Knowledge Library Audi/VW offers free engine repairs plus $2.3M in attorneys’ fees to settle class action
Products Liability Law
Wednesday, September 24, 2014

Audi/VW offers free engine repairs plus $2.3M in attorneys’ fees to settle class action

Volkswagen and Audi would provide a free service adjustment and warranty extension for certain Audi vehicles designed to address alleged defects causing excessive oil consumption, under a settlement agreement proposed to the U.S. District Court for the Central District of California court by plaintiffs in a class action suit against the companies. In addition to providing these class benefits, the companies would pay attorneys’ fees of up to $2.3 million and litigation expenses of up to $100,000, along with $2,500 service awards to each of the named class representatives (Asghari v. Volkswagen, September 22, 2014, Morrow, M.).

Background. Ali Asghari, Daniel Tran, Yung Kim, Ara Dersarkissian, and Katrina Noble are the lead plaintiffs in a class action suit against Volkswagen Group of America, Inc., Volkswagen AG, and Audi AG. They claimed that the companies designed, manufactured, marketed, sold, and warranted about 126,000 Audi vehicles with 2.0 liter turbocharged engines with the engine code CAEB that allegedly contained one or more defects which caused them to consume an excessive amount of engine oil. These vehicles included all 2009 Audi A4 vehicles; 2010 Audi A4 and A5 vehicles; and 2011 Audi A4, A5, and Audi Q5 vehicles originally equipped with the factory 2.0 TFSI longitudinal engine with the CAEB code that were imported and distributed by Volkswagen. Their cases originally were brought separately and later were combined during the litigation process. In 2014, the parties met with a mediator and subsequently formalized a settlement agreement, which the plaintiffs proposed to the court for its preliminary approval.

Settlement terms. Under the terms of the proposed settlement, Volkswagen would provide a free service adjustment to owners of vehicles in the settlement class to reduce their excessive oil consumption, provided that owners can show documentary proof of compliance with their vehicle’s oil and oil filter maintenance requirements. The applicable new vehicle limited warranties for settlement class vehicles would be extended from 4 years/50,000 miles to 8 years/80,000 miles, or 1 year/12,000 miles from the date the service adjustment is performed, whichever is later.

Owners who already have paid for a service adjustment in whole or in part would be reimbursed for their costs. The companies would pay a claim administrator to process and review “expeditiously” all claims for reimbursement. Owners would be required to fill out a claim form and provide a receipt or automobile repair invoice to be eligible.

The companies plan to notify class members of the agreement by direct mail and through a one-time publication of the notice in USA Today; they would also maintain a web site—to be maintained by the claim administrator—containing instructions on how class members could submit a claim, object, or opt out.

Supporting arguments. The parties argued that the settlement was within the range of reasonableness. The extended warranty, service adjustment, and reimbursement program would address the class members’ oil consumption issues. Further, the plaintiffs said in their motion that they believed that their case was strong on the merits, but that there were risks in continued litigation because the companies had argued that there was no oil consumption defect, any actual issues had been disclosed in the owners’ manuals, and the plaintiffs would not be able to show that any such defect would constitute a safety concern because drivers are warned of low oil levels by a light on the dashboard. The defendants were expected to argue that individual issues regarding liability and damages should prevail over common interests, and continuing a litigation process involving 126,000 vehicles would consume a significant amount of party and court resources, they argued. Further, the agreement was reached through arm’s length negotiations after extensive investigation and discovery. Finally, the class action process was the best method for resolving the claims.

A hearing on the proposed settlement in anticipation of preliminary approval and the establishment of a hearing date and briefing schedule for final settlement approval, among other items, has been set for October 20, 2014.

The case number is CV13-02529-MMM-(JEMx).

Attorneys: Payam Shahian (Strategic Legal Practices APC) for Ali Asghari. Gary S. Yates (Herzfeld and Rubin PC) for Volkswagen Group of America, Inc.

Companies: Volkswagen Group of America, Inc.

MainStory: TopStory DesignManufacturingNews MotorVehiclesNews CaliforniaNews

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