Products Liability Law Daily $800M settlement proposed to resolve FCA defeat devices claims
Thursday, January 10, 2019

$800M settlement proposed to resolve FCA defeat devices claims

By Kathleen Bianco, J.D.

FCA US, and its affiliates (FCA) have agreed to pay close to $800 million to settle civil, environmental, and consumer claims with the U.S. Environmental Protection Agency (EPA), the U.S. Department of Justice (DOJ), the California Air Resources Board (CARB), the State of California, 49 other states, and U.S. Customs and Border Protection. The proposed settlements have been submitted to the San Francisco division of the U.S. District Court for the Northern District of California for judicial approval. The settlements account for approximately $400 million in civil penalties payable to various U.S. federal and state authorities, and approximately $400 million for future cost of extended warranty and environmental mitigation efforts, according to an FCA press release (FCA US Reaches Settlements on Emissions Requirements, January 10, 2019).

The settlements address claims filed against FCA alleging that Fiat equipped nearly 104,000 Ram 1500 and Jeep Grand Cherokee vehicles (model years 2014-2016) sold in the U.S. with at least eight software-based features that were not disclosed in Fiat’s applications for certificates of conformity and that affect the vehicles’ emission control systems. The undisclosed software features lessen the effectiveness of the vehicles’ emissions control systems during certain normal driving situations. This resulted in vehicles that meet emission standards in the laboratory and during standard EPA testing, but that exceed the allowable nitrogen oxides emissions during normal driving conditions. The claims allege that each of these vehicles differs materially from the specifications provided to the EPA in certification applications and, thus, the cars were uncertified in violation of the Clean Air Act and California law. Further details on the settlement as related to the claims by the EPA and the state of California can be found in releases issued by the EPA and the California Attorney General’s office. A DOJ news release additionally states that the settlement resolves neither any potential criminal liability, nor "any consumer claims or claims by individual owners or lessees who may have asserted claims in the ongoing multidistrict litigation."

Terms of the proposed settlements. Under the proposed settlement agreements, FCA will pay $305 million to EPA, DOJ, and the California Air Resources Board (CARB) for environmental claims; $13.5 million to the California Attorney General for consumer claims and mitigation expenses; $72.5 million to various other state attorneys general for environmental and consumer claims; and $6 million to Customs and Border Protection to resolve allegations of illegally importing 1,700 noncompliant vehicles. Additionally, FCA will pay an additional $19 million to California for emissions mitigation initiatives, while also financing the upgrade of 200,000 high-efficiency catalytic converters through the aftermarket.

Moreover, FCA will be required to conduct an emissions recall to update emission control software in affected vehicles equipped with 3.0-liter EcoDiesel V-6 engines. Also, all current and former owners and lessees of vehicles affected by the recall will be eligible to receive a payment averaging $2,800. The affected vehicles will qualify for an extended warranty in connection with the software update as well. Finally, according to FCA, the settlements do not constitute findings or admissions of any alleged violations of vehicle emissions rules.

There will be a 30-day period for public notice and comments on the settlement consent decrees that have been filed in the federal court in the Northern District of California. The EPA/California Consent Decree can be found here.

The case is No. 3:17-md-02777-EMC.

Attorneys: Leigh P. Rende, U.S. Department of Justice, for the United States. Amie Adelia Vague (Lightfoot Franklin & White LLC) for FCA US LLC and Fiat Chrysler Automobiles N.V. Robert J. Giuffra, Jr. (Sullivan and Cromwell LLP) for VM Motori S.P.A. and VM North America, Inc.

Companies: FCA US LLC; Fiat Chrysler Automobiles N.V.; VM Motori S.P.A.; VM North America, Inc.

MainStory: TopStory SettlementAgreementsNews PenaltiesNews DamagesNews MotorVehiclesNews MotorEquipmentNews CaliforniaNews

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