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The U.S. Justice Department has offered Fiat Chrysler Automobiles a possible settlement over its emissions-cheating EcoDiesel engine. But it will likely cost FCA a large chunk of cash. Bloomberg obtained a copy of the settlement offer that was sent to FCA's lawyers. The key detail of the proposed settlement says the settlement “must include very substantial civil penalties” that discourage others future violations and that “adequately reflect the seriousness of the conduct that led to these violations.” The proposed settlement doesn't mention an end of the criminal investigation by the Justice Department. Spokespeople for FCA did not respond for comment. Bloomberg also obtained a term sheet sent by FCA to Government lawyers back in December. In the sheet, FCA acknowledged that the final settlement would include "civil penalties, an emissions fix for the diesel vehicles and environmental mitigation efforts." The mitigation efforts could include "projects to promote low- or zero-emissions “mobility projects”." The saga of FCA's EcoDiesel mess dates back to last January when the Environmental Protection Agency (EPA) accused the automaker of having multiple defeat devices installed on the 3.0L EcoDiesel V6 - used in the Ram 1500 and Jeep Grand Cherokee. Since then, FCA has been working with the EPA and Justice Department on trying to clear this mess up. The automaker has also brought their 2017 and 2018 models equipped with the EcoDiesel into compliance via new software and hopes to do the same for the older models. Source: Bloomberg View full article

Fiat Chrysler Automobiles is trying to put the past behind them with the 3.0L EcoDiesel emission mess. The company has restarted production of the engine for the 2017 Ram 1500 and Jeep Grand Cherokee, and is in the process of getting a fix out there for older models. Now, talks about a possible settlement for owners of the 3.0L EcoDiesel are making some significant progress. At a hearing yesterday in San Fransisco, court settlement master Ken Feinberg said that proposed settlement documents have been passed between lawyers for FCA and owners of the 3.0 EcoDiesel. The proposal was also discussed at a meeting where the lawyers for both groups were joined by the Justice Department, California Air Resources Board, and supplier Bosch. “We’re looking for different substantive ways to secure an early comprehensive settlement,” Feinberg said. “Everybody in good faith is certainly trying to figure out how we might achieve a comprehensive settlement.” An agreement on a settlement could happen before tests of the proposed fix are finished in March. Source: Reuters Pic Credit: William Maley for Cheers & Gears View full article

Today at U.S. District Court in Detroit, Volkswagen pleaded guilty on three felony charges relating to the diesel emission scandal as part of a plea agreement. The three felonies are conspiracy, obstruction of justice, and introducing imported merchandise into the United States by means of false statements. "Your honor, VW AG is pleading guilty to all three counts because it is guilty on all three counts," said Volkswagen general counsel Manfred Doess at the hearing. As part of the plea deal, Volkswagen will pay $4.3 billion in penalties and have an independent monitor to oversee U.S. operations over the next three years. The deal also requires Volkswagen to continue cooperating with federal and state investigators. A sentencing hearing has been scheduled for April 21st. Source: Automotive News (Subscription Required), Reuters View full article

Volkswagen is making progress with moving on from the diesel emission scandal as they have announced a proposed agreement for the 3.0L TDI V6. Filed in federal court last night, the agreement totals $1.2 billion and hopes to resolve civil claims for 78,000 vehicles. The settlement includes, Buy back or terminate the lease of approximately 20,000 eligible 2009-2012 Volkswagen Touareg and Audi Q7 TDI models (dubbed the Generation 1 models). There is also the possibility of Volkswagen offering owners of these models a fix if approved by the U.S. Government. Repair the approximately 58,000 Generation 2 models (2013-2016 Volkswagen Touareg, Porsche Cayenne, and Audi Q7; 2014-2016 Audi A6, A7, A8, Q5, and Q7). Offer compensation payments as much as $16,114 for all owners of 3.0L TDI V6 models The agreement needs the approval of a federal judge. A hearing on this will take place a couple weeks from now. “With the Court-approved 2.0L TDI program well under way and now this proposed 3.0L TDI program, all of our customers with affected vehicles in the United States will have a resolution available to them. We will continue to work to earn back the trust of all our stakeholders and thank our customers and dealers for their continued patience as this process moves forward,” said Hinrich J. Woebcken, President and CEO of Volkswagen Group of America, Inc in a statement. Source: Bloomberg, Volkswagen Press Release is on Page 2 VOLKSWAGEN REACHES SETTLEMENT AGREEMENTS WITH PRIVATE PLAINTIFFS AND U.S. FEDERAL TRADE COMMISSION ON 3.0L TDI V6 VEHICLES IN THE UNITED STATES Program, if approved, would include provisions to recall and repair most affected vehicles. Options for older affected vehicles include buybacks or trade-in credits, or lease termination. All eligible owners and lessees of affected vehicles will receive cash payments. Herndon, VA (February 1, 2017) – Volkswagen AG and Volkswagen Group of America, Inc. (together, Volkswagen) announced today that they have reached proposed agreements to resolve outstanding civil claims regarding approximately 78,000 affected 3.0L TDI V6 diesel engine vehicles in the United States. Two agreements have been submitted to the Court for approval: (1) a proposed class settlement with private plaintiffs represented by a Court-appointed Plaintiffs’ Steering Committee (PSC) on behalf of a nationwide class of current and certain former owners and lessees of eligible 3.0L TDI V6 vehicles; and (2) a proposed Consent Order submitted by the U.S. Federal Trade Commission (FTC). “With the Court-approved 2.0L TDI program well under way and now this proposed 3.0L TDI program, all of our customers with affected vehicles in the United States will have a resolution available to them. We will continue to work to earn back the trust of all our stakeholders and thank our customers and dealers for their continued patience as this process moves forward,” said Hinrich J. Woebcken, President and CEO of Volkswagen Group of America, Inc. Proposed 3.0L TDI Settlement Program Under the 3.0L TDI settlement program, Volkswagen has agreed, among other terms, to provide cash payments to all eligible members of the class, and take the following specific actions: Recall and repair, free of charge to the customer, approximately 58,000 affected 2013-2016 Model Year Volkswagen, Audi and Porsche 3.0L TDI V6 vehicles (so-called Generation 2 vehicles) to bring them into compliance with the emissions standards to which they were originally certified, if an appropriate Emissions Compliant Repair is approved by U.S. regulators. Buy back or offer trade-in credit of equal value for, or terminate the leases of, approximately 20,000 eligible 2009-2012 Model Year Volkswagen and Audi 3.0L TDI V6 vehicles (so-called Generation 1 vehicles) or, if approved by U.S. regulators, modify the vehicles to substantially reduce their nitrogen oxide (NOx) emissions so as to allow eligible owners and lessees to keep them. Volkswagen has agreed to pay up to approximately $1.2 billion in benefits for the 3.0L TDI settlement program, assuming 100% participation in the program, a 100% buyback of all eligible Generation 1 vehicles and availability of an Emissions Compliant Repair for Generation 2 vehicles. Volkswagen expects to be able to bring affected Generation 2 vehicles to the same emissions standards to which the vehicles were originally certified. Volkswagen will begin the 3.0L TDI settlement program as soon as the Court grants final approval to the settlement agreements. At the earliest, approval will occur in May 2017. Potential claimants under the class settlement do not need to take any action at this time. Individual class members will receive extensive notification of their rights and options (including the option to “opt out” of the settlement agreement) if the Court grants preliminary approval of the proposed class settlement at a hearing scheduled to take place on February 14, 2017. More information about the proposed 3.0L TDI settlement program can be found at www.VWCourtSettlement.com. Notes to Editors The proposed settlement applies to all 3.0L TDI V6 diesel engine vehicles that Volkswagen, Audi, or Porsche marketed or sold in the United States for Model Years 2009 through 2016. The vehicles are divided into two generations, as follows: Generation 1 Vehicles Volkswagen Touareg: 2009-2012 Audi Q7: 2009-2012 Generation 2 Vehicles Volkswagen Touareg: 2013-2016 Audi Q7: 2013-2015 Audi A6, A7, A8, A8L, Q5: 2014-2016 Porsche Cayenne Diesel: 2013-2016 View full article

Volkswagen will be cutting another big check. Today, the company announced that it had reached a settlement with Department of Justice over the criminal case on the diesel emission scandal. Volkswagen will plead guilty to three criminal felony charges and will pay $4.3 billion - $2.8 billion for the fine and $1.5 billion to settle civil cases. The settlement also requires an independent monitor to watch over the company for the next years. Volkswagen's board still needs to approve this settlement, but the company says the approval could happen today or tomorrow. If they waited, the parties would have to do it all over again with new people coming as part of President-elect Trump's team. “Today’s actions reflect the Justice Department’s steadfast commitment to defending consumers, protecting our environment and our financial system and holding individuals and companies accountable for corporate wrongdoing. In the days ahead, we will continue to examine Volkswagen’s attempts to mislead consumers and deceive the government. And we will continue to pursue the individuals responsible for orchestrating this damaging conspiracy,” said Attorney General Loretta E. Lynch in a statement. In addition, six Volkswagen executives and employees have been charged with their involvement in the scandal. They include, Richard Dorenkamp - In charge of Volkswagen’s Engine Development After-Treatment Department from 2003 to 2013. This department is where the cheat was developed. Bernd Gottweis - Volkswagen's supervisor responsible for Quality Management and Product Safety between 2007 to October 2014. Jens Hadler - Head of powertrain development from 2007 to 2011. Heinz-Jakob Neusser - Head of powertrain development from 2011 to 2013, suspended by Volkswagen back in 2015. Jürgen Peter - Worked in Volkswagen's Quality Management and Product Safety Group from 1990 to now. For a few months in 2015, he was a liaison for various regulatory agencies. Oliver Schmidt - Volkswagen's liaison with U.S. environmental regulators. He was arrested on Sunday in Miami as he was returning to Germany. Source: Department of Justice, Bloomberg, Reuters Press Release is on Page 2 Volkswagen AG Agrees to Plead Guilty and Pay $4.3 Billion in Criminal and Civil Penalties; Six Volkswagen Executives and Employees are Indicted in Connection with Conspiracy to Cheat U.S. Emissions Tests VW to Pay $2.8 Billion Criminal Fine in Guilty Plea and $1.5 Billion Settlement of Civil Environmental, Customs and Financial Violations; Monitor to Be Appointed to Oversee the Parent Company Volkswagen AG (VW) has agreed to plead guilty to three criminal felony counts and pay a $2.8 billion criminal penalty as a result of the company’s long-running scheme to sell approximately 590,000 diesel vehicles in the U.S. by using a defeat device to cheat on emissions tests mandated by the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB), and lying and obstructing justice to further the scheme, the Justice Department announced today. In separate civil resolutions of environmental, customs and financial claims, VW has agreed to pay $1.5 billion. This includes EPA’s claim for civil penalties against VW in connection with VW’s importation and sale of these cars, as well as U.S. Customs and Border Protection (CBP) claims for customs fraud. In addition, the EPA agreement requires injunctive relief to prevent future violations. The agreements also resolve alleged violations of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). The Criminal Case: VW is charged with and has agreed to plead guilty to participating in a conspiracy to defraud the United States and VW’s U.S. customers and to violate the Clean Air Act by lying and misleading the EPA and U.S. customers about whether certain VW, Audi and Porsche branded diesel vehicles complied with U.S. emissions standards, using cheating software to circumvent the U.S. testing process and concealing material facts about its cheating from U.S. regulators. VW is also charged with obstruction of justice for destroying documents related to the scheme, and with a separate crime of importing these cars into the U.S. by means of false statements about the vehicles’ compliance with emissions limits. Under the terms of the plea agreement, which must be accepted by the court, VW will plead guilty to all these crimes, will be on probation for three years, will be under an independent corporate compliance monitor who will oversee the company for at least three years, and agrees to fully cooperate in the Justice Department’s ongoing investigation and prosecution of individuals responsible for these crimes. In addition, a federal grand jury in the Eastern District of Michigan returned an indictment today charging six VW executives and employees for their roles in the nearly 10-year conspiracy. Heinz-Jakob Neusser, 56; Jens Hadler, 50; Richard Dorenkamp, 68; Bernd Gottweis, 69; Oliver Schmidt, 48; and Jürgen Peter, 59, all of Germany, are charged with one count of conspiracy to defraud the United States, defraud VW’s U.S. customers and violate the Clean Air Act by making false representations to regulators and the public about the ability of VW’s supposedly “clean diesel” vehicles to comply with U.S. emissions requirements. The indictment also charges Dorenkamp, Neusser, Schmidt and Peter with Clean Air Act violations and charges Neusser, Gottweis, Schmidt and Peter with wire fraud counts. This case has been assigned to U.S. District Judge Sean F. Cox of the Eastern District of Michigan. Schmidt was arrested on Jan. 7, 2017, in Miami during a visit to the United States and appeared in federal court there on Monday. The other defendants are believed to presently reside in Germany. Today’s announcement was made by Attorney General Loretta E. Lynch, EPA Administrator Gina McCarthy and Assistant Administrator Cynthia Giles, Deputy Attorney General Sally Q. Yates, FBI Deputy Director Andrew McCabe, Acting Deputy Secretary Russell C. Deyo for the Department of Homeland Security, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division and Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “Volkswagen’s attempts to dodge emissions standards and import falsely certified vehicles into the country represent an egregious violation of our nation’s environmental, consumer protection and financial laws,” said Attorney General Lynch. “Today’s actions reflect the Justice Department’s steadfast commitment to defending consumers, protecting our environment and our financial system and holding individuals and companies accountable for corporate wrongdoing. In the days ahead, we will continue to examine Volkswagen’s attempts to mislead consumers and deceive the government. And we will continue to pursue the individuals responsible for orchestrating this damaging conspiracy.” “When Volkswagen broke the law, EPA stepped in to hold them accountable and address the pollution they caused,” said EPA Administrator McCarthy. “EPA’s fundamental and indispensable role becomes all too clear when companies evade laws that protect our health. The American public depends on a strong and active EPA to deliver clean air protections, and that is exactly what we have done.” “This wasn’t simply the action of some faceless, multinational corporation,” said Deputy Attorney General Yates. “This conspiracy involved flesh-and-blood individuals who used their positions within Volkswagen to deceive both regulators and consumers. From the start of this investigation, we’ve been committed to ensuring that those responsible for criminal activity are held accountable. We’ve followed the evidence—from the showroom to the boardroom—and it brought us to the people whose indictments we’re announcing today.” “Americans expect corporations to operate honestly and provide accurate information,” said Deputy Director McCabe. “Volkswagen’s data deception defrauded the U.S. government, violated the Clean Air Act and eroded consumer trust. This case sends a clear message to corporations, no matter how big or small, that if you lie and disregard rules that protect consumers and the environment, you will be caught and held accountable.” “Blatant violations of U.S. customs and environmental laws will not be tolerated, and this case reinforces that,” said Acting Deputy Secretary Deyo. “These actions put our economy, consumers and citizens at risk, and the Department of Homeland Security and U.S. Customs and Border Protection will continue to take every step necessary to protect the American people.” According to the indictment, the individuals occupied the following positions within the company: Heinz-Jakob Neusser: from July 2013 until September 2015, Neusser worked for VW as head of Development for VW Brand and was also on the management board for VW Brand. From October 2011 until July 2013, Neusser served as the head of Engine Development for VW. Jens Hadler: from May 2007 until March 2011, Hadler worked for VW as head of Engine Development for VW. Richard Dorenkamp: from 2003 until December 2013, Dorenkamp worked for VW as the head of VW’s Engine Development After-Treatment Department in Wolfsburg, Germany. From 2006 until 2013, Dorenkamp led a team of engineers that developed the first diesel engine that was designed to meet the new, tougher emissions standards in the United States. Bernd Gottweis: from 2007 until October 2014, Gottweis worked for VW as a supervisor with responsibility for Quality Management and Product Safety. Oliver Schmidt: from 2012 through February 2015, Schmidt was the General Manager in charge of the Environment and Engineering Office, located in Auburn Hills, Michigan. From February 2015 through September 2015, Schmidt returned to VW headquarters to work directly for Neusser, including on emissions issues. Jürgen Peter: Peter worked in the VW Quality Management and Product Safety Group from 1990 until the present. From March 2015 until July 2015, Peter was one of the VW liaisons between the regulatory agencies and VW. According to the charging documents and statement of facts filed with the court, in 2006, VW engineers began to design a new diesel engine to meet stricter U.S. emissions standards that would take effect by model year 2007. This new engine would be the cornerstone of a new project to sell diesel vehicles in the United States that would be marketed to buyers as “clean diesel,” a project that was an important strategic goal for VW’s management. When the co-conspirators realized that they could not design a diesel engine that would both meet the stricter NOx emissions standards and attract sufficient customer demand in the U.S. market, they decided they would use a software function to cheat standard U.S. emissions tests. VW engineers working under Dorenkamp and Hadler designed and implemented a software to recognize whether a vehicle was undergoing standard U.S. emissions testing on a dynamometer or it was being driven on the road under normal driving conditions. The software accomplished this by recognizing the standard published drive cycles. Based on these inputs, if the vehicle’s software detected that it was being tested, the vehicle performed in one mode, which satisfied U.S. NOx emissions standards. If the software detected that the vehicle was not being tested, it operated in a different mode, in which the vehicle’s emissions control systems were reduced substantially, causing the vehicle to emit NOx up to 40 times higher than U.S. standards. Disagreements over the direction of the project were articulated at a meeting over which Hadler presided, and which Dorenkamp attended. Hadler authorized Dorenkamp to proceed with the project knowing that only the use of the defeat device software would enable VW diesel vehicles to pass U.S. emissions tests. Starting with the first model year 2009 of VW’s new “clean diesel” engine through model year 2016, Dorenkamp, Neusser, Hadler and their co-conspirators installed, or caused to be installed, the defeat device software into the vehicles imported and sold in the United States. In order to sell their “clean diesel” vehicles in the United States, the co-conspirators lied to the EPA about the existence of their test-cheating software, hiding it from the EPA, CARB, VW customers and the U.S. public. Dorenkamp, Neusser, Hadler, Gottweis, Schmidt, Peter and their co-conspirators then marketed, and caused to be marketed, VW diesel vehicles to the U.S. public as “clean diesel” and environmentally-friendly. Around 2012, hardware failures developed in certain of the diesel vehicles. VW engineers believed the increased stress on the exhaust system from being driven in the “dyno mode” could be the cause of the hardware failures. In July 2012, VW engineers met with Neusser and Gottweis to explain what they believed to be the cause of the hardware failures and explained the defeat device. Gottweis and Neusser each encouraged further concealment of the software. In 2014, the co-conspirators perfected their cheating software by starting the vehicle in “street mode,” and, when the defeat device realized the vehicle was being tested, switching to the “dyno mode.” To increase the ability of the vehicle’s software to recognize that it was being tested on the dynamometer, the VW engineers activated a “steering wheel angle recognition feature.” With these alterations, it was believed the stress on the exhaust system would be reduced because the engine would not be operating for as long in “dyno mode.” The new function was installed in existing vehicles through software updates. The defendants and other co-conspirators falsely represented, and caused to be represented, to U.S. regulators, U.S. customers and others that the software update was intended to improve durability and emissions issues in the vehicles when, in fact, they knew it was used to more quickly deactivate emission control systems when the vehicle was not undergoing emissions tests. After years of VW selling their “clean diesel” vehicles in the United States that had the cheating software, in March 2014, West Virginia University’s Center for Alternative Fuels, Engines and Emissions published the results of a study commissioned by the International Council on Clean Transportation (ICCT). The ICCT study identified substantial discrepancies in the NOx emissions from certain VW vehicles when tested on the road compared to when these vehicles were undergoing EPA and CARB standard drive cycle tests on a dynamometer. Rather than tell the truth, VW employees, including Neusser, Gottweis, Schmidt and Peter, pursued a strategy to disclose as little as possible – to continue to hide the existence of the software from U.S. regulators, U.S. customers and the U.S. public. Following the ICCT study, CARB, in coordination with the EPA, attempted to work with VW to determine the cause for the higher NOx emissions in VW diesel vehicles when being driven on the road as opposed to on the dynamometer undergoing standard emissions test cycles. To do this, CARB, in coordination with the EPA, repeatedly asked VW questions that became increasingly more specific and detailed, and tested the vehicles themselves. In implementing their strategy of disclosing as little as possible, Neusser, Gottweis, Schmidt, Peter and their co-conspirators provided EPA and CARB with testing results, data, presentations and statements in an attempt to make it appear that there were innocent mechanical and technological problems to blame, while secretly knowing that the primary reason for the discrepancy was their cheating software that was installed in every VW diesel vehicle sold in the United States. The co-conspirators continued this back-and-forth with the EPA and CARB for over 18 months, obstructing the regulators’ attempts to uncover the truth. The charges in the indictment are merely accusations and each defendant is presumed innocent unless and until proven guilty. The case was investigated by the FBI and EPA-CID. The prosecution and corporate investigation are being handled by Securities and Financial Fraud Unit Chief Benjamin D. Singer and Trial Attorneys David Fuhr, Alison Anderson, Christopher Fenton and Gary Winters of the Criminal Division’s Fraud Section; Trial Attorney Jennifer Blackwell of the Environment and Natural Resources Division’s Environmental Crimes Section; and from the U.S. Attorney’s Office for the Eastern District of Michigan, Criminal Division Chief Mark Chutkow and White Collar Crime Unit Chief John K. Neal and Assistant U.S. Attorney Timothy J. Wyse. The Justice Department’s Office of International Affairs also assisted in the case. The Justice Department also extends its thanks to the Office of the Public Prosecutor in Braunschweig, Germany. The Civil Resolutions: The first civil settlement resolves EPA’s remaining claims against six VW-related entities (including Volkswagen AG, Audi AG and Porsche AG) currently pending in the multidistrict litigation before U.S. District Judge Charles R. Breyer of the Northern District of California. EPA’s complaint alleges that VW violated the Clean Air Act by selling approximately 590,000 cars that the United States alleges are equipped with defeat devices and, during normal operation and use, emit pollution significantly in excess of EPA-compliant levels. VW has agreed to pay $1.45 billion to resolve EPA’s civil penalty claims, as well as the civil penalty claim of CBP described below. The consent decree resolving the Clean Air Act claims also resolves EPA’s remaining claim in the complaint for injunctive relief to prevent future violations by requiring VW to undertake a number of corporate governance reforms and perform in-use testing of its vehicles using a portable emissions measurement system of the same type used to catch VW’s cheating in the first place. Today’s settlement is in addition the historic $14.7 billion settlement that addressed the 2.0 liter cars on the road and associated environmental harm announced in June 2016, and $1 billion settlement that addressed the 3.0 liter cars on the road and associated environmental harm announced in December 2016, which together included nearly $3 billion for environmental mitigation projects. A second civil settlement resolves civil fraud claims asserted by U.S. Customs and Border Protection (CBP) against VW entities. VW entities violated criminal and civil customs laws by knowingly submitting to CBP material false statements and omitting material information, over multiple years, with the intent of deceiving or misleading CBP concerning the admissibility of vehicles into the United States. CBP enforces U.S. customs laws as well as numerous laws on behalf of other governmental agencies related to health, safety, and border security. At the time of importation, VW falsely represented to CBP that each of the nearly 590,000 imported vehicles complied with all applicable environmental laws, knowing those representations to be untrue. CBP’s relationship with the importing community is one based on trust, and this resolution demonstrates that CBP will not tolerate abrogation of importer responsibilities and schemes to defraud the revenue of the United States. The $1.45 billion paid under the EPA settlement also resolves CBP’s claims. In a third settlement, VW has agreed to pay $50 million in civil penalties for alleged violations of FIRREA. The Justice Department alleged that a VW entity supported the sales and leasing of certain VW vehicles, including the defeat-device vehicles, by offering competitive financing terms by purchasing from dealers certain automobile retail installment contracts (i.e. loans) and leases entered into by customers that purchased or leased certain VW vehicles, as well as dealer floorplan loans. These financing arrangements were primarily collateralized by the vehicles underlying the loan and lease transactions. The department alleged that certain of these loans, leases and floorplan financings were pooled together to create asset-backed securities and that federally insured financial institutions purchased certain notes in these securities. Today’s FIRREA resolution is part of the department’s ongoing efforts to deter wrongdoers from using the financial markets to facilitate their fraud and to ensure the stability of the nation’s financial system. Except where based on admissions by VW, the claims resolved by the civil agreements are allegations only. The civil settlements were handled by the Environmental and Natural Resources Division’s Environmental Enforcement Section, with assistance from the EPA; the Civil Division’s Commercial Litigation Branch; and CBP. View full article

The Takata Airbag recall now stands as the largest vehicle recall ever due to how many vehicles around the world use them. In the U.S. alone, 19 auto manufacturers have recalled 49 million vehicles with the airbags that can shoot out shrapnel in the event of an accident. 11 deaths and 184 injuries in the U.S. have been linked to these airbags. Due to this, Takata has been facing numerous lawsuits and investigations. A new report says that Takata is close to closing one of those investigations. The Wall Street Journal has learned from sources that Takata is in negotiations with the U.S. Justice Department about a possible settlement. The deal would see the Japanese supplier pleading guilty to criminal misconduct and paying a fine ranging from hundred of millions to $1 billion. The settlement could be finalized early next year, but sources say the timing could slip. Reaching an agreement with the Justice Department would put Takata in better standing when it comes to another supplier (possibly Autoliv) taking over the company. It would also close one door in a massive scandal. Source: Wall Street Journal (Subscription Required) View full article

There appears to be some movement on the 3.0L TDI settlement between Volkswagen and U.S. Government. A source briefed on the 3.0L TDI V6 settlement told Reuters that Volkswagen will pay $200 million into a pollution reduction fund. This is on top of the $2.7 billion Volkswagen will be paying for the 2.0L TDI pollution reduction fund. This seems to be the only thing the two groups have agreed on at the moment. Yesterday, a hearing at U.S. Federal Court in San Fransisco was pushed back few hours to give them more time to negotiate. U.S. District Judge Charles Breyer said at the hearing the parties have made "substantial progress and I am optimistic that there will be a resolution." Breyer has given them until Monday to see if an agreement can be reached. The sticking point in the negotiations over the 3.0L TDI has been how much Volkswagen would offer in compensation to owners who get their vehicles repaired or bought back. Reuters says Volkswagen, the U.S. Federal Trade Commission, and lawyers for the suing owners have been going at it for weeks. Source: Reuters View full article

Almost five months after Volkswagen and the U.S. Government announced they had reached a settlement totaling $14.7 billion over the 2.0L TDI engine scandal, U.S. District Judge Charles Breyer has given the final approval today in San Francisco . The approval marks a pivotal moment for the German automaker as they begin to move away from a scandal that has done a lot of harm not only to them, but also diesel fuel. The majority of the settlement will be used by Volkswagen to give owners of vehicles equipped with the 2.0L TDI four-cylinder two options, Have Volkswagen buy back the vehicle at NADA trade-in value before the scandal broke along with a one-time cash payment Wait for Volkswagen to come up with a fix for the 2.0L TDI (a one-time cash payment is included) The remainder of the settlement will be split between offsetting the excess emissions and the development of zero-emission vehicles. “Final approval of the 2.0L TDI settlement is an important milestone in our journey to making things right in the United States, and we appreciate the efforts of all parties involved in this process. Volkswagen is committed to ensuring that the program is now carried out as seamlessly as possible for our affected customers and has devoted significant resources and personnel to making their experience a positive one,” said Hinrich J. Woebcken, President and CEO of Volkswagen Group of America, Inc in a statement. Work is still being done on a settlement for the 85,000 vehicles equipped with the 3.0L TDI V6. Source: Volkswagen, Reuters Press Release is on Page 2 Volkswagen AG, Volkswagen Group of America, Inc. and certain affiliates (together, Volkswagen) announced today that Judge Charles R. Breyer of the United States District Court for the Northern District of California has granted final approval to the settlement agreement between Volkswagen and private plaintiffs represented by a Court-appointed Plaintiffs’ Steering Committee (PSC) to resolve civil claims regarding eligible Volkswagen and Audi 2.0L TDI vehicles in the United States. Concurrently, Judge Breyer also approved a Consent Decree between Volkswagen and the U.S. Department of Justice on behalf of the Environmental Protection Agency (EPA) and the State of California by and through the California Air Resources Board (CARB) and the California Attorney General; and a Consent Order between Volkswagen and the U.S. Federal Trade Commission. All three agreements were previously announced. “Final approval of the 2.0L TDI settlement is an important milestone in our journey to making things right in the United States, and we appreciate the efforts of all parties involved in this process. Volkswagen is committed to ensuring that the program is now carried out as seamlessly as possible for our affected customers and has devoted significant resources and personnel to making their experience a positive one,” said Hinrich J. Woebcken, President and CEO of Volkswagen Group of America, Inc. Volkswagen remains focused on resolving other outstanding issues in the United States and continues to work towards an agreed resolution for customers with affected 3.0L TDI V6 diesel engines. View full article

The settlement between the U.S. Government and Volkswagen still has to be approved by a federal court judge, but we're already getting some indications of what owners are planning to do when it is approved. Car and Driver got their hands on a memorandum filed at U.S. Federal Court in San Francisco by Lieff Cabraser Heimann & Bernstein - the firm representing owners in the case. The memorandum argued for the deal to get final approval - ahead of an October 18th hearing. But this memorandum also revealed some staggering numbers. At the time Car and Driver wrote their story, more than 311,000 owners - about 65 percent of the total 475,000 vehicles eligible - have registered for the settlement benefits. This is surprising since there is no deadline at the moment and deal hasn't been approved. The firm said in the memorandum the level of response for the settlement “a landslide referendum in favor of settlement approval, by any standard.” Owners who have signed up have the choice of either having Volkswagen buy back the vehicle at a value before the scandal broke or having the vehicle if and when a fix is approved. No matter which option is chosen, Volkswagen will also hand out additional money. Source: Car and Driver View full article

Volkswagen and their U.S. dealers have had a tense relationship since the diesel emission scandal broke. From the departure of Michael Horn to dealer meetings where tough questions were being asked to Volkswagen executives. But it seems some progress is being made on repairing it. In a statement released today, Volkswagen announced they have reached an “agreement in principle” with its dealers over compensation for losses due to the diesel emission scandal. According to Automotive News, the preliminary agreement will see dealers get a cash payout within 18 months from a settlement fund. The payout for each dealer will be determined by a formula that is currently being worked out. Volkswagen has also agreed to purchase "“unfixable, used” diesel vehicles from dealer inventory under the same terms as buyback offers for consumers". This settlement comes after a group of Volkswagen dealers filed a lawsuit against the German automaker back in April. The settlement is still being finalized and will need to get the approval of U.S. District Judge Charles Breyer in San Francisco before anything else can happen. Volkswagen says they hope to have everything finalized by September. “We believe this agreement in principle with Volkswagen dealers is a very important step in our commitment to making things right for all our stakeholders in the United States,” said Hinrich J. Woebcken, CEO of the North American Region, Volkswagen in a statement. Source: Automotive News (Subscription Required), Volkswagen Press Release is on Page 2 Volkswagen and VW-Branded Franchise Dealers in the U.S. Reach Agreement in Principle to Resolve Diesel Litigation Herndon, VA - August 25, 2016 - Volkswagen Group of America, Inc. (“Volkswagen”) today announced it has reached an agreement in principle to resolve the claims of VW-branded franchise dealers in the United States relating to TDI vehicles affected by the diesel matter and other matters asserted concerning the value of the franchise. Volkswagen has agreed to make cash payments and provide additional benefits to the dealers to resolve alleged past, current and future claims of losses in franchise value. Volkswagen and the dealers’ counsel will now work to finalize details of the proposed settlement, including how to apportion payments to dealers in the appropriate manner. Details of the agreement in principle are still under discussion and are expected to be finalized at the end of September. Any proposed agreement will become effective only after approval by the Court, and the parties have agreed to keep further terms confidential as they work to finalize the agreement. Under the agreement, Volkswagen will consent to the certification – for settlement purposes only – of a class of VW-branded franchise dealers in the United States as of an agreed date. “We believe this agreement in principle with Volkswagen dealers is a very important step in our commitment to making things right for all our stakeholders in the United States,” said Hinrich J. Woebcken, CEO of the North American Region, Volkswagen. “Our dealers are our partners and we value their ongoing loyalty and passion for the Volkswagen brand. This agreement, when finalized, will strengthen the foundation for our future together and further emphasize our commitment both to our partners and the U.S. market.” Steve Berman, Managing Partner of the dealers’ counsel Hagens Berman, said, “Our clients recognized the best solution would be one that not only allows them to recoup lost franchise value and continue to employ thousands of American workers, but one that also charts a strong course for the recovery of the Volkswagen brand in the United States.” Berman added, “Now that there is a path forward for dealers, they can continue to work proactively to take great care of their customers, who are also VW customers.” The plaintiffs filed the initial complaint against Volkswagen on April 6, 2016, in the U.S. District Court for the Northern District of Illinois. The litigation was subsequently transferred to the multidistrict proceedings in the U.S. District Court for the Northern District of California. View full article

Last month, Volkswagen announced that it had reached a $14.7 billion settlement with the U.S. Government over the illegal software used on the 2.0L TDI engine. But before anything could be put into motion, it had to get the go-ahead from U.S. District Court Judge Charles Breyer. Yesterday at a hearing in San Francisco, Judge Breyer gave his preliminary approval on the settlement. This now means Volkswagen and Audi can start sending out official notices to owners explaining what happens next. Those hoping for buyback offers will need to wait a few more months. Breyer has scheduled a hearing on October 18th to hopefully give the final approval. Also, a lawyer for the Department of Justice told the court yesterday that Volkswagen would be proposing a new fix for the 3.0L TDI V6 within the next month. Source: Reuters, Volkswagen Press Release is on Page 2 VOLKSWAGEN ANNOUNCES PRELIMINARY APPROVAL OF 2.0L TDI SETTLEMENT PROGRAM IN THE UNITED STATES Wolfsburg / Herndon VA 2016-07-26 -- Volkswagen AG announced today that Judge Charles R. Breyer of the United States District Court for the Northern District of California has granted preliminary approval of the settlement agreement reached on June 28 with private plaintiffs represented by the Plaintiffs’ Steering Committee (PSC) to resolve civil claims regarding eligible Volkswagen and Audi 2.0L TDI vehicles in the United States. Individual class members will now receive notification of their rights and options under the agreement. Volkswagen will begin the settlement program immediately after the Court grants final approval to the class settlement, which is anticipated on October 18, 2016. Under the proposed settlement, eligible customers will have two choices: (1) they can sell back their vehicle to Volkswagen or terminate their lease without an early termination penalty, or, (2) keep their vehicle and receive a free emissions modification, if approved by the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB). Customers who select any of these options under the settlement will also receive a cash payment from Volkswagen. More information about the program can be found at www.VWCourtSettlement.com. Volkswagen appreciates the constructive engagement of all the parties, under the direction of Judge Breyer and with the active participation of Special Master Robert S. Mueller III, as the settlement approval process moves forward. The parties believe that the proposed settlement program will provide a fair, reasonable and adequate resolution for affected Volkswagen and Audi customers. Notes to Editors The following 2.0L TDI engine vehicles are included in the proposed 2.0L TDI settlement program: VW Beetle VW Golf VW Jetta VW Passat Audi A3 2013- 2015 2010-2015 2009-2015 2012-2015 2010-2013; 2015 Volkswagen continues to work closely with the EPA and CARB on an approved emissions modification for each of the 2.0L TDI engine vehicles listed above. Volkswagen is also trying to secure approval of a technical resolution for affected vehicles with a V6 3.0L TDI engine as quickly as possible. In addition to the proposed class settlement, Volkswagen has entered into a separate Consent Decree with the United States Department of Justice (acting on behalf of the EPA), CARB and the California Attorney General and a separate Partial Stipulated Order for Permanent Injunction and Monetary Judgment with the United States Federal Trade Commission regarding 2.0L TDI vehicles. Volkswagen has also resolved current and potential consumer protection claims of 44 U.S. states, the District of Columbia and Puerto Rico. The agreements are not an admission of liability by Volkswagen. By their terms, they are not intended to apply to or affect Volkswagen's obligations under the laws or regulations of any jurisdiction outside the United States. The company continues to work to resolve other outstanding legal matters in the United States. View full article

In addition to $14.7 billion settlement reached with the U.S. Government, Volkswagen will pay an additional $86 million in civil penalties to California over the diesel emission scandal. "We must conserve and protect our environment for future generations and deliver swift and certain consequences to those who break the law and pollute our air," said California's Attorney General Kamala Harris in a statement. Harris explained the civil penalties resolved certain claims made by state officials against Volkswagen dealing with the state's unfair competition law, along with certain violations of federal law. The majority of $86 million will go to the Attorney General's office to "defray costs relating to investigation and litigation of the emissions scandal," according to court documents. The remainder will be used for grants given to government agencies and universities to study technology that can detect 'defeat devices'. Source: Reuters View full article