State ex rel. Yost v. Volkswagen Aktiengesellschaft, No. 19AP-7

CourtUnited States Court of Appeals (Ohio)
Writing for the CourtLUPER SCHUSTER, J.
Citation2019 Ohio 5084,137 N.E.3d 1267
Decision Date10 December 2019
Docket NumberNo. 19AP-7
Parties STATE of Ohio, EX REL. [Dave YOST], Ohio Attorney General, Plaintiff-Appellant, v. VOLKSWAGEN AKTIENGESELLSCHAFT d.b.a. Volkswagen Group and/or Volkswagen AG, et al., Defendants-Appellees.

137 N.E.3d 1267
2019 Ohio 5084

STATE of Ohio, EX REL. [Dave YOST], Ohio Attorney General, Plaintiff-Appellant,
v.
VOLKSWAGEN AKTIENGESELLSCHAFT d.b.a. Volkswagen Group and/or Volkswagen AG, et al., Defendants-Appellees.

No. 19AP-7

Court of Appeals of Ohio, Tenth District, Franklin County.

Rendered on December 10, 2019


On brief: Dave Yost, Attorney General, Aaron S. Farmer, Columbus, and Karia A. Ruffin, for appellant. Argued: Aaron S. Farmer.

On brief: Reminger Co., L.P.A., and Hugh J. Bode ; Cleveland, Sullivan & Cromwell, LLP, Robert J. Giuffra, Jr., David M.J. Rein, Matthew A. Schwartz, and Judson O. Littleton, for appellees Volkswagen Aktiengesellschaft d.b.a. Volkswagen Group and/or Volkswagen AG, Audi AG, Volkswagen Group of America, Inc. d.b.a. Volkswagen of America, Inc., or Audi of America, Inc., Volkswagen of America, Inc., and Audi of America, LLC. Argued: Matthew A. Schwartz.

On brief: Porter, Wright, Morris & Arthur LLP, Terrance M. Miller, and Elizabeth L. Moyo ; Columbus, King & Spalding LLP, and Joseph Eisert, for appellees Dr. Ing. h.c. F. Porsche AG d.b.a. Porsche AG, and Porsche Cars North America, Inc.

DECISION

LUPER SCHUSTER, J.

{¶ 1} Plaintiff-appellant, State of Ohio, ex rel. Dave Yost, Ohio Attorney General (the "State"), appeals from a judgment of the Franklin County Court of Common Pleas granting the motion to dismiss of defendants-appellees, Volkswagen Aktiengesellschaft d.b.a. Volkswagen Group and/or Volkswagen AG, Audi AG, Volkswagen Group of America, Inc., d.b.a. Volkswagen of America, Inc. or Audi of America, Inc., Volkswagen of America, Inc., Audi of America, LLC, Dr. Ing. h.c. F. Porsche AG d.b.a. Porsche AG, and Porsche Cars North America, Inc. (collectively "Volkswagen"). For the following reasons, we reverse and remand.

I. Factual and Procedural Background

{¶ 2} In October 2016, the State initiated this action against Volkswagen under Ohio's Air Pollution Control Act, R.C. Chapter 3704, seeking relief for "the massive, emissions-control-tampering scheme perpetrated by [Volkswagen] in connection with their sale or lease to U.S. consumers of more than 550,000 vehicles, including approximately 14,000 in Ohio, from model year 2009 to 2016." (Oct. 26, 2016 Compl. at 1.)

{¶ 3} In November 2016, and pursuant to 28 U.S.C. 1446, Volkswagen removed the matter to the United States District Court for the Southern District of Ohio. The matter was transferred to the United

137 N.E.3d 1270

States District Court for the Northern District of California, which served as the multi-district litigation ("MDL") court for various actions against Volkswagen. The MDL court remanded this matter to Ohio state court based on the court's conclusion that Volkswagen had failed to demonstrate "arising under" jurisdiction pursuant to 28 U.S.C. 1331.

{¶ 4} In August 2017, Volkswagen moved to dismiss the State's complaint pursuant to Civ.R. 12(B)(6) on the basis that the State's claims were preempted by the federal Clean Air Act., 42 U.S.C. 7401 et seq. ("CAA"). Additionally, Volkswagen moved to dismiss defendants Volkswagen AG, Audi AG, and Porsche AG for lack of personal jurisdiction.

{¶ 5} In September 2017, the State filed an amended complaint seeking relief based on Volkswagen's emission-control-tampering scheme. More specifically, the State alleged Volkswagen tampered with the subject vehicles, certain 2009-2016 Volkswagen, Audi, and Porsche model-year vehicles with 2.0 or 3.0 liter diesel engines, to effectively disable their emission control systems. The State's first cause of action alleged Volkswagen tampered with emission control systems of the subject vehicles during normal driving operation by factory installing a software-based device (known as a "defeat device") that increased the effectiveness of the emission control systems during laboratory testing but reduced the effectiveness of those systems during normal driving conditions (Count I). The State's second cause of action alleged Volkswagen tampered with the emission control systems of the subject vehicles when it recalled and updated the software-based defeat device on vehicles already in use (Count II). The State's third cause of action alleged Volkswagen tampered with the emission control systems of the subject vehicles when the vehicles with updated defeat devises were driven on Ohio's roads (Count III). The State's final claim was that the named defendants engaged in a civil conspiracy to violate R.C. Chapter 3704 (Count IV).

{¶ 6} In October 2017, Volkswagen moved to dismiss the State's amended complaint pursuant to Civ.R. 12(B)(1) and 12(B)(6) on the grounds that the CAA preempted the State's claims. Volkswagen also again moved to dismiss the State's claims against defendants Volkswagen AG, Audi AG, and Porsche AG for lack of personal jurisdiction.

{¶ 7} On December 7, 2018, the trial court granted Volkswagen's motion to dismiss. As to Count I of the State's complaint, the court reasoned that this claim was based on Volkswagen's alleged misconduct before the subject vehicles were sold to end users, and therefore was expressly preempted by the CAA. As to the State's two claims regarding Volkswagen's alleged misconduct occurring after the sale of the subject vehicles (Counts II and III), the court determined that such conduct was not expressly preempted by the CAA. However, the court concluded that Congress intended only the federal government to regulate model-wide tampering of vehicle emission control devices, and therefore the CAA preempted the State's claims based on Volkswagen's post-sale changes to those devices on the subject vehicles. Based on the trial court's disposition of the State's first three underlying tampering claims, it concluded that the State's civil conspiracy claim also must fail. Because the trial court concluded that the complaint must be dismissed pursuant to Civ.R. 12(B)(6), it declined to address Volkswagen's personal jurisdiction arguments.

{¶ 8} The State timely appeals.

II. Assignment of Error

{¶ 9} The State assigns the following error for our review:

137 N.E.3d 1271
The trial court erred as a matter of law when it found that federal conflict preemption barred the State of Ohio's claims against Volkswagen (Counts Two and Three) for tampering with emissions controls on registered or licensed cars during, and after, recall and maintenance activities in Ohio.

III. Discussion

{¶ 10} In the State's sole assignment of error, it alleges the trial court erred in finding that federal law preempted the State's post-sale vehicle emission control system tampering claims against Volkswagen. We agree.

{¶ 11} As outlined above, the State alleged Volkswagen violated Ohio law by installing software-based emission control defeat devices on the subject vehicles during manufacturing (Count I), and by tampering with the emission control systems after the sale of those vehicles (Counts II and III). The trial court concluded that, while Counts II and III were not barred by express preemption, they were barred by conflict preemption. Based on this disposition, the court concluded that the State's civil conspiracy claim (Count IV) also failed. In this appeal, the State concedes the trial court properly dismissed Count I based on federal preemption, but challenges the trial court's conclusion that federal preemption also barred Counts II and III.

{¶ 12} Whether federal law preempts state law is a question of law, and therefore we must apply a de novo standard of review without deference to the trial court's decision. Bailey v. Manor Care of Mayfield Hts. , 8th Dist., 2013-Ohio-4927, 4 N.E.3d 1071, ¶ 12. The doctrine of federal preemption arises from the Supremacy Clause of the United States Constitution, which provides that "the Laws of the United States * * * shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Constitution, Article VI, cl. 2. Pursuant to the Supremacy Clause, the United States Congress has the power to preempt state laws. In re Miamisburg Train Derailment Litigation , 68 Ohio St.3d 255, 259, 626 N.E.2d 85 (1994).

{¶ 13} There are three ways federal law can preempt state law: (1) where federal law expressly preempts state law (express preemption); (2) where federal law has occupied the entire field (field preemption); or (3) where there is a conflict between federal law and state law (conflict preemption). Norfolk S. Ry. Co. v. Bogle , 115 Ohio St.3d 455, 2007-Ohio-5248, 875 N.E.2d 919, ¶ 7. Express preemption occurs when Congress explicitly defines the extent to which its enactments preempt state law. English v. Gen. Elec. Co. , 496 U.S. 72, 78, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990). In the case of field preemption, "state law is pre-empted where it regulates conduct in a field that Congress intended the Federal Government to occupy exclusively. Such an intent may be inferred from a ‘scheme of federal regulation * * * so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it,’ or where an Act of Congress ‘touches a field in which the federal interest is so dominant that the federal system will be assumed to...

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4 practice notes
  • State ex rel. Yost v. Volkswagen Aktiengesellschaft, 2020-0092
    • United States
    • United States State Supreme Court of Ohio
    • June 29, 2021
    ...purpose to [expressly or impliedly] preempt the State's in-use motor vehicle emission control system tampering claims." 2019-Ohio-5084, 137 N.E.3d 1267, ¶ 29. As a result, the court of appeals reversed the trial court's judgment and remanded the matter for further proceedings. Id. at ¶ 35. ......
  • State ex rel. Yost v. Volkswagen Aktiengesellschaft, 2020-0092
    • United States
    • United States State Supreme Court of Ohio
    • June 29, 2021
    ...purpose to [expressly or impliedly] preempt the State's in-use motor vehicle emission control system tampering claims." 2019-Ohio-5084, 137 N.E.3d 1267, ¶ 29. As a result, the 165 Ohio St.3d 215 court of appeals reversed the trial court's judgment and remanded the matter for further proceed......
  • DeWine v. State Farm Ins. Co., No. 20CA3903
    • United States
    • United States Court of Appeals (Ohio)
    • November 23, 2020
    ...we are not bound to follow the holdings that they articulate"); State ex rel. Yost v. Volkswagen Aktiengesellschaft, 2019-Ohio-5084, 137 N.E.3d 1267, ¶ 30 (10th Dist.) (Ohio courts are not bound by decision of a federal court other than the United States Supreme Court "but we are free to co......
  • State v. CSX Transp., Inc., NO. 14-19-07
    • United States
    • United States Court of Appeals (Ohio)
    • April 27, 2020
    ...deference to the trial court's decision. State ex rel. Yost v. Volkswagen Aktiengesellschaft , 10 Dist. Franklin, 2019-Ohio-5084, 137 N.E.3d 1267, ¶ 12, citing Bailey v. Manor Care of Mayfield Hts. , 8th Dist. Cuyahoga, 2013-Ohio-4927, 4 N.E.3d 1071, ¶ 12.Federal Preemption of State Law {¶1......
4 cases
  • State ex rel. Yost v. Volkswagen Aktiengesellschaft, 2020-0092
    • United States
    • United States State Supreme Court of Ohio
    • June 29, 2021
    ...purpose to [expressly or impliedly] preempt the State's in-use motor vehicle emission control system tampering claims." 2019-Ohio-5084, 137 N.E.3d 1267, ¶ 29. As a result, the court of appeals reversed the trial court's judgment and remanded the matter for further proceedings. Id. at ¶ 35. ......
  • State ex rel. Yost v. Volkswagen Aktiengesellschaft, 2020-0092
    • United States
    • United States State Supreme Court of Ohio
    • June 29, 2021
    ...purpose to [expressly or impliedly] preempt the State's in-use motor vehicle emission control system tampering claims." 2019-Ohio-5084, 137 N.E.3d 1267, ¶ 29. As a result, the 165 Ohio St.3d 215 court of appeals reversed the trial court's judgment and remanded the matter for further proceed......
  • DeWine v. State Farm Ins. Co., No. 20CA3903
    • United States
    • United States Court of Appeals (Ohio)
    • November 23, 2020
    ...we are not bound to follow the holdings that they articulate"); State ex rel. Yost v. Volkswagen Aktiengesellschaft, 2019-Ohio-5084, 137 N.E.3d 1267, ¶ 30 (10th Dist.) (Ohio courts are not bound by decision of a federal court other than the United States Supreme Court "but we are free to co......
  • State v. CSX Transp., Inc., NO. 14-19-07
    • United States
    • United States Court of Appeals (Ohio)
    • April 27, 2020
    ...deference to the trial court's decision. State ex rel. Yost v. Volkswagen Aktiengesellschaft , 10 Dist. Franklin, 2019-Ohio-5084, 137 N.E.3d 1267, ¶ 12, citing Bailey v. Manor Care of Mayfield Hts. , 8th Dist. Cuyahoga, 2013-Ohio-4927, 4 N.E.3d 1071, ¶ 12.Federal Preemption of State Law {¶1......

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