Volkswagen Settlements for TDI Diesel Owners Under Development

Volkswagen indicated late last week that it has hired attorney Kenneth Feinberg to design an independent settlement program for owners of TDI diesel vehicles that were sold with emissions test cheat software. 

The plan to implement a Volkswagen TDI diesel settlement fund was announced in a press release issued on December 17, about three months after U.S. regulators ordered the company to recall nearly 500,000 diesel vehicles sold with “defeat device” software.

The Volkswagen and Audi veicles with 2.0L and 3.0L TDI diesel vehicles were sold as environmentally friendly, with a substantial premium charged for the “green” vehicles. However, the company faces thousands of claims after admitting that it installed software designed to detect when the vehicle was being tested, artificially lowering emissions. However, during normal operations the TDI diesel vehicles released substantial and illegal levels of air pollution.

Feinberg has worked on a number of high profile settlements in recent years for corporations that found themselves facing massive legal costs from lawsuits, including both the General Motors ignition recall settlement fund as well as settlements by BP Deep Horizon oil spill settlement program.

“We are pleased to announce the retention of Kenneth Feinberg,” Volkswagen Group of America President and CEO Michael Horn said in the statement. “His extensive experience in handling such complex matters will help to guide us as we move forward to make things right with our customers.”

It is not yet clear what form the settlement program will take. Some analysts are speculating that it may involve Volkswagen offering to buy back vehicles with the emissions test cheating software, which could cost the company in excess of $9 billion.

Volkswagen Diesel Recall Lawsuits

Thousands of vehicle owners are likely to pursue Volkswagen “Clean Diesel” lawsuits against the auto maker, each involving similar claims of the premium paid and substantial drops in resale value.

Amid the mounting cases filed in U.S. District Courts nationwide, the U.S. Judicial Panel on Multidistrict Litigation (JPML) determined earlier this month that the complaints will all be consoidated in the federal court system before one judge to reduce duplicative discovery, avoid conflicting pretrial rulings and to serve the convenience of witnesses, parties and the courts. The litigation is centralized before U.S. District Judge Charles R. Breyer in the Northern District of California.

It is unknown how much vehicle owners may receive in Volkswagen settlements, but lawyers involved in the cases have indicating that establishing the early claims resolution process will not allow the auto maker to settle cases cheaply.

The EPA has also indicated that Volkswagen could face as much as $18 billion in fines for violating Clean Air Act emissions testing laws.