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From Products Liability Law Daily, February 1, 2017

FTC settlement ensures full compensation for vehicle owners impacted by Volkswagen’s emissions cheating scandal

By Colleen Kave, J.D.

A partial settlement agreement pursuant to which Volkswagen Group of America, Inc. will fully compensate vehicle owners who purchased 3.0-liter TDI diesel vehicles through a combination of repairs, additional monetary compensation, and buybacks for certain models, has been submitted for approval by a federal district court in California, according to a Federal Trade Commission announcement. The proposed agreement will result in up to $4 billion of compensation to consumers, with the total judgment amount hinging on approval of emissions repair and the number of buybacks. The settlement also includes a contribution from Bosch GmbH and Bosch LLC (collectively, Bosch), the manufacturers of the defeat device at issue in the case, and a commitment by Volkswagen to pay the cost of administering the entire settlement program, including vehicle repairs, notifications, and other logistics (In re Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation (Relates to FTC v. Volkswagen Group of America), January 31, 2017).

In March 2016, the FTC sued Volkswagen, alleging that the auto manufacturer deceived consumers by falsely advertising its supposedly "Clean Diesel" Volkswagen and Audi vehicles as low-emission, environmentally friendly, meeting emissions standards, and maintaining a high resale value. The settlement order completes the FTC’s case against Volkswagen, ensuring full compensation for all consumers who purchased a TDI diesel engine vehicle.

In a companion matter, hundreds of private actions have submitted a proposed class action settlement consistent with the FTC’s order, and a related settlement with the Department of Justice (DOJ) and Environmental Protection Agency (EPA) resolved the Clean Air Act violations alleged by those agencies.

Pursuant to the current order, owners of older vehicles (model years 2009-2012) will be able to sell their cars back to Volkswagen and obtain full compensation for their losses. In the alternative, these owners can opt to keep their cars and receive monetary compensation plus an emissions modification to improve their vehicle’s emissions, provided such a modification receives approval from the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB).

Owners and lessees of newer vehicles (model years 2013-2016) will receive an emissions repair, which is expected to obtain regulatory approval, to bring the cars into full compliance with originally certified emission standards, plus additional monetary compensation ranging from approximately $8,500 to $17,600. If an emissions repair is not available within the timeframe specified in the order, Volkswagen must offer to buy back those models and provide lease terminations. Options for lessees vary based on make, model, model year, and availability of approved emissions modifications, and owners who sold their TDI vehicles after the defeat device issue became public also may receive compensation.

The FTC order includes generous loan forgiveness provisions for consumers eligible for buybacks, additional limited warranties and lemon law-type protections for consumers eligible to receive emissions modifications or repairs, special protections for those serving in the armed forces, and special protections for consumers in rural areas who may be far from the nearest dealer. An independent, court-appointed claims supervisor will monitor Volkswagen’s compliance with stringent claims process deadlines.

The case is MDL No. 2672 CRB (JSC).

Companies: Volkswagen Group of America, Inc.

MainStory: TopStory SettlementAgreementsNews MotorVehiclesNews MotorEquipmentNews

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