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In re Volkswagen Clean Diesel Litigation

Court of Appeals of Texas, Third District, Austin

July 28, 2017

In re Volkswagen Clean Diesel Litigation: Texas Clean Air Act Enforcement Cases

         FROM THE DISTRICT COURT OF TRAVIS COUNTY, 353RD JUDICIAL DISTRICT NO. D-1-GN-16-000370, HONORABLE TIM SULAK, JUDGE PRESIDING

          Before Chief Justice Rose, Justices Field and Bourland

          OPINION

          Jeff Rose, Chief Justice

         This appeal presents issues concerning State and local-government enforcement of the Texas Clean Air Act (TCAA).[1] Appellant, the State of Texas, and a number of Texas counties filed the underlying TCAA-enforcement lawsuits in various counties across Texas against the German automaker Volkswagen[2] after Volkswagen admitted that it had installed emissions "defeat devices" on certain of its diesel vehicles manufactured in the United States between 2009 and 2016. After the Texas Judicial Panel on Multidistrict Litigation transferred these TCAA-enforcement suits to Travis County District Court for consolidated and coordinated pretrial proceedings, [3] the State filed pleas to the jurisdiction challenging the pretrial court's jurisdiction over the eighteen county suits that had been filed after the State's suit. In this appeal, the State challenges the pretrial court's orders denying the State's pleas to the jurisdiction.[4] Based on our determination that the pretrial court has subject-matter jurisdiction over the eighteen county-filed lawsuits, we affirm the pretrial court's order denying the State's pleas to the jurisdiction.

         Background

         In September 2015, the EPA issued to Volkswagen a notice of violation of the federal Clean Air Act after Volkswagen admitted to installing unauthorized software-based "defeat devices" in approximately 480, 000 diesel-engine automobiles manufactured in the U.S. from 2009 through 2015.[5] The defeat devices installed on the Volkswagen- and Audi-branded vehicles "bypass, defeat, or render inoperative elements of the vehicles' emission control systems that exist to comply with [Clean Air Act] emission standards."[6]

         In the wake of the EPA's notice of violation, more than 600 environmental and consumer cases were filed against Volkswagen in both federal and state courts across the country.[7]In Texas, more than sixty consumer and environmental lawsuits were filed against Volkswagen by private parties, local governments, and the State. On Volkswagen's motion, the Texas cases were transferred to two multidistrict litigation (MDL) pretrial courts in Travis County for "consolidated or coordinated pretrial proceedings"-one court presiding over the consumer-protection cases and the other over the TCAA-enforcement cases filed by the State and various local governments.[8]

         This appeal arises from interlocutory proceedings in the environmental-MDL group, which consists of lawsuits filed by the following governmental entities:

• Harris County, filed in Harris County District Court on September 29, 2015, and Fort Bend County, filed in Fort Bend County District Court on October 7, 2015 (collectively, "the first-filing counties");
• The State of Texas, filed in Travis County District Court on October 8, 2015; and
• Bexar, Brazos, Dallas, Denton, Ector, El Paso, Hidalgo, Hunt, Jefferson, Lubbock, Montgomery, Nueces, Parker, Tarrant, Taylor, Travis, Victoria, Walker, and Webb counties, all filed in district courts in their respective counties after October 8, 2015; (collectively, "the later-filing counties").[9]

         In multiple motions, including the pleas to the jurisdiction at issue in this appeal, the State asked the pretrial court to dismiss the later-filing counties' lawsuits on various grounds such as lack of standing, justiciable interest, capacity, authority, and dominant jurisdiction. In those motions, the State argued that the TCAA's enforcement provisions[10] precluded the later-filing counties' lawsuits once the State had filed a TCAA-based lawsuit against Volkswagen. The MDL pretrial court denied the State's motions, and we denied the State's petition for permissive interlocutory appeal of the pretrial court's orders.[11] Here, the State appeals from the pretrial court's interlocutory order denying its pleas to the jurisdiction.[12]

         Analysis

         The State's challenge to the pretrial court's denial of the pleas to the jurisdiction is based on the State's contention that the TCAA's enforcement provisions preclude local governments from filing their own TCAA-enforcement lawsuits once the State has filed suit against a defendant for the same TCAA violations. That ban on later-filed suits, the State urges, means that the later-filing counties do not have a justiciable interest in pursuing their TCAA-enforcement claims and, thus, the pretrial court lacked subject-matter jurisdiction over the later-filing counties' lawsuits.

         Standard of review

         A plea to the jurisdiction challenges a trial court's authority to decide the subject matter of a specific cause of action.[13] Here, the State challenges the counties' standing-specifically, whether the counties have a justiciable interest in their claims. We review questions of subject-matter jurisdiction de novo.[14] The burden is on the counties to affirmatively demonstrate the trial court's jurisdiction.[15] When assessing a plea to the jurisdiction, our analysis begins with the live pleadings.[16] Although we may also consider evidence submitted to negate the existence of jurisdiction-and must do so when necessary to resolve the jurisdictional issue-we need not do so here because the underlying jurisdictional facts are not disputed.[17] We construe the plaintiffs' pleadings liberally, taking all factual assertions as true, and look to the plaintiffs' intent.[18] We must grant the plea to the jurisdiction if the counties affirmatively negate the existence of jurisdiction.[19]

          To the extent the parties' issues turn on construction of a statute, we review these questions de novo.[20] Our primary objective in statutory construction is to ascertain and give effect to the Legislature's intent.[21] In determining legislative intent, we begin with the statute's words.[22]"Where text is clear, text is determinative of that intent."[23] We consider the words in context, not in isolation.[24] We rely on the plain meaning of the text, unless a different meaning is supplied by legislative definition or is apparent from context, or unless such a construction leads to absurd results.[25]

          The TCAA's enforcement provisions

         The TCAA's purpose is to "safeguard the state's air resources from pollution by controlling or abating air pollution and emissions of air contaminants."[26] To that end, the TCAA prohibits the emission of air contaminants and activities that cause or contribute to air pollution.[27]The TCAA authorizes the Texas Commission on Environmental Quality (TCEQ or commission) to administer the TCAA, including granting TCEQ the authority to adopt administrative rules regarding car emissions.[28] Relevant here, TCEQ has adopted rules requiring air-quality-control systems on car engines and prohibiting the sale or use of emission-defeat devices.[29]

         TCEQ's authority to enforce the TCAA and the other statutes over which it has jurisdiction is codified in Chapter 7 of the Water Code.[30] Chapter 7 authorizes TCEQ to enforce the TCAA by imposing penalties for TCAA violations, either through administrative proceedings or, as is the case here, in a civil action brought by the Texas Office of the Attorney General under Subchapter D as follows:

(a) On the request of the executive director or the [TCEQ], the attorney general shall institute a suit in the name of the state for injunctive relief . . . to recover a civil penalty, or for both injunctive relief and a civil penalty.
. . . .
(c) The suit may be brought in Travis County, in the county in which the defendant resides, or in the county in which the violation or threat of violation occurs.[31]

         A violation occurs when a person violates a statute, rule, order, or permit relating to the TCAA.[32]In a civil suit, a violator "shall be assessed for each violation a civil penalty not less than $50 nor greater than $5, 000 for each day of each violation as the court or jury considers proper."[33]Continuing violations are subject to "a civil penalty not less than $100 nor greater than $25, 000 for each subsequent day and for each subsequent violation, " and "[e]ach day of a continuing violation is a separate violation."[34] As noted above, the amount of the penalty is determined by the fact finder.[35] Finally, the State is entitled to reasonable attorney fees and costs for its prosecution of a TCAA enforcement suit.[36]

         Subchapter H of Chapter 7, titled "Suit by Others, " authorizes local governments to enforce TCAA violations occurring in the local government's jurisdiction:

If it appears that a violation or threat of violation of . . . [the TCAA] . . ., or a rule adopted or an order or a permit issued under [the TCAA] has occurred or is occurring in the jurisdiction of a local government, the local government . . . may institute a civil suit under Subchapter D in the same manner as the commission in a district court by its own attorney for the injunctive relief or civil penalty, or both, as authorized by this chapter against the person who committed, is committing, or is threatening to commit the violation.[37]

         In a local-government suit, TCEQ is a "necessary and indispensable party, "[38] and the trier of fact is tasked with determining the amount of a civil penalty by considering, stated generally, the nature of the violation, the impact of the violation, and various factors regarding the violator, including degree of culpability, violation history, and economic benefit gained from the violation.[39]

         Jurisdiction over the later-filed counties' enforcement suits

         The State maintains that the plain text of the TCAA's enforcement provisions precludes local governments from bringing enforcement suits once the State has initiated a claim for the same geographic area and that, as a result, the later-filing counties here lack a justiciable interest (a component of standing) in their TCAA enforcement actions.[40] We disagree. The plain and unambiguous language of the TCAA enforcement provisions authorize local governments to file enforcement suits without regard to the State's filing of an enforcement suit. Section 7.351 provides that a "local government may institute a civil suit under Subchapter D in the same manner as [TCEQ]" for a violation that is occurring or has occurred in the local-government's jurisdiction.[41]Subchapter D, as detailed above, defines a violation of the TCAA, sets the maximum for civil penalties, prescribes the procedure for and limits of a State suit for civil penalties, and requires that civil penalties recovered in a suit brought under Subchapter D by a local government be divided between the State and the local government.[42] Nothing in the text of the enforcement provisions imposes a limitation on the filing of a local-government suit brought after the State has filed suit or implies the existence of a time line. Nor is there anything in the text of the enforcement provisions that hint at such a limitation. Had the Legislature intended to limit TCAA-enforcement actions, it would have included language to that effect in the provision, as it did in other sections of Chapter 7.[43] For example, for violations of Chapter 401 of the Health Code, Chapter 7 allows a local government to file an enforcement suit only "if the commission does not have a suit filed before the 121st day after" a written complaint is filed.[44] And, in fact, the Legislature has since amended Subchapter H to, stated generally, prevent the filing of such local-government enforcement suits under section 7.351 suits if the State has already filed an enforcement suit for the same violations.[45]

          The State maintains that the Water Code's use of the word "institute" in sections 7.105(a) and 7.351, and its specification that a local government "may institute a civil suit under Subchapter D in the same manner as the commission" in section 7.351, impose limitations on later-filed suits. Specifically, the State argues that because "institute" means "to begin (legal proceedings) in a court, "[46] and because each penalty must address a specific violation, a suit on such a violation can be started only by the State or a local government, not both. But the State's argument stretches a word that is simply a formal way to say "start" or "begin" a lawsuit[47] and a phrase that simply means "in the same way the commission institutes suit."[48] The plain text does not support the State's assertion ...


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