State ex rel. Yost v. Volkswagen Aktiengesellschaft

• Decision Date: 29 June 2021
• Docket Number: No. 2020-0092,2020-0092
• Citation: 177 N.E.3d 242,165 Ohio St.3d 213
• Parties: The STATE EX REL. YOST, Atty. Gen., Appellee, v. VOLKSWAGEN AKTIENGESELLSCHAFT, d.b.a. Volkswagen Group and/or Volkswagen AG, et al., Appellants.
• Court: Ohio Supreme Court

165 Ohio St.3d 213

177 N.E.3d 242

The STATE EX REL. YOST, Atty. Gen., Appellee,

v.VOLKSWAGEN AKTIENGESELLSCHAFT, d.b.a. Volkswagen Group and/or Volkswagen AG, et al., Appellants.

No. 2020-0092

Supreme Court of Ohio.

Submitted January 26, 2021

Decided June 29, 2021.

David Yost, Attorney General, Benjamin M. Flowers, Solicitor General, Michael J. Hendershot, Chief Deputy Solicitor General, and Aaron S. Farmer and Karia A. Ruffin, Assistant Attorneys General, for appellee.

Reminger Co., L.P.A., Hugh J. Bode, Cleveland, and Jackie M. Jewell, Columbus; and Sullivan & Cromwell, L.L.P., Robert J. Giuffra Jr., David M.J. Rein, Matthew A. Schwartz, and Judson O. Littleton, for appellants 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, L.L.C.

Porter, Wright, Morris & Arthur, L.L.P., L. Bradfield Hughes, and Elizabeth L. Moyo, Columbus; and King & Spalding, L.L.P., and Joseph Eisert, for appellants Dr. Ing. h.c. F. Porsche AG, d.b.a. Porsche AG; and Porsche Cars North America, Inc.

Arnold & Porter Kaye Scholer, L.L.P., Jayce Born, Jonathan S. Martel, and S. Zachary Fayne ; and Kevin D. Shimp, urging reversal for amici curiae, United States Chamber of Commerce, Ohio Chamber of Commerce, and Alliance for Automotive Innovation.

Fischer, J. {¶ 1} In this case, we are asked to decide whether the federal Clean Air Act, 42 U.S.C. 7401 et seq., preempts Ohio law and precludes an anti-tampering claim under Ohio's Air Pollution Control Act, R.C. 3704.01 et seq. For the reasons that follow, we hold that it does not and therefore affirm the judgment of the Tenth District Court of Appeals.

I. BACKGROUND

{¶ 2} Starting around 2009, appellant Volkswagen Aktiengesellschaft, d.b.a. Volkswagen Group and/or Volkswagen AG ("Volkswagen"),¹ programmed vehicles manufactured and sold under its various labels with software that would enable those vehicles to perform better than they otherwise would have on federal emissions tests. The software, sometimes referred to as a "defeat device," would identify when a Volkswagen vehicle was being tested by regulators for compliance with federal emissions standards. Once the software detected that an emissions test was in progress, the software would trigger equipment within the vehicle that would reduce the vehicle's emissions to an acceptable level. In reality, of course, emissions from the vehicle during everyday driving, i.e., under non-test conditions, were well above the federally imposed legal limit.

{¶ 3} Several years into that scheme, Volkswagen learned that its emissions-control software was not working properly and was causing certain performance problems in its vehicles. Volkswagen updated the software to fix those problems and to continue skirting federal emissions standards. Starting around 2013, Volkswagen installed the improved and updated software in new vehicles slated for sale in the United States. Without telling its customers the true reason why, Volkswagen also installed the updated software in its older vehicles through a voluntary recall program and when its customers brought their vehicles in for routine maintenance.

{¶ 4} Eventually, the United States Environmental Protection Agency ("EPA") discovered Volkswagen's scheme. In a subsequent enforcement action, Volkswagen admitted to all of this and agreed to pay a $2.8 billion penalty in connection with its wrongdoing.

{¶ 5} In 2016, then Ohio attorney general Mike DeWine sued Volkswagen for its vehicle-emissions tampering, alleging that Volkswagen's conduct, which impacted approximately 14,000 vehicles that had been sold or leased in Ohio, violated Ohio's Air Pollution Control Act, R.C. 3704.01 et seq. As relevant here, Volkswagen moved to dismiss the attorney general's claims on the grounds that Ohio's anti-tampering statute was preempted by the federal Clean Air Act, 42 U.S.C. 7401 et seq., and that the attorney general's claims were therefore precluded. The trial court agreed with Volkswagen's preemption argument and granted Volkswagen's motion to dismiss.

{¶ 6} On appeal to the Tenth District, appellee, Ohio Attorney General Dave Yost,² argued that the trial court erred when it determined that federal preemption principles barred the state's claims against Volkswagen, because the federal Clean Air Act draws a critical distinction between new and used vehicles. While the attorney general conceded below that federal law alone governs emissions from new vehicles, he argued that the federal legislative scheme does not preempt Ohio law and preclude state-based claims concerning post-sale tampering with a vehicle's emissions-control system.

{¶ 7} The Tenth District agreed with the attorney general, concluding that the federal Clean Air Act evinces "no clear and manifest congressional 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.

{¶ 8} Following the Tenth District's decision, Volkswagen appealed to this court and we accepted its appeal to consider whether the federal Clean Air Act either expressly or impliedly preempts state-law claims against a manufacturer for its post-sale emissions-control tampering. See 158 Ohio St.3d 1450, 2020-Ohio-1090, 141 N.E.3d 985.

II. ANALYSIS

A. Federal Preemption

{¶ 9} Before turning to whether federal law expressly or impliedly preempts Ohio's anti-tampering law and precludes the state-law claims involved here, it is helpful to review some basic principles regarding federal preemption.

{¶ 10} The doctrine of federal preemption originates 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." Article VI, cl. 2.

{¶ 11} Under the Supremacy Clause, the United States Congress has the power to preempt state law. In re Miamisburg Train Derailment Litigation , 68 Ohio St.3d 255, 259, 626 N.E.2d 85 (1994) ; see also Gibbons v. Ogden , 22 U.S. 1, 210-211, 9 Wheat. 1, 6 L.Ed. 23 (1824) ("the act of Congress, or the treaty, is supreme; and the law of the State, though enacted in the exercise of powers not controverted, must yield to it"). Congress may do so either expressly or impliedly. Kansas v. Garcia , ––– U.S. ––––, 140 S.Ct. 791, 801, 206 L.Ed.2d 146 (2020) ; Girard v. Youngstown Belt Ry. Co. , 134 Ohio St.3d 79, 2012-Ohio-5370, 979 N.E.2d 1273, ¶ 14.

{¶ 12} When Congress expressly preempts state law, it explicitly says so with clear statutory language. English v. Gen. Elec. Co. , 496 U.S. 72, 78-79, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990). When considering whether preemption is implied, courts look to congressional intent to determine whether Congress meant to preempt state law without saying as much. See id. at 79, 110 S.Ct. 2270. Identifying implied preemption is thus a little more complicated than identifying express preemption, but courts generally find this type of preemption in two circumstances.

{¶ 13} The first circumstance occurs when Congress has enacted a legislative and regulatory scheme that is so pervasive " ‘that Congress left no room for the States to supplement it’ " or when the legislative and regulatory scheme " ‘touch[es] a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject.’ " (Brackets added in English .) Id. , quoting Rice v. Santa Fe Elevator Corp. , 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed. 1447 (1947). Implied preemption of this variety is referred to as "field preemption." English at 79, 110 S.Ct. 2270. Volkswagen has not presented a field-preemption argument here, so we focus our analysis on the second type of implied preemption, which is discussed below.

{¶ 14} The second circumstance in which implied preemption is found occurs when a state law "actually conflicts with federal law." Id. This type of implied preemption is fittingly referred to as "conflict preemption." Id. at fn. 5. Conflict preemption may be broken down further into subcategories depending on whether the conflict exists because (1) compliance with both state and federal law is impossible, id. at 79, 110 S.Ct. 2270, citing Florida Lime & Avocado Growers, Inc. v. Paul , 373 U.S. 132, 142-143, 83 S.Ct. 1210, 10 L.Ed.2d 248 (1963), or (2) the state law " ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,’ " id. , quoting Hines v. Davidowitz , 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1941).

B. Standard of Review

{¶ 15} Because the "purpose of Congress is the ultimate touchstone," Retail Clerks Internatl. Assn., Local 1625, AFL-CIO v. Schermerhorn , 375 U.S. 96, 103, 84 S.Ct. 219, 11 L.Ed.2d 179 (1963), preemption—whether express or implied—is primarily a question of legislative intent and so our focus is on the text and structure of the provisions involved. Ohio State Bldg. & Constr. Trades Council v. Cuyahoga Cty. Bd. of Commrs. , 98 Ohio St.3d 214, 2002-Ohio-7213, 781 N.E.2d 951, ¶ 46 ; Malone v. White Motor Corp. , 435 U.S. 497, 504, 98 S.Ct. 1185, 55 L.Ed.2d 443 (1978). Preemption is thus a question of law, Pinchot v. Charter One Bank, F.S.B. , 99 Ohio St.3d 390, 2003-Ohio-4122, 792 N.E.2d 1105, ¶ 39, and we conduct a de novo review of a judgment that was based on preemption grounds. See Menorah Park Ctr. for Senior Living v. Rolston , 164 Ohio St.3d 400, 2020-Ohio-6658, 173 N.E.3d 432, ¶ 12.

C. The Federal Clean Air Act and Ohio's Air Pollution Control Act

1. The Federal Clean Air Act Does Not Expressly Preempt...