We are pleased to announce that Fiat Chrysler Automobiles NV has agreed to pay up to $884 million to settle claims that it illegally equipped diesel fuel-powered vehicles with software that enabled them to cheat emissions standards. The U.S. Department of Justice (DOJ), state officials and our firm along with 10 other law firms assigned to the Plaintiffs Steering Committee (PSC) for consumers made the announcement on Jan. 10. The company and parts maker Robert Bosch GmbH – which settled its part in the matter with payments of up to $131 million – are the latest auto companies to settle claims involving the use of defeat devices. Volkswagen AG has paid almost $23 billion to settle its liabilities.
Fiat Chrysler will pay a $305 million civil penalty to settle claims it violated the Clean Air Act that will be divided between the federal government and California. The state will receive a total of $78.4 million, including $42.7 million from the CAA portion. Fiat Chrysler also will pay $6 million to settle U.S. Customs and Border Protection claims that it illegally imported 1,700 noncompliant vehicles, according to the DOJ. In addition, the department said Fiat Chrysler will recall the vehicles and fix the emission problems in a program that could cost the company up to $185 million.
Separately, the company settled with consumers who had filed a class action in a deal that could reach up to $280 million. The company also agreed to pay $72.5 million that will be divided up among the 49 states other than California to settle various state law claims. The DOJ and U.S. Environmental Protection Agency (EPA) said the settlements do not resolve any potential criminal liability. EPA acting Administrator Andrew Wheeler said in a statement:
Fiat Chrysler deceived consumers and the federal government by installing defeat devices on these vehicles that undermined important clean air protections. Today’s settlement sends a clear and strong signal to manufacturers and consumers that EPA will vigorously enforce the nation’s laws designed to protect the environment and public health.
The DOJ’s suit, originally filed in Michigan federal court before it was consolidated with the consumer class action in California, was prompted by testing conducted by the EPA that revealed the company failed to disclose that auxiliary emissions control devices (AECDs) were built into nearly 104,000 3-liter EcoDiesel-powered Jeep Grand Cherokee and Dodge Ram 1500 vehicles. Those AECDs, also known as defeat devices, were made by parts supplier Bosch and kept the vehicles’ nitrogen oxides emission levels within legal limits during test conditions to fool regulators but then allowed the NOx emissions to spike during normal driving conditions.
The company failed to disclose the AECDs when it applied for certificates of conformity as required under the Clean Air Act. The law requires automakers to get those certificates before selling automobiles in the U.S. As part of their applications, they have to disclose all AECDs and explain why those that reduce the effectiveness of emissions controls aren’t defeat devices, because vehicles with defeat devices can’t be certified. Bosch was not targeted by the federal government, but faced claims in the related consumer class action. Their portion of the class action settlement could reach $27.5 million, according to the consumers’ consent decree.
As part of the settlement with the states, Bosch agreed to pay an additional $98.7 million to settle consumer protection and environmental law claims and make a separate $5 million payment to the National Association of Attorneys General “for training and future enforcement purposes.” The Plaintiffs in the class action sought to represent a class of people nationwide bringing claims under the Racketeer Influenced and Corrupt Organizations (RICO) Act who purchased or leased a vehicle at issue. For the other claims under the federal Magnusson Moss Warranty Act, common law fraud, and state consumer protection statutes, the Plaintiffs were looking to represent subclasses of people in the state or jurisdiction where they purchased their vehicle and currently reside.
The nationwide class would have included drivers of roughly 100,000 vehicles in all 50 states and Washington, D.C., while each of the state classes would have spanned roughly 100 to 14,000 members and most would have had more than 1,000 members. Our co-counsel, Elizabeth Cabraser, who was appointed lead counsel and chair of our Plaintiffs’ Steering Committee, said in a statement:
By holding FCA and Bosch accountable for their diesel emissions cheating, consumers will now receive the vehicle they were promised plus cash compensation, while protecting our environment.
Dee Miles is our firm’s Consumer Fraud & Commercial Litigation Section Head and serves on the Plaintiffs Steering Committee for this consolidated litigation. He said, “using cheat devices on trucks and automobiles to deceive regulators and consumers in order to sell vehicles that pollute the environment is egregious corporate behavior that can’t be tolerated.” Our firm is honored to have been part of the solution in partnership with the federal government in reaching a very satisfactory result for all victims of this misconduct.
New York state had alleged Fiat Chrysler, in addition to installing defeat devices, misled consumers about the environmental impact of the vehicles and lied to the state that it complied with state laws. New York Attorney General Letitia James, in a statement, said:
Fiat Chrysler and Bosch attempted to pull the wool over the eyes of American consumers, and pollute their way to the bank, but the Office of Attorney General will not stand for that type of behavior from any company.
The government is represented by Zachary Moor, Emily C. Powers, Leigh P. Rende and Joseph W.C. Warren of the U.S. Department of Justice. As mentioned earlier, the consumers are represented by lead counsel Elizabeth J. Cabraser, David. S. Stellings, Kevin R. Budner, Phong-Chau G. Nguyen and Wilson M. Dunlavey of Lieff Cabraser Heimann & Bernstein LLP and steering committee members who include Dee Miles of Beasley Allen Crow Methvin Portis & Miles PC; Roland K. Tellis of Baron & Budd PC; Lesley E. Weaver of Bleichmar Fonti & Auld LLP; and Stacey P. Slaughter of Robins Kaplan LLP, among others.
New York, Alabama, Connecticut, Illinois, Maryland, Massachusetts, Oregon, Texas and Washington are represented by their respective attorney general offices. The MDL is In re: Chrysler-Dodge-Jeep EcoDiesel Marketing, Sales Practices and Products Liability Litigation, (case number 3:17-md-02777) in the U.S. District Court for the Northern District of California.