Car dealers sue VW and Scout Motors in class-action lawsuit

On March 3, a class-action lawsuit was initiated by two dealers against Scout Motors, Scout Motors Sales LLC, Volkswagen Group of America, and Volkswagen AG in the U.S. District Court for the Eastern District of Virginia. The lawsuit automatically includes all Volkswagen dealers in the U.S. and does not require any action on their part. The two lead plaintiffs, Sunrise Imports (doing business as Volkswagen of West Islip in New York) and Curran Volkswagen from Connecticut, are representing the class in the lawsuit.

Attorney Leonard Bellavia, from Bellavia Cohen P.C., who is representing the plaintiffs, stated that the dealers accuse the Scout model of violating the manufacturer’s dealer agreements. The complaints listed in the suit include breach of contract against all four defendants, conspiracy to injure a business relationship against all four defendants, and interfering with a contract against only the Scout defendants.

The lawsuit points out that Volkswagen has a legal and contractual obligation to sell its vehicles directly to VW-authorized dealerships, who then sell the vehicles to consumers. However, the plaintiffs claim that Volkswagen is attempting to avoid these obligations by selling its new electric vehicles, known as Scout vehicles, directly to consumers. This move has allowed Scout to amass $15 million in reservation fees from customers who want to purchase a Scout vehicle, bypassing the dealer network.

The damages caused by this action are referred to as cascading damages by Bellavia. The plaintiffs are seeking a jury trial, monetary damages, legal fees, and an injunction against Scout to prevent them from selling vehicles directly to consumers. While a specific monetary figure has not been named yet, it is estimated that the damages could amount to billions of dollars.

Hagens Berman Sobol Shapiro LLP, a prominent class-action law firm, is also representing the plaintiffs in this case. The firm has successfully sued Volkswagen in the past, securing a nearly $15 billion settlement for consumers. This lawsuit is part of a series of legal actions against Scout Motors, Volkswagen, and associated companies. Other suits have been filed in Florida and California, seeking similar remedies.

Attorney Leonard Bellavia stated that dealers are often reluctant to sue their manufacturers, as they are wary of incurring legal fees and damaging their relationship with the factory. He noted that manufacturers sometimes take advantage of this reluctance. The class-action lawsuit against Scout Motors is seen as a significant step for dealers, as it allows them to act collectively without incurring individual costs.

The lawsuit aims to hold Volkswagen and Scout Motors accountable for their actions and send a message to other manufacturers that dealers are not willing to tolerate violations of their agreements. The case has the potential to have far-reaching implications for the automotive industry, as dealers look to protect their rights and interests in the marketplace.