By pacbiztimes Friday, September 25th, 2015

Brian Martenis has buyer’s remorse.

The Santa Maria resident purchased a brand new Volkswagen Golf SportWagen on Aug. 29 because he was attracted to the Golf’s “clean diesel” engine, which boasted economical gas mileage, reliability, quality performance, good resale value and low emissions, Martenis said.

He opted to spring for the new car to replace his gas-guzzling Toyota Tacoma truck when his commute for his firefighting job got longer.

“My Tacoma had a lifetime warranty, I wish I had that back,” Martenis told the Business Times.

Martenis felt a sinking feeling in his gut when he heard the U.S. Environmental Protection Agency announce on Sept. 18 that the German automaker blatantly cheated the Clean Air Act, which limits harmful emissions.

Volkswagen said on Sept. 22 that it installed software in 11 million of its cars, including the 2015 Golf, which duped regulators assessing toxic exhaust.

The “defeat device” turned on the full emissions controls only during emissions testing. When the car was driven normally, the effectiveness of the emissions pollution control devices was reduced by up to 40 percent.

“This is my fourth VW purchase,” Martenis said. “I’m obviously pretty upset. I was trying to do my part to help the environment. I’m concerned that VW lied and cheated the system since 2009. That brings more questions as to the integrity of the company as a whole.”

Martenis, along with an estimated 50,000 other diesel VW owners in California, own cars they can’t resell as of now. Regulators demand that the automaker fix the cars’ computers but Martenis is worried that will affect his car’s gas mileage, torque and performance.

He has filed complaints with the Better Business Bureau and the Consumer Finance Protection Bureau seeking a full refund but has had no luck yet. Martenis is on the hook for about $27,000, he said.

“Even if they fixed the problem and it doesn’t change the performance, there’s a stigma associated with the resale value,” Martenis said. “One of the selling points was that it would resell for a good amount even with a ton of miles because of its renowned reliability.”

That’s the basis of a class-action lawsuit that six Volkswagen owners from Santa Barbara County filed against the German automaker’s U.S. manufacturer and distributor Volkswagen Group of America, which is based in Virginia.

“’Clean diesel’ turns out to be the greatest oxymoron of the 21st century,” attorney Barry Cappello told the Business Times. Cappello is a partner of Cappello & Noel, the Santa Barbara law firm filing the class-action suit.

The claim is filed in Santa Barbara County Superior Court on behalf of all California drivers who owned or leased any diesel VW Jetta from 2009-15, VW Jetta SportWagen from 2009-14, VW Beetle from 2013-15, Audi A3 from 2010-15, VW Golf from 2010-15, 2015 VW Golf SportWagen, and VW Passat from 2012-15. The lawsuit is also filed against Santa Barbara car dealer Santa Barbara Volkswagen, Solazyme and Amyris.

San Francisco-based Solazyme and Emeryville-based Amyris partnered with Volkswagen to measure the environmental impacts of clean-diesel technology.

“We chose to file in California State Court here in Santa Barbara because there are California entities that VW worked with to ensure their emissions controls were meeting government standards,” said Leila Noel, a partner of Cappello & Noel. “We believe these entities along with Volkswagen knew the numbers were rigged. We have limited our case to California. Most other firms are filing for a nationwide class.”

The lawsuit is charging the defendants with fraudulent concealment, violation of California’s False Advertising Act and violations of California’s Unfair Competition Law.

Another Santa Barbara-based law firm, Keller Rohrback, also filed a lawsuit in federal court on behalf of seven named plaintiffs from California, Washington and Connecticut.

“Everyone is starting to realize this is not just an engineering mistake or negligence, this is some hardcore deceit at the highest level of a company,” Cappello said. “Volkswagen has such a footprint in the Tri-Counties, VW has emissions facilities in Oxnard and Thousand Oaks.”

There are Volkswagen dealerships in Santa Maria, Santa Barbara, Ventura and Westlake Village.

“Any dealer that is selling these cars is in trouble,” Cappello said.

A June Volkswagen news release stated that Solazyme and Amyris found that “advanced renewable fuels in the test offered comparable performance to standard crude-based diesel fuel blends while producing less CO2 emissions on average.”

“How could every car always pass emission tests?” Cappello asked. “It should’ve been a red flag at VW service dealers.”

Tom Oliver, president of Santa Barbara-based Smog It, has serviced many diesel Volkswagen cars over the past few years but never noticed any issues, he said. Cars made after 2000 do not require physical smog checks by monitoring emissions through the car’s exhaust, only a computer diagnostic test per California standards, Oliver said.

“There’s an ongoing learning curve when it comes to those diesel vehicles,” he said.

An independent nonprofit commissioned a study by West Virginia University that discovered a discrepancy between lab and on-road emissions testing, according to a report published by the EPA.

The International Council for Clean Transportation handed over the results to the EPA and the California Resource Board in May 2014.

Volkswagen is the world’s largest automaker and the industry leader in diesel car sales in the United States, according to the Cappello & Noel lawsuit. The EPA said that the German automaker could face up to $18 billion in penalties.

Volkswagen shares have dropped about 30 percent since the announcement and it has lost about a third of its market cap. The company said it has set aside $7.3 billion in the third quarter to deal with the problem.

Volkswagen CEO Martin Winterkorn has taken the fall, announcing his resignation on Sept. 23. He accepted blame on behalf of the company but did not admit to any “personal wrongdoing.”

“I would think twice before buying another VW,” said Haik Hakobian, who owns Santa Barbara-based repair shop Haik’s German Autohaus. He serviced four Volkswagen diesels but didn’t notice anything out of the ordinary. “Whatever punishment they get, they deserve. But it’s not always the company’s fault; it’s often people working for the company who schemed it. They usually find ways to escape harsh punishments. They should go to jail.”

In the meantime, Martenis is stuck with a $27,000 bill.

“I paid for something I didn’t actually get,” said Martenis, adding that he financed it with a six-year loan.

“That’s salt in the wound. I’m pretty upset about it. I’m not really proud of my purchase.”

• Contact Alex Kacik at akacik@pacbiztimes.com