Volkswagen Diesel Settlement Offers To Be “Generous”: Fund Manager

The attorney overseeing a Volkswagen diesel engine settlement program is promising that “generous” compensation will be offered to vehicle owners who wish to settle, but details on the terms of the agreement are not yet available, as the car company and federal regulators continue to wrangle over how to resolve the emissions problems. 

Kenneth Feinberg, the attorney appointed to supervise the Volkswagen owner claims fund that the auto maker is developing, told a German paper last week that Volkswagen intends to offer generous compensation packages to the nearly 600,000 U.S. consumers who purchased vehicles with TDI diesel engines that contain software designed to cheat on emissions tests.

The announcement comes as an increasing number of Volkswagen diesel emissions lawsuits are being filed by consumers who allege they paid top dollar for vehicles that were marketed as environmentally friendly, only to find out later that their cars were releasing dangerous and illegal levels of pollution.

There are currently more than 500 lawsuits filed throughout the federal court system involving emissions “cheat” software contained in certain Volkswagen and Audi diesel vehicles, and it is widely expected that lawsuits will be brought on behalf of tens of thousands of vehicle owners who allege they paid a premium for TDI Diesel vehicles, which are now worth substantially less.

Since December, the cases have been consolidated as part of a federal multidistrict litigation (MDL), which is centralized before U.S. District Judge Charles R. Breyer in the Northern District of California to reduce duplicative discovery into common issues in the cases, avoid conflicting pretrial rulings from different Courts and to serve the convenience of the parties, witnesses and the judicial system.

The lawsuits stem from a Volkswagen recall first announced in September 2015 for certain TDI diesel vehicles, which were sold with software known as a “defeat device”, which artificially lowers emissions while the vehicle is undergoing air emissions testing. However, during normal operations they release exceedingly high levels of pollutants, even though they were marketed as environmentally friendly.

In late January, a federal judge appointed a group of 22 Volkswagen MDL attorneys to serve in various leadership positions in the litigation. The Plaintiffs Steering Committee will represent all plaintiffs in the litigation during the discovery and pretrial proceedings.

Volkswagen TDI Diesel Recall Delays

Feinberg said that concrete plans for a settlement fund cannot move forward until the Volkswagen presents a plan to fix the vehicles that is acceptable to U.S. regulators. Feinberg, who also oversaw settlements for the General Motors ignition switch recalls and BP’s Deepwater Horizon oil spill, said he would probably miss the original goal of setting up the fund within 60 to 90 days.

Some progress may have been made last week, when Volkswagen officials submitted a draft recall plan that would affect about 85,000 Audi and Porsche vehicles that were affected by a second wave of recalls in March. The recall plan affecting 3-liter diesel engines was submitted to the U.S. Environmental Protection Agency and the California Air Resources Board.

Both the EPA and the Air Board said they would review the proposal. However, it is unclear when VW and regulators will reach an agreement and how that agreement will affect Volkswagen TDI diesel owners.

Volkswagen has already admitted that it broke the law, and has set aside $7 billion to deal with the emissions scandal so far. However, there remains substantial litigation to establish what amount of damages vehicle owners may be entitled to receive, and whether the auto maker should be required to buy back the recalled vehicles.

In January, a plan proposed by Volkswagen to fix the vehicles with a software update and new catalytic converters was rejected by California officials and the U.S. Environmental Protection Agency. California officials said that in rejecting the Volkswagen plan it was letting the company know that there was no cheap, easy, quick fix to the problem in the company’s future.

A Volkswagen environmental lawsuit filed by the Justice Department has been brought on behalf of the EPA, seeking injunctive relief and the assessment of civil penalties. The case does not preclude additional criminal charges. The claim involves 499,000 2.0 liter diesel vehicles and 85,000 3.0 diesel vehicles sold in the U.S. since the 2009 model year. The company could be fined as much as $37,500 per vehicle for four violations of law each, meaning the company could face charges of $90 billion.