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From Antitrust Law Daily, May 17, 2017

FTC claims against VW over 'clean diesel' resolved

By Jeffrey May, J.D.

A settlement resolving FTC allegations that Volkswagen Group of America, Inc. (VW) deceived consumers by marketing its "3.0-liter TDI" automobiles as "clean diesel" vehicles was approved by the federal district court in San Francisco today. Under the settlement, VW agreed to compensate owners and lessees of Volkswagen, Audi, and Porsche 3.0 liter TDI diesel cars who were purportedly misled by the auto maker’s representations. Owners were permitted to sell their vehicles back to VW, and lessees were permitted to terminate leases. They also were able to seek approved emissions modifications. The settlement also included compliance reporting provisions and outlined the claims process for impacted consumers (In re Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation, May 17, 2017, Breyer, C.).

The FTC brought its action against VW in March 2016. The agency challenged the auto maker's advertising campaign for "clean diesel" vehicles that contained "defeat devices" or illegal software designed to enable the vehicles to cheat emissions tests. The agency alleged that the auto maker misrepresented that certain Audi and VW vehicles were environmentally friendly, had low emissions, complied with state and federal emissions standards, and retained high resale values. Between late 2008 and late 2015, VW purportedly distributed more than 550,000 "Defeat Device Vehicles" (DDVs) to U.S. consumers, the agency alleged. During that time, VW became the largest seller of light-duty diesel vehicles in the United States. According to the FTC, the so-called DDVs "have contributed—and will continue to contribute—to environmental and human health harms including smog, acid rain, water quality deterioration, childhood asthma, adult respiratory ailments, and premature death."

The FTC’s complaint followed a civil suit brought by the Department of Justice, on behalf of the Environmental Protection Agency (EPA) in January 2016. That complaint, which also was settled, alleged that VW’s illegal defeat devices caused emissions to exceed EPA standards, resulting in harmful air pollution. VW was charged with violating the Clean Air Act.

In December 2016, then FTC Chairwoman Edith Ramirez said in a statement that resolution of the EPA Clean Air Act and consumer injury claims brought by the FTC, Department of Justice, State of California, and private consumers over the company’s marketing and sales of certain "clean diesel" vehicles was nearly completed.

Consumers who bought 3.0 liter vehicles will receive up to $1.2 billion in compensation for VW’s allegedly misleading "clean diesel" claims. This is on top of a more than $10 billion redress fund already created for 2.0 liter consumers. A settlement as to 2.0-liter TDI "Clean Diesel" vehicles was approved in October 2016.

FTC statement on today’s action. "Under the Commission’s 2.0 liter and 3.0 liter settlements, Volkswagen will offer consumers over $11 billion in compensation," Acting FTC Chairman Maureen K. Ohlhausen said in response to the court’s approval. "We are confident that these orders will fully reimburse injured consumers, while sending a strong message to others that deceptive conduct does not pay."

The case is No. 3:15-md-02672-CRB.

Attorneys: Jonathan Cohen for FTC. Robert J. Guiffra, Jr. and Sharon L. Nelles (Sullivan & Cromwell LLP) for Volkswagen Group of America, Inc. Cari K. Dawson (Alston & Bird LLP) for Porsche Cars North America, Inc.

Companies: Volkswagen Group of America, Inc.; Porsche Cars North America, Inc.

MainStory: TopStory Advertising ConsumerProtection CaliforniaNews FederalTradeCommissionNews

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