Reply Brief — Volkswagen Aktiengesellschaft, et al., Petitioners v. Ohio, ex rel. Dave Yost, Attorney General

No. 21-312

In the Supreme Court of the United States

VOLKSWAGEN AKTIENGESELLSCHAFT, ET AL.,

PETITIONERS

v.

STATE OF OHIO EX REL. DAVE YOST, ATTORNEY

GENERAL, RESPONDENT.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE SUPREME COURT OF OHIO

REPLY BRIEF FOR PETITIONERS

MICHAEL H. STEINBERG

SULLIVAN & CROMWELL LLP

1888 Century Park East

Los Angeles, CA 90067

JUDSON O. LITTLETON

SULLIVAN & CROMWELL LLP

1700 New York Ave., N.W.

Washington, DC 20006

ROBERT J. GIUFFRA, JR.

Counsel of Record

DAVID M.J. REIN

MATTHEW A. SCHWARTZ

SULLIVAN & CROMWELL LLP

125 Broad Street

New York, NY 10004

(212) 558-4000

giuffrar@sullcrom.com

Counsel for Petitioners Volkswagen Aktiengesellschaft, Audi Aktiengesellschaft, Volkswagen Group of America, Inc., and Audi of America,

LLC

[Additional parties and counsel listed on signature page]

TABLE OF CONTENTS

A. This Court has jurisdiction...................................... 4

B. The square conflict among lower courts

warrants review ........................................................ 6

C. The decision below is incorrect ............................... 8

(I)

TABLE OF AUTHORITIES

Page(s)

Cases:

Abney v. United States,

431 U.S. 651 (1977) ............................................... 2, 6

Buckman Co. v. Plaintiffs’ Legal Comm.,

531 U.S. 341 (2001) ................................................. 12

Coventry Health Care of Mo., Inc. v.

Nevils,

137 S. Ct. 1190 (2017) ............................................... 5

Cox Broad. Corp. v. Cohn,

420 U.S. 469 (1975) ........................................... 2, 4, 6

Engine Mfrs. Assn. v. S. Coast Air Quality

Mgmt. Dist.,

541 U.S. 246 (2004) ............................................... 6, 9

Engine Mfrs. Assn. v. EPA,

88 F.3d 1075 (D.C. Cir. 1996) ............................ 5, 11

English v. Gen. Elec. Co.,

496 U.S. 72 (1990) ..................................................... 7

Goodyear Atomic Corp. v. Miller,

486 U.S. 174 (1988) ................................................... 5

Murphy v. Nat. Collegiate Athletic Assn.,

138 S. Ct. 1461 (2018) ............................................... 7

Southland Corp. v. Keating,

465 U.S. 1 (1984) ....................................................... 5

In re Volkswagen “Clean Diesel” Mktg.,

Sales Pracs., & Prods. Liab. Litig.,

959 F.3d 1201 (9th Cir. 2020) ............................ 2, 11

(II)

III

Statutes:

42 U.S.C.

§ 7541(h) .................................................................... 9

§ 7543(a) ......................................................... passim

§ 7543(d) .................................................................. 11

Ariz. Rev. Stat. § 28-1522 .............................................. 6

Rules and Regulatory Materials:

59 Fed. Reg. 31,306 (June 17, 1994) ........................... 10

Miscellaneous:

S. Shapiro, et al., Supreme Court Practice

(11th ed. 2019) ....................................................... 4, 6

In the Supreme Court of the United States

VOLKSWAGEN AKTIENGESELLSCHAFT, ET AL.,

PETITIONERS

v.

STATE OF OHIO EX REL. DAVE YOST, ATTORNEY

GENERAL, RESPONDENT.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE SUPREME COURT OF OHIO

REPLY BRIEF FOR PETITIONERS

The divided decision below casts aside a half-century

of national regulation of auto manufacturers’ development

and maintenance of emission controls. The decision’s reasoning would allow the State of Ohio—and every other

state and local government—to regulate any changes

manufacturers make to emissions systems after sale, including routine fixes to meet federal warranty requirements. Having deepened a split of authority that has injected substantial uncertainty and disarray into the regulatory landscape facing auto manufacturers, the decision

below warrants this Court’s immediate review.

First, this Court has jurisdiction because this case

falls within well-established exceptions to the final judgment rule:

• The Ohio Supreme Court has “finally decided” the

federal preemption issue, and reversal of the deci-

(1)

2

sion below “would be preclusive of any further litigation.” Cox Broad. Corp. v. Cohn, 420 U.S. 469,

482-483 (1975). Deferring review of that preemption issue would “seriously erode [the] federal policy,” id. at 483, of protecting auto manufacturers

from the regulatory chaos—and resulting burden

on interstate commerce—of every state and locality separately regulating manufacturers’ nationwide emissions conduct.

• Because the Clean Air Act (“CAA”) restricts states

from even “attempt[ing] to enforce” tampering

laws against manufacturers’ nationwide conduct,

allowing this case to proceed would itself violate

the very right petitioners seek to vindicate. See

Abney v. United States, 431 U.S. 651, 659-660

(1977).

• Finally, the Court’s “failure to decide the question

now will leave [companies] operating in the shadow

of the civil and criminal sanctions of a rule of law

and a statute the constitutionality of which is in serious doubt.” Cox, 420 U.S. at 485-486.

Second, respondent admits that the decision below

conflicts with decisions on the same question by the Alabama Supreme Court and Tennessee and Minnesota appellate courts. Respondent can only disparage those

other state courts’ decisions and speculate that the conflict may resolve itself if those courts abandon their own

precedent and follow the flawed decision below (and the

erroneous Ninth Circuit decision on which it relied, which

is the subject of another pending petition for certiorari).

See In re Volkswagen “Clean Diesel” Mktg., Sales Pracs.,

& Prods. Liab. Litig., 959 F.3d 1201 (9th Cir. 2020)

(“Counties”), cert. pending, No. 20-994. There is nothing

approaching consensus here: fifteen courts have now

ruled on the question presented, and 16 of the 33 judges

3

have correctly found that the CAA preempts state and local tampering claims against manufacturers based on nationwide conduct. Lower courts have stayed other cases

brought by states and counties pending this Court’s resolution of this conflict. 1

Respondent has also previously agreed that the question squarely presented here is exceptionally important.

See Ohio Juris. Mem., Ohio S.C. Dkt., at 1, 6 (Feb. 14,

2020) (stating the case “involves a substantial question”

that is “being litigated nationwide”). As has been explained by seven organizations representing U.S. and

global automakers, part suppliers, dealers, and other

manufacturers, as well as four former senior EPA, California Air Resources Board, and Department of Justice

officials, the present uncertainty on this question of nationwide importance is untenable. Manufacturers perform post-sale emissions updates on millions of cars annually, including to fulfill their obligations under federal

warranties. But under the majority’s reasoning below,

they cannot do so without risking exposure to “potentially

ruinous liability.” Product Liability Advisory Council et

al. Br. 7; Alliance for Automotive Innovation et al. Br. 5.

The only way to avoid this risk is if manufacturers can

first ensure that no state or locality deems such updates

“tampering” under local law—far from a straightforward

determination given the complexity of emissions controls.

Alliance Br. 15-16. The cost of doing so (or threat of suit)

will chill even beneficial updates.

Third, like the majority below, respondent misconstrues the preemptive scope of the CAA. Whether as a

1

See Order, People v. Volkswagen Aktiengesellschaft, Appeal

No. 1-18-1382 (Ill. App. Ct. Mar. 16, 2021); Env. Prot. Comm’n of

Hillsborough Cty. v. Mercedes-Benz USA, LLC, No. 20-cv-2238, Dkt.

No. 81 (M.D. Fla. Feb. 24, 2021).

4

matter of express or implied preemption, the CAA authorizes EPA alone to regulate manufacturers’ nationwide

conduct affecting their vehicles’ emissions compliance

throughout their “useful life.” By allowing 50 states and

thousands of localities to separately sue manufacturers

under their own laws and local priorities, the Ohio majority would prevent EPA from fulfilling its congressionally

mandated role to enforce uniform national emissions

standards.

A. This Court has jurisdiction.

As respondent has recently recognized (when not trying to avoid this Court’s review), “the finality doctrine is

‘pragmatic.’” Reply to Brief in Opposition in Ohio v. Ford,

No. 19-1191, p. 7 (quoting Cox, 420 U.S. at 486). This case

squarely falls within several well-established exceptions

to the final judgment rule. See Cox, 420 U.S. at 482-486;

S. Shapiro, et al., Supreme Court Practice § 3.7, pp. 3–30

to 3–31 (11th ed. 2019). Respondent is thus wrong (at 1)

that this case presents a “worse vehicle than Counties for

addressing the question presented.” 2

1. First, this Court has jurisdiction over cases where:

(i) “the federal issue has been finally decided in the state

courts”; (ii) “reversal of the state court on the federal issue would be preclusive of any further litigation”; and

(iii) “a refusal immediately to review the state court decision might seriously erode federal policy.” Cox, 420 U.S.

at 482-483. Respondent does not dispute that reversing

the Ohio majority’s final decision on this purely legal,

threshold preemption question would end this litigation

(and others).

2

If anything, this case would offer a better vehicle if, unlike in

Counties, No. 20-994, the full Court can participate in consideration

of the question presented.

5

As to the third element, the decision below upends a

federal policy in place for 50 years that EPA alone should

regulate auto manufacturers’ emissions-related conduct.

As Congress recognized, the economic realities of the industry require manufacturers to design, maintain, and

modify their vehicles on a nationwide basis. Congress’s

central purpose in preempting state and local regulation

was thus to avoid an “anarchic patchwork of federal and

state regulatory programs, a prospect which threatened to

create nightmares for the manufacturers.” Engine Mfrs.

Assn. v. EPA, 88 F.3d 1075, 1079 (D.C. Cir. 1996) (quotation

omitted).

That “regulatory chaos” and unpredictability is precisely what the decision below creates, and this conflict

can be resolved only by this Court’s immediate review.

Alliance Br. 3, 5. As amici explained, “a wait-and-see approach is untenable for the auto industry,” as manufacturers “now cannot implement . . . post-sale updates without

potentially exposing themselves to state and local tampering claims and potentially ruinous liability.” Id. at 5. This

Court has frequently exercised jurisdiction when statecourt preemption decisions threaten such important federal policies. See, e.g., Coventry Health Care of Mo., Inc.

v. Nevils, 137 S. Ct. 1190, 1195-1196 (2017) (denial of summary judgment regarding preemption under Federal

Employees Health Benefits Act); Goodyear Atomic Corp.

v. Miller, 486 U.S. 174, 178-180 (1988) (remand to administrative agency regarding preemption concerning nuclear facility); Southland Corp. v. Keating, 465 U.S. 1, 5-7

(1984) (denial of motion to compel arbitration involving issue of Federal Arbitration Act preemption of state law

limiting arbitrability).

2. This Court also has jurisdiction under the exception

for “cases where the subsequent state proceedings would

themselves deny the federal right for the vindication of

6

which review is sought in the Supreme Court.” Supreme

Court Practice § 3.7, at 3-31; see Abney, 431 U.S. at 659660. CAA Section 209(a) prohibits states and localities

from even “attempt[ing] to enforce” tampering laws

against manufacturers’ nationwide conduct. See Engine

Mfrs. Assn. v. S. Coast Air Quality Mgmt. Dist., 541 U.S.

246, 253 (2004) (examining the “standard-enforcement efforts that are proscribed by § 209” (emphasis added)).

Thus, petitioners “contest[] the very authority of the Government to hale [them] into court.” Abney, 431 U.S. at

659-660.

3. Finally, respondent ignores that, in Cox, this Court

held that it had jurisdiction to review a non-final state supreme court decision where: (i) the decision was “plainly

final on the federal issue”; (ii) reversal would “terminate[]” the litigation, even though petitioners “may prevail at trial on nonfederal grounds”; and (iii) “a failure to

decide the [federal] question now will leave” companies

“operating in the shadow of the civil and criminal sanctions of a rule of law and a statute the constitutionality of

which is in serious doubt.” 420 U.S. at 485-486. Respondent does not dispute that the first two criteria are satisfied, and the third is likewise easily met, given the unprecedented nature of respondent’s action and the deep split

of authority on whether such claims are preempted. 3

B. The square conflict among lower courts warrants review.

Respondent correctly admits (at 10) that “there is a

split of authority” between Ohio and the Ninth Circuit on

3

While respondent’s action involves only civil liability, other

states have enacted criminal anti-tampering provisions. See, e.g.,

Ariz. Rev. Stat. § 28-1522 (making it a misdemeanor to “tamper[] with

or remove[] any part of a vehicle” under certain conditions).

7

one side, and the decisions of the Alabama Supreme Court

and courts of appeals in Minnesota and Tennessee on the

other. See Pet. 17 n.4 (citing Missouri and Illinois trial

court decisions also finding preemption).

Respondent’s speculation (at 11) that the split may

“resolve itself”—i.e., if state agencies disregard precedent and bring preempted claims in an attempt to persuade those courts to reverse themselves—is no reason to

allow the split to persist and likely deepen. States and localities in the Ninth Circuit, Ohio, and Texas are currently

permitted to bring these claims, whereas states and localities in at least Alabama, Minnesota, Tennessee, Illinois,

and Missouri may not. The decision below is not binding

in those states, nor is its flawed reasoning likely to persuade those courts.

As amici have explained, manufacturers conduct recalls affecting, on average, six million cars annually, plus

additional voluntary, post-sale field fixes. Alliance Br. 7,

9. In fact, manufacturers are often required to make postsale emissions updates to satisfy their CAA obligations,

including CAA warranty requirements. It is thus critical

that this Court resolve this issue now rather than allowing

this split to persist on a question over which Congress

clearly intended nationwide uniformity.

Neither the split nor the importance of resolving it is

minimized by respondent’s argument (at 10-11) that there

is no conflict on express preemption. All forms of preemption “work in the same way,” Murphy v. Nat. Collegiate

Athletic Assn., 138 S. Ct. 1461, 1480 (2018): whether labeled “express” or “implied,” preemption “fundamentally

is a question of congressional intent,” English v. Gen.

Elec. Co., 496 U.S. 72, 78-79 (1990).

8

C. The decision below is incorrect.

1. Respondent acknowledges (at 12) that “‘relating to’

[in § 209(a)] has a broad meaning,” and that “laws nominally targeting post-sale conduct can ‘relate to’ emissioncontrol systems on new cars.” But that is not what the

decision below held. Instead, relying on the Ninth Circuit’s flawed reasoning in Counties, the Ohio majority

adopted a bright-line rule that § 209(a) “no longer applies”

after a car “is first sold.” Pet. App. 9a. That broad holding

renders the expansive phrase “relating to” in § 209(a) a

nullity. See Pet. 24-25. States and counties will undoubtedly rely on the Ohio majority’s “pre- and post-sale distinction,” Pet. App. 10a, as supporting their efforts to engage in unlimited regulation of manufacturers’ post-sale

updates, including those that, while not formally pre-approved by EPA, are necessary to comply with federallyrequired emission warranties.

As courts and EPA have long recognized, state and local enforcement impermissibly “relates back to the original design” of the engine whenever it seeks penalties

based on how the manufacturer designed and built the

original engine. Pet. 25-26. That occurs whenever the

post-sale modification seeks to rectify issues with the factory-installed emissions system. The claims here unquestionably relate back: had there been no defeat device installed in the factory, there would have been no post-sale

modifications to the defeat device for respondent to penalize.

Moreover, because the post-sale updates reduced

emissions, respondent’s claims depend on the cars’ noncompliance as manufactured. Respondent’s only answer

is to assert (at 13) that its tampering claims have “nothing

to do with problems pertaining to ‘factory-installed software,’” but that merely confirms that its view of the law

9

requires accepting that states can punish manufacturers

for cars that comply with EPA standards.

2. As this Court explained in South Coast—its only

decision construing § 209—courts must examine how

Congress directed EPA to enforce the CAA’s new-vehicle

standards to identify the “standard-enforcement efforts

that are proscribed by § 209.” 541 U.S. at 253. Respondent’s ipse dixit (at 14) that “nothing about the EPA’s enforcement of new-vehicle standards suggests that Ohio’s

Anti-Tampering Law is the sort of ‘standard-enforcement

effort[]’ that the Clean Air Act proscribes” ignores the numerous post-sale enforcement mechanisms the CAA directs EPA to employ—such as in-use testing, defect reporting, warranty compliance, recalls, and the CAA’s antitampering provision, Pet. 9-11—to ensure vehicles continue to meet those standards during their full useful life,

as required by the EPA certificate of conformity. 4

Through these post-sale mechanisms, EPA “enforce[s]

standard[s]” “relating to the control of emissions from

new motor vehicles,” 42 U.S.C. § 7543(a), and Congress

enacted § 209(a) at a minimum to bar states and localities

from “attempt[ing]” to duplicate that exclusive EPA role,

as confirmed by the CAA’s express bar on states even requiring manufacturers to test vehicle emissions post-sale,

42 U.S.C. § 7541(h)(2). Respondent never reconciles Congress’s bar on state testing with the Ohio majority’s view

that Congress thought all 50 states and thousands of localities could freely regulate manufacturers once their

cars are sold. 5 And respondent’s strawman argument (at

4

Former Officials Br. 13-17; Alliance Br. 10-14.

5

Notably, while touting its “E-Check” program requiring

Ohio “residents” to “test their cars’ emissions” (at 2), respondent fails

to acknowledge that it never requires manufacturers to test their vehicles’ emissions because it is prohibited by federal law from doing so.

10

14-15) that South Coast “cannot plausibly be read” “to

mean that the Preemption Clause’s scope ebbs and flows

based on the EPA’s current enforcement approach” ignores that the touchstone for South Coast is the authority

granted to EPA alone by Congress—through multiple

CAA provisions—not EPA’s “current enforcement approach.”

Moreover, respondent ignores EPA’s own interpretation of § 209(a) as preempting states and localities from

implementing “recall programs.” EPA explained that

“[i]n-use testing and recall programs of the type set forth

in [CAA] section 207 ensure compliance with standards

required to be met by manufacturers at the time of certification of the engine.” 59 Fed. Reg. 31,306, 31,330 n.28

(June 17, 1994) (emphasis added). EPA thus explained

that because recall programs “relate to the original manufacture of the engine” and “place the burden of compliance upon the manufacturer,” they fall within § 209(a)’s

scope. Ibid. Respondent offers no principled explanation

for how, under its view of preemption, states cannot require a recall, but can penalize one.

3. Respondent is also wrong (at 15) that there is no

textual support for petitioners’ interpretation that the

CAA preempts tampering claims against manufacturers

but not consumers or mechanics. Only manufacturers

make “new motor vehicles,” so § 209(a) by definition will

almost always preempt enforcement directed to manufacturers’ model-wide conduct. And only manufacturers are

subject to EPA’s comprehensive enforcement mechanisms ensuring nationwide compliance with CAA standards for vehicles’ entire useful life, all of which “relat[e] to

the control of emissions from new motor vehicles.”

42 U.S.C. § 7543(a).

11

Relatedly, respondent is wrong (at 16) that petitioners

“admit[]” that the savings clause in § 209(d)—which narrowly preserves states’ authority to regulate the “use, operation, or movement” of cars—authorizes states to prosecute tampering by consumers and mechanics. Respondent’s citation refers to petitioner’s argument that § 209(a)

does not preempt states from prosecuting tampering by

consumers and mechanics. As petitioners have consistently explained—and courts and EPA have found—

§ 209(d) only preserves state authority to regulate how

cars are driven, such as through “carpool lanes” or “programs to control extended idling of vehicles,” Engine

Mfrs. Assn., 88 F.3d at 1094, and thus provides no support

for respondent’s position that Congress imposed no limits

on state post-sale regulation of manufacturers.

4. Respondent cannot rehabilitate the majority’s implied preemption analysis. As the dissent (which respondent ignores) emphasized, allowing state tampering claims

based on manufacturers’ model-wide conduct “conflicts

both with the EPA’s immediate authority and the longerterm goals underlying the [CAA].” Pet. App. 22a.

Respondent does not dispute that the majority’s analysis would permit every state and locality to penalize manufacturers for any post-sale, model-wide change based on

their own local interests and preferences—heralding

what the Ninth Circuit called “staggering liability” for

manufacturers. Counties, 959 F.3d at 1225. The dissent

correctly recognized (Pet. App. 24a) that this would eviscerate Congress’s penalty scheme and EPA’s detailed

penalty policy for manufacturer tampering, and also undermine EPA’s ability to enter into comprehensive settlements with manufacturers, as EPA did here (before Ohio

and other decisions interpreted the CAA to allow unfettered state and local regulation of manufacturers’ postsale updates). Pet. 31-33. Respondent’s solution—that

12

manufacturers wait until oppressive penalties are assessed against them after trial, and hope to reverse them

in an appellate court for abuse of discretion—is no answer

given that Congress has expressed its intention that

states not even “attempt to enforce” such laws against

manufacturers. Moreover, the risk of exposure to these

claims from all 50 states and thousands of localities will

discourage manufacturers from making environmentally

and economically beneficial updates under EPA’s recall

and field fix processes. See, e.g., Alliance Br. 17.

5. Finally, respondent’s claim (at 19) that it is not suing

petitioners “because [Volkswagen] defrauded the EPA” is

belied by respondent’s multiple references (at 4-5, 16) to

petitioners’ “cheating” and “fraud[].” Respondent’s

claims seek penalties based on a post-sale update the true

nature of which was misrepresented to EPA. This Court’s

holding in Buckman Co. v. Plaintiffs’ Legal Committee,

531 U.S. 341, 347-353 (2001), that federal agencies should

redress misrepresentations made to them, squarely applies here, where EPA has already comprehensively redressed petitioners’ wrongdoing.

13

Respectfully submitted.

JOSEPH EISERT

KING & SPALDING LLP

1700 Pennsylvania Ave.,

N.W. Ste. 200

Washington, D.C. 20006

L. BRADFIELD HUGHES

ELIZABETH L. MOYO

PORTER, WRIGHT, MORRIS &

ARTHUR LLP

41 S. High Street, 29th Floor

Columbus, OH 43215

Counsel for Petitioners Dr. Ing. h.c.

F. Porsche AG, and Porsche Cars

North America, Inc.

ROBERT J. GIUFFRA, JR.

Counsel of Record

DAVID M.J. REIN

MATTHEW A. SCHWARTZ

SULLIVAN & CROMWELL LLP

125 Broad Street

New York, NY 10004

(212) 558-4000

giuffrar@sullcrom.com

MICHAEL H. STEINBERG

SULLIVAN & CROMWELL LLP

1888 Century Park East

Los Angeles, CA 90067

JUDSON O. LITTLETON

SULLIVAN & CROMWELL LLP

1700 New York Ave., N.W.

Washington, DC 20006

HUGH J. BODE

JACKIE M. JEWELL

REMINGER CO. L.P.A.

101 West Prospect Ave.,

Ste. 1400

Cleveland, OH 44115-1093

Counsel for Petitioners

Volkswagen Aktiengesellschaft,

Audi Aktiengesellschaft,

Volkswagen Group of America,

Inc., and Audi of America,

LLC

OCTOBER 2021