Napleton Orlando Imports, LLC v. Volkswagen Group of America, Inc.

Background

Volkswagen dealerships brought a proposed class action alleging that Robert Bosch GmbH and Robert Bosch LLC knowingly participated in Volkswagen’s “clean diesel” emissions fraud. The dealerships claimed they were harmed and sought damages under the Racketeer Influenced and Corrupt Organizations Act (RICO), a federal law allowing certain private claims for business or property injuries caused by racketeering, and under state civil-conspiracy laws.

The Bosch defendants moved for summary judgment, which asks whether the evidence allows a reasonable fact finder to rule for the opposing party. They argued that, after more than two years of discovery, the named dealerships had not identified damages that the law allowed them to recover. Bosch also moved to exclude the dealerships’ expert evidence.

RICO damages

The court examined four categories of claimed damages.

First, the dealerships claimed that Volkswagen’s stop-sale orders made inventory worthless and caused storage and maintenance costs. The court found that Volkswagen’s support payments covered the costs of servicing, storing, and financing the vehicles, and that Volkswagen later paid for modification and preparation work. The dealerships sold all the vehicles they had in inventory, generally at a profit, and the one dealership that lost money on certain sales received support payments exceeding those losses. The court concluded that the dealerships did not suffer losses directly from the stop-sale orders.

Second, the dealerships claimed lost profits from vehicles Volkswagen would have manufactured and sold in the future, along with related service, trade-in, and used-vehicle revenue. The court held that these losses were not caused by racketeering activity as RICO requires. The dealerships had benefited from selling the noncompliant vehicles while the fraud continued, and the alleged losses arose when the fraud was discovered and the vehicle line was discontinued. The court also found unsupported and speculative the dealerships’ theory that Volkswagen could have produced legal vehicles attracting similar consumer demand through 2027.

Third, the dealerships claimed that Volkswagen’s buyback of more than 385,000 vehicles reduced their service and replacement-parts revenue. The court again found that the losses resulted from discovery of the fraud and the resulting buyback, rather than from the fraud itself. The required connection between the alleged racketeering and the claimed damages was therefore missing.

Fourth, the dealerships claimed harm to goodwill. The court reaffirmed its prior conclusion that a decline in goodwill was not a recoverable RICO injury in this case because goodwill is an intangible interest. The dealerships had not identified controlling authority requiring a different result and had not offered evidence supporting the alleged goodwill losses.

Because the dealerships had identified no damages recoverable under RICO, the court concluded that their RICO claims could not proceed.

State-law claims

The dealerships also asserted civil-conspiracy claims under Pennsylvania, Florida, and California law. The court explained that these claims likewise required proof that the alleged conspiracy caused the claimed damages. Applying its analysis of the RICO damages, the court found no legally supported damages from the stop-sale orders, the discontinuation of the vehicle line, or the buyback. It also found no authority or evidence supporting recovery for goodwill losses under the relevant state laws.

Disposition

The court granted the Bosch defendants’ motion for summary judgment. The order states that the dealerships had not submitted proof of damages recoverable under their claims. The court also denied Bosch’s motion to exclude the dealerships’ expert evidence; it did not consider the merits of that exclusion motion because summary judgment was warranted even if the expert’s damage estimates were considered. Judge Charles R. Breyer signed the order.