Photo credit: AP Images

Three Volkswagen dealerships from the Illinois-based Napleton Automotive Group sued Volkswagen Wednesday for damages stemming from the Dieselgate scandal, reports Automotive News. This lawsuit is in defiance of a Volkswagen dealer council effort to resolve dealer grievances outside of the courts.

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The Napleton Automotive Group has every right to be particularly raw about Dieselgate, given that they acquired an Urbana, Ill., Volkswagen dealership just three days before the EPA first announced Volkswagen’s emissions issues on Sept. 18 last year.

That timing raised more than a few eyebrows at the Napleton Automotive Group. If the EPA was to the point of making a public announcement, the dealers’ attorney Steve Berman explained to Automotive News that the company had to have known of the scandal’s repercussions to Volkswagen dealers at the time of Napleton’s sale:

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Steve Berman, the attorney representing Napleton’s stores, called the deal a “sickening display of VW’s disregard for its dealer franchisees,” saying in a statement that VW “withheld the truth and pushed the sale through, knowing well that Ed Napleton was purchasing a dealership that would almost immediately plummet in value.”

The 111-page lawsuit filed by law firm Hagens Berman Sobol Shapiro seeks class-action status and accuses Volkswagen of defrauding its own outlets, per Automotive News. Hagens Berman Sobol Shapiro is the same firm representing thousands of Volkswagen owners who have filed suit against the company.

The lawsuit alleges that Volkswagen knowingly violated state and federal laws designed to protect dealerships by illegally skirting emissions laws. It also claims that Volkswagen engaged in a criminal racketeering enterprise in doing so.

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Furthermore, the suit alleges that Volkswagen engaged in favoritism in pricing and allocation and illegally funneled business to its captive finance arm, Volkswagen Credit.

Meanwhile, dealers remain extremely unhappy with Volkswagen’s lack of response to the Dieselgate scandal. Continued promises of “we’re working on it” don’t cut it when dealers have cars they can’t sell and a brand with a sharp stigma against it.

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Napleton Automotive Group President Ed Napleton said in a statement that this inaction from the company is precisely what led him to file suit. As quoted by Automotive News:

What is really discouraging and led me to file this lawsuit is that Volkswagen has wholly failed to respond to dealer concerns in a substantive manner. It has talked for months about multiple plans, but done nothing and left us dealers in the red, and in limbo.

Meanwhile, representatives from the Volkswagen dealer council maintain that this lawsuit does not reflect most of their dealers’ desires.

A joint statement released by two council members, Chairman Alan Brown and Dealer Investment Committee head Jason Kuhn, revealed that the council isn’t surprised that Napleton would sue, however, they are still looking for a quicker resolution outside of court. As quoted by Automotive News:

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It is not unexpected that a few outlier dealers would file a lawsuit against VW. Some dealers view litigation as an end-game strategy and nothing more. Filing a lawsuit may provide a headline or two, but it is substantially longer, more contentious and a much more costly path towards a settlement.

Brown and Kuhn are from American Volkswagen dealerships as well. Brown is the general manager of Lewisville Volkswagen, and Kuhn serves as chairman of the Kuhn Automotive Group. The Dealer Investment Committee which Kuhn serves on was formed specifically for discussions of a settlement with Volkswagen.

Volkswagen, of course, told Automotive News that they’re reviewing the complaint and still researching a fix for affected cars. How many complaints do they need to review before they release anything on a fix for the cheating diesels?