Settlement Between Carb Up and NHTSA Regarding the Certification of Diesel Engines

A Class Action Lawsuit was filed against Carbons Inc on 7/1/10. The Company requested the Court to declare that CARB`s adoption of the 2021 Guideline is illegal. Navigators & Co, the lead plaintiff in the case, filed a lawsuit against Carbons, Inc., alleging breach of contract, fraud and negligence. After a two-day trial in the U.S. District Court in New York, a four-judge Federal jury found that Carbons, Inc. was liable for a number of alleged violations of the federal Fair Debt Collection Practices Act. The lawsuit also found that Navigators & Co. had failed to obtain an adequate refund for their clients’ debt.

Lawsuit Against Carb

The Company requested the Court to declare that CARB`s adopting of the 2021 Guideline is illegal because it violates a previously filed lawsuit which requires the producer of a motor vehicle to identify the alternative fuel used in such vehicles that do not meet the exhaust emission limits set forth in sections 5596 and 5597 of title 40 of the United States Code. That law is FDCPA. The lawsuit charged that Carbons, Inc. misrepresented that its DIESEL engines were compliant with the requirements set forth in this law. In addition, the lawsuit charged that Carbons, Inc. misstated or omits any information necessary to provide an accurate comparison to that required by the law.

Following the conclusion of the initial phases of the lawsuit, the parties reached a settlement agreement in which the Company agreed to a final hearing by the entire U.S. District Court for the southern district of New York.

On a conference call, the parties were provided with an additional answer to their complaint as well as a certificate that they had complied with all discovery requirements. The certificate also acknowledged that “one of the factors that may be considered by the court” was, “The engines in question are certified by the U.S. Department of Transportation`s National Highway Traffic Safety Administration”. The parties now go forward to determine the outcome of this litigation.The plaintiff’s complaint seeks a declaration that the defendants, through their Carbons, LLC subsidiary, did not comply with the requirements of the FDCPA.

The complaint further claims that defendant did not include the above-cited statement in the warranty or in any advertising literature. Further, it is claimed that defendant failed to provide any proof that the engines in question are certified by the NHTSA. Assuming for the sake of discussion that the complaint has merit, the parties will proceed to a final hearing on the date set forth in the attached Notice of Default. The parties shall submit more specific and accurate information by means of their expert witness at this final hearing.

Plaintiffs additionally contend that defendants improperly certified their reference to the NHTSA as the “U.S. Department of Transportation`s National Highway Safety Administration”.

The District Court found one instance of this over two years ago but found that plaintiffs could not prove that it was an error. The 2021 Federal Energy Regulatory Commission`s (FERC) National Current Market Rule Affecting Vehicles describes the definition of “`road vehicle’ “as it relates to CDL trucks to operate for extended periods of time without any control of emissions. Pursuant to this definition, it follows that if a truck is sold for use in California where it can legally operate, then it is within the meaning of the applicable NHTSA rule.”

The plaintiffs further argue that defendants misrepresented the relationship between the NHTSA and CA state officials when they certified their reference to the NHTSA as the California construction trucking association.

When discovery became aware of this misrepresentation, defendants offered a written affidavit from a former NHTSA administrator stating that the association did not receive certification from the U.S. Department of Transportation. Moreover, the plaintiffs were unaware that the association never received certification from the federal government. Although the complaint names defendant Harley Davidson Motorsports Inc. as its defendant, the complaint also names California Construction Truck Association as a defendant.

In its answer, the company contends that its answer is not based on any improper purpose or improper intent.

It further contends that plaintiffs have already been properly served with a complaint for purposes of serving third-party defendants who are not parties to the underlying lawsuit. Additionally, the company contends that it has no duty to apply NHTSA’s certification requirements to diesel engines because those conditions apply to non-classifiable industrial emissions and there is nothing in the definition of “applying” that can be construed as requiring application of NHTSA’s certification standards. The company further contends that plaintiffs waived their right to bring the case in court by failing to comply with the notice requirement of section 561(b) of the Clean Air Act. Finally, the company contends that plaintiffs waived their rights to bring the case before an administrative law judge by failing to timely file their complaint.

Accordingly, the complaint was filed, and a scheduling conference was scheduled for one week beginning on May 7, 2021. On that date, the parties were advised that they would submit written submissions addressing three issues: (1) whether they had failed to properly apply NHTSA’s certification requirements; (2) whether plaintiffs had waived their rights to bring a proceeding before an administrative law judge; (3) whether the agency violated its own regulatory statute by failing to apply NHTSA’s certification requirements. The parties are urged to address these issues at this conference. If this agreement is not satisfactory, this case will be dismissed without prejudice.

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