DC Circuit Affirms $72 Million Adverse Judgment Against Volvo Powertrain

In a decision released Friday in the case of United States of America v. Volvo Powertrain Corp., the DC Circuit affirmed the lower court’s decision finding that a Consent Decree entered into by several engine manufacturers to settle civil complaints that they had violated federal law by equipping certain engines with “defeat devices” to suppress emissions during EPA tests applied to Volvo Powertrain. The terms of the Consent Decree also required these manufacturers to attain EPA emissions standards ahead of schedule.

At issue here were Volvo Penta engines, which Volvo argued were not subject to the terms of the Consent Decree. In a long opinion interpreting the Consent Decree, Judge Srinivasan, writing for a unanimous panel, held that the consent decree, by its terms, did apply to this Volvo plant, noting that certain issues had been forfeited when they were not argued before the trial court. Interestingly, the court also held that the relevant regulations, located at 40 C.F.R. Part 89, apply to all engines for which a manufacturer seeks a certificate of conformity, regardless of whether the engines are sold in the United States.

The action was prompted by a tip from Caterpillar Inc., one of Volvo Penta’s competitors, complaining that these engines should be part of the enforceable provisions of the Consent Decree.

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