (VCCI).

However, the Superior Court dismissed other claims, such as breach of express and implied warranty, conspiracy, and unjust enrichment. The court granted the plaintiff leave to amend the conspiracy claim, allowing for a possible reconsideration of that issue. The court also rejected the certification of a constructive trust remedy, finding no sufficient basis for such a claim.

The court further ruled that the case could proceed on the question of punitive damages, given the severity of Volkswagen's actions, and whether damages can be assessed on a class-wide aggregate basis. However, the court did not certify issues related to inferred reliance, noting that the misrepresentations about the vehicles' emissions were not core to the vehicles' overall functionality, unlike cases involving products that completely failed to deliver their promised benefits.