Federal Court Denies Volkswagen and Scout Motors’ Second Attempt to End CNCDA Lawsuit
Contact: Autumn Heacox, Director of Communications & Marketing: aheacox@cncda.org, (916) 441-2599 x105
SACRAMENTO, CA (October 23, 2026) — A federal judge has denied motions by Volkswagen Group of America and Scout Motors to end the California New Car Dealers Association’s lawsuit challenging their plan to sell Scout vehicles directly to California consumers. The order, issued October 22 by Chief Judge Cynthia Bashant of the U.S. District Court for the Southern District of California, maintains CNCDA’s claims against both companies as the case proceeds through discovery.
Volkswagen and Scout each filed motions for judgment on the pleadings in June, roughly three months after the same court denied their motions to dismiss. The court found that both companies were asking it to revisit questions it had already decided, including its reading of California Vehicle Code section 11713.3 and whether CNCDA had adequately pleaded its Unfair Competition Law claims. Under the law-of-the-case doctrine, a court does not reopen issues it has already resolved absent new controlling authority, new evidence, or clear error. The court found none of those here and denied both motions.
The ruling matters beyond the procedural outcome. In rejecting the motions, the court reaffirmed its earlier interpretation of the statute, including the phrase “indirectly through an affiliate,” which is central to CNCDA’s position that Volkswagen cannot use a subsidiary to do what the law bars it from doing directly. That reading is the foundation of the case as it continues.
“The court told Volkswagen and Scout essentially what it told them in March,” said Anthony Bento, CNCDA Chief Legal Officer. “They raised arguments that were available to them the first time around, and the court declined to dismiss the case – now twice. Our claims stand, and we continue with discovery in the case.”
The lawsuit seeks to enforce Assembly Bill 473, the 2023 law sponsored by CNCDA that prohibits manufacturers from competing with their own franchised dealers. It runs alongside protests filed in late April at California’s New Motor Vehicle Board by 14 California Volkswagen dealers.
“We have beaten back two rounds of motions and will keep moving forward because California law needs enforcement. Undoubtedly, Volkswagen and Scout will continue to argue that they do not have to abide by it,” said Brian Maas, CNCDA President. “There are nearly 650 franchised dealer owners in California, and every one of them has a stake in whether manufacturers can compete against their own business partners. Dealers will continue to fight for their right to offer all models to their customers.”
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ABOUT CNCDA:
For over 100 years, CNCDA has protected and promoted the interests of California’s franchised new car and truck dealers.
In 2025, California’s franchised new car dealers sold more than 1.8 million new cars and trucks, employed almost 138,000 people, paid $9.16 billion in state sales tax, and donated $72.09 million to charitable and civic organizations. CNCDA is the nation’s largest state association of franchised automotive dealers, with nearly 1,200 dealership members. We provide dealer advocacy, plus legal, compliance, and regulatory support. Visit www.cncda.org for more.