April 10, 2016 — On Wednesday, Ed Napleton, owner of one of the largest dealer groups in the country, filed a lawsuit against Volkswagen alleging the automaker engaged in criminal racketeering. Napleton owns three Volkswagen dealerships acquiring the Urbana, IL store three days before the diesel emissions scandal exploded in September.
Napleton also claims the manufacturer directed business to its finance arm using practices that violated state franchise laws.
The lawsuit is the third time Napleton has sued a manufacturer since July 2014 when he filed a suit against Land Rover in a Right of First Refusal case that kept him from buying stores in Long Island. He then sued Fiat Chrysler Automobiles earlier this year for lying about sales. The case against JLR has been settled. The lawsuit involving FCA is ongoing.
Dealers on Volkswagen’s National Dealer Council spent last week trying to head off any dealer-related lawsuits against the beleaguered automaker. Other Volkswagen dealers privately indicated to TBR during the National Automobile Dealers Assn. convention in Las Vegas last week that a class action lawsuit was the last thing they needed. They prefer to see the manufacturer announce a solution U.S. regulators will accept and then begin working on a rebranding strategy to get beyond the scandal. One Volkswagen dealer expressed he would rather go without further financial assistance from the automaker if it meant coming up with a fix in the next few weeks.
Dealers have set up a group to negotiate for reparations, reportedly as much as $1 million over the next few years. Media reports indicate New York attorney Leonard Bellavia has drafted a complaint in preparation for a class action lawsuit against the German automaker. Whether that suit is filed depends on whether dealers can negotiate a settlement with Volkswagen. (Bellavia represented Napleton in his previous two lawsuits. Seatlle law firm Hagens Berman Sobol Shapiro is representing Napleton in the case against Volkswagen.)
Volkswagen executives and dealers did not talk about reparations during the highly anticipated franchise meeting at NADA last week. NADA changed the meeting room three times to increase space to account for nearly 600 dealers — up from 250 in normal years. It was a meeting devoid of expected fireworks as Volkswagen officials were circumspect regarding potential solutions to the diesel issue. CEO Herbert Diess told dealers the automaker is working to redefine the brand, strengthen the relationship with its dealers along with a stronger portfolio of products. Meanwhile, Diess said that VW plans to give the U.S. team more freedom and responsibility.
He refrained from setting a sales target for the U.S. market during the meeting but emphasized the automaker will work to develop consistent growth for the future with new SUVs hitting the market in 2017. Volkswagen also agreed to double the planned production of the new Golf Alltrack wagon to 75,000, scheduled for showrooms later this fall. Meanwhile, the crossover SUV, the CrossBlue, should be in showrooms in early 2017.
But dealers may have to wait for a solution to the diesel issue. After Volkswagen missed its March 24 deadline for coming up with a fix, U.S. District Judge Charles Breyer extended the deadline to April 21. Reports, though, indicate executives are not confident they can hit the new deadline.
For more on our coverage of the Volkswagen scandal, click Here.