The Federal Trade Commission (FTC) has officially filed suit against Volkswagen after the company admitted to cheating on U.S. emissions tests. After outside testing showed that some of VW’s clean diesel vehicles were outputting up to 40x the legal amount of pollutants in the United States, the company admitted to installing devices that were able to cheat emissions tests in as many as 580,000 of their vehicles.
In addition to the 500 existing civil lawsuits against the German automaker, the FTC has filed suit against Volkswagen saying that U.S. consumers have suffered “billions of dollars in injuries” because of the company’s deceptive actions. A Volkswagen spokesperson publicly stated that the company was cooperating with U.S. regulators and will continue to do so.
A federal judge has given VW until April 21st to remedy the situation with consumers by either fixing the vehicles or providing vehicle owners with some sort of financial compensation. No word has been given on the exact solution Volkswagen has been working on, but the company says that a plan is in the works.
In a whistle-blower lawsuit that has been filed by a former Volkswagen employee in Michigan, individuals with the German carmaker have been accused of deleting electronic data not long after the Environmental Protection Agency (EPA) first accused VW of equipping its vehicles with emissions cheating software. The former employee, Daniel Donovan, was an information manager for VW in Auburn Hills, Michigan.
The lawsuit claims that he was wrongfully dismissed last December because it was suspected that he would report VW for destroying electronic data that may have been used as evidence against the automaker by U.S. authorities. The suit goes on to describe how Donovan was instructed by his superiors to tell the chief information officer not to delete electronic data on Sept. 18. According to the lawsuit, the chief information officer was upset by this and that data continued to be deleted until Sept. 21, though the claim also alleges that backup data was being destroyed even after this date.
According to Donovan’s suit, he informed his managers that deleting this data may constitute “obstruction of justice” and that he did not want to engage in the activity. The suit also alleges that outside accountants that were hired by VW complained when they were not able to access all of the information they requested. On Dec. 6, Donovan was formally dismissed from his position, a dismissal that Donovan contends was prompted by the alleged certainty that “‘[Donovan] was about to report the obstruction of justice and spoliation of evidence’” to U.S. authorities. VW maintains that the employee’s dismissal is unrelated to the emissions scandal.
This lawsuit may put even greater pressure on U.S. officials to take a harder line with VW, particularly if Volkswagen cannot find a way to fix the emissions issue for people in the U.S. who own affected vehicles by the March 24—the date on which a federal judge in San Francisco asked the German company to present a plan to solve the problem. As of now, Volkswagen is still negotiating the penalties it will have to pay with the U.S. Justice Department and the EPA for the emissions-cheating software the company equipped in some of its diesel vehicle models.
Though former Volkswagen chief executive Martin Winterkorn publically admitted that around 11 million of his company’s vehicles had been equipped with emissions-cheating software last September, it seems as though Winterkorn may have known of the problem much earlier than he said. The New York Times reports that the authenticity of documents have been verified by two people who held senior positions with VW, though they wished to remain anonymous.
Newly released internal memos and emails indicate that top managers with the German carmaker knew that affected diesel models could not be brought into compliance with emissions standards. In fact, The New York Times reports that Wintekorn was warned that regulators may eventually accuse the company of using emissions-cheating software in May of 2014, almost a full year and a half before his admission last September.
Should U.S. officials find that Volkswagen intentionally misled regulators, thereby breaking laws based on public disclosure of problems like these, the penalties levied against VW may increase. As part of that, VW may have to pay larger settlements to owners of affected diesel vehicles. The German automaker has not yet found a technical solution that is suitable for U.S. regulators and VW may have to buy back affected vehicles from owners instead.
Honda and Fiat Chrysler have issued a worldwide recall of five million vehicles to fix a defective airbag component that the automakers have known about for years. This defective component—a semiconductor that can become susceptible to corrosion—causes the airbag to do one of two things: deploy at random times, or not deploy at all when it is needed.
The defect was discovered in January of 2008 by Continental Automotive Systems, the German company that manufacturers the components that actually control the airbags in these vehicles, who then informed automakers of the defect, according to Mary Arraf, a Continental spokesperson. Arraf went on to claim that it was up to automakers to issue a recall at that point.
The fact that it has taken eight years for anything to be done about the defect is concerning, not to mention probably illegal; federal law in the United States mandates that manufacturers must inform regulators of its plans to issue a recall within five business days of becoming aware of a safety problem. Arraf indicated that “‘potentially less than two million’” vehicles may be affected in the United States.
At present, only Honda and Fiat Chrysler have initiated recalls, though a number of other car makers may eventually need to follow suit, including Mazda and Volvo. A Mazda spokesperson said that the company was still investigating. At Pohl & Berk, LLP, our firm will continue to monitor this evolving story.
In a statement made before the United States District Court in San Francisco, Robert Giuffra, a lawyer for Volkswagen, said that the German automaker may decide to buy back some of their diesel vehicles if the company is not able to make them comply with EPA air quality standards quickly enough. Giuffra is one of the attorneys defending VW against the class-action suits that have been filed against the carmaker by owners of affected diesel vehicles.
While the company has indicated in the past that it may eventually need to buy back some of its diesel vehicles in the United States, Giuffa’s statements are the clearest indication yet that the company simply does not have the technology necessary to fix the problem. That being said, VW has not made a definitive statement about what they intend to do for owners of affected vehicles.
At the time of the hearing in San Francisco, the number of vehicles that were known to be affected by the scandal was set at around 575,000. Since the Environmental Protection Agency brought the emissions cheating scandal to light in September and through the end of December in 2015, the value of VW diesel vehicles has dropped by a staggering 16 percent, according to data that is collected by Kelley Blue Book. Even steeper declines have been reported by some owners.
According to a recent article in the New York Times, internal Takata emails that were recently unsealed as a part of a personal injury lawsuit against the Japanese airbag manufacturer suggest that data from airbag testing may have been “misrepresented and manipulated.” So far, more than 20 million vehicles equipped with defective Takata airbags have been recalled and, unless the company can prove that the ammonium nitrate they use as a propellant in many of their airbags is safe, these numbers could increase.
The newly unsealed emails contain communications between Takata employees specifically regarding inflater testing in airbags that made use of the ammonium nitrate propellant. One email from a Takata airbag engineer contained the text “Happy Manipulating!!!” in addition to the results of airbag testing. Other emails include comments about changing the appearance of lines and colors in a graphic of testing results in an attempt to “dress it up” and “divert attention” from the results themselves.
In response to this new information, Takata has argued that these comments do not indicate data manipulation, but rather, are specifically regarding the formatting of data, and that they are not related to the airbags included in the current recall.
Months after Volkswagen admitted to equipping certain diesel vehicles with software designed to cheat emissions tests, the company has hired Kenneth R. Feinberg to address claims related to the scandal and create a compensation plan for victims. Feinberg is a leading specialist in compensation funds, his most notable work including payouts to victims of 9/11, the BP oil spill, and most recently, those who were affected by the faulty ignition switches in General Motors’ vehicles.
Volkswagen came under fire after the company admitted to installing illegal devices in certain diesel vehicles in order to get lower results on emissions tests, leading many VW owners to take legal action against the automaker, claiming that their vehicles were devalued because of the scandal.
While details of the compensation program have yet to be finalized, VW hopes this move will limit the number of lawsuits filed against them. Feinberg and his team’s first step in developing this program will be to outline parameters for eligibility and what proof vehicle owners will be required to provide. Feinberg plans to receive input from the company as well as vehicle owners to fully develop the plan, including the amount of compensation that affected VW owners could get.
Feinberg also explained that the compensation program will not interfere with any state and federal investigations of the company’s actions regarding the scandal. He expects that the program will take about 60 to 90 days to develop.
Though General Motors admitted that it failed to disclose information about defective ignition switches for a decade, the automaker’s 2009 bankruptcy actually protects G.M. from lawsuits filed for accidents that happened prior to that date. As reported in The New York Times, this legal protection allowed G.M. to compensate these accident victims on its own accord, which it has done through a fund set up by the automaker and operated by attorney Kenneth R. Feinberg.
Of the 4,343 death and injury claims that have been filed against G.M., Feinberg has reported that 399 claims have been found to be eligible for compensation. Included in that figure are 128 approved claims for accidents that occurred prior to the company’s 2009 bankruptcy. In all, it is believe that this fund has authorized around $595 million for the 399 eligible claims, though G.M.’s own second-quarter earnings report suggests that the total may be closer to $625 million.
According to a spokesman from G.M., the company elected to take what it described as a “nonadversarial” approach with the compensation fund, and the reports filed by Feinberg show that a number of claims were settled despite substantial evidence indicating that some drivers shared some of the blame for their accidents. To date, these reports show that over 90 percent of offers for compensation were eventually accepted by victims or their families.
For those people who file claims for accidents that occurred prior to G.M.’s bankruptcy, this is may be the best chance they have for recovering compensation for their accidents. Despite that, there are 180 pre-bankruptcy lawsuits that will be heard over a series of trials in New York next year.
United States Bankruptcy Judge Robert Gerber has said that General Motors could still be held liable for punitive damages associated with the 2014 recall of the company’s defective ignition switches, according to Reuters. This means that it may be possible for victims and their families to recover compensation for any injury, loss of life, or property damage associated with one of GM’s faulty ignition switches. In September, GM reached undisclosed settlements in around 1,300 injury and wrongful death claims.
Though it may now be possible for victims to recover punitive damages from the company, only claims specifically involving the conduct of post-bankruptcy GM will be considered eligible for compensation. As Gerber explained, post-bankruptcy GM cannot be held liable for what pre-bankruptcy GM “‘knew or did’” regarding the faulty ignition switches. In any event, the decision rendered by Gerber may now be applied to each of the individual cases already filed against GM by each of the judges presiding over these cases.
If you or a loved one was injured in an accident involving a faulty GM ignition switch, you should consult with a Tennessee personal injury attorney at Pohl & Berk, LLP, about what legal claim to compensation you may now be eligible to pursue. To speak with a Tennessee personal injury attorney directly, please call our offices at 615-277-2765 today.
On Monday of this week, the U.S. Environmental Protection Agency (EPA) announced a new list of vehicle models that they claim are equipped with emissions-cheating software at the heart of the current Volkswagen scandal. Vehicles named by the EPA in this most recent announcement include the 2014 Volkswagen Touareg, the 2015 Porsche Cayenne, and the 2016 Audi A6 Quattro, A7 Quattro, A8, A8L, and Q5.
While other Volkswagen and Audi models have been named in connection to this scandal, this is the first time that a Porsche model has been accused of having this software installed.
Volkswagen has refuted this most recent EPA claim, and has stated that they will comply fully with the agency to investigate the matter. The company has admitted to installing illegal “defeat devices” in other Volkswagen and Audi diesel vehicles to help these cars meet U.S. emissions standards.
This illegal software allows the vehicles to sense when an emissions test is being performed, and to only engage the vehicle’s emission controls in order to pass the test. At all other times, these vehicles can emit pollutants at levels up to 40 times the country’s legal limit.
