In re Volkswagen "clean Diesel" Mktg.
Decision Date | 17 May 2017 |
Docket Number | MDL No. 2672 CRB (JSC) |
Parties | IN RE: VOLKSWAGEN "CLEAN DIESEL" MARKETING, SALES PRACTICES, AND PRODUCTS LIABILITY LITIGATION This Order Relates To: ALL ACTIONS (except the securities action) |
Court | U.S. District Court — Northern District of California |
In the fall of 2015 the public learned of Volkswagen's deliberate use of a defeat device—software designed to cheat emissions tests and deceive federal and state regulators—in nearly 600,000 Volkswagen-, Porsche-, and Audi-branded turbocharged direct injection ("TDI") diesel engine vehicles sold in the United States. Litigation quickly ensued, and those actions were consolidated and assigned to this Court as a multidistrict litigation ("MDL"). After months of intensive negotiations and with the assistance of a court-appointed settlement master, Plaintiffs and Defendants Volkswagen AG ("VWAG"); Volkswagen Group of America, Inc. ("VWGoA"); Audi AG; Porsche AG; and Porsche Cars North America, Inc. ("PCNA") (collectively, "Volkswagen" or "Defendants") reached a settlement that resolves consumer claims concerning certain 3.0-liter diesel TDI vehicles. (See Dkt. No. 2894.) The Court preliminarily approved the Settlement on February 16, 2017. (See Dkt. No. 2919.)
Settlement Class Counsel now move for final approval of the Settlement. (Dkt. No. 3088.) On May 11, 2017, the Court held a fairness hearing regarding final approval, during which three Class Members or attorneys for Class Members addressed the Court. Having considered the parties' submissions, and with the benefit of oral argument, the Court GRANTS final approval of the Settlement. The Settlement is fair, reasonable, and adequate.
Over the course of six years, Volkswagen sold nearly 600,000 Volkswagen-, Audi-, and Porsche-branded TDI "clean diesel" vehicles, which it marketed as being environmentally friendly, fuel efficient, and high performing. Unbeknownst to consumers and regulatory authorities, Volkswagen installed in these cars a software defeat device that allowed the vehicles to evade United States Environmental Protection Agency ("EPA") and California Air Resources Board ("CARB") emissions test procedures. The defeat device senses whether the vehicle is undergoing emissions testing or being operated on the road. During emissions testing, the defeat device produces regulation-compliant results. When the vehicle is on the road, the defeat device reduces the effectiveness of the vehicles' emissions control system. Only by installing the defeat device on its vehicles was Volkswagen able to obtain Certificates of Conformity from EPA and Executive Orders from CARB for its 2.0- and 3.0-liter diesel engine vehicles; in fact, these vehicles release nitrogen oxides at a factor of up to 40 times over permitted limits.
Consumers filed hundreds of lawsuits nationwide after Volkswagen's use of the defeat device became public. On December 8, 2015, the Judicial Panel on Multidistrict Litigation ("JPML") transferred 56 related actions, including numerous putative class actions, to this Court for coordinated pretrial proceedings in the above-captioned MDL. (Dkt. No. 1.) The JPML has since transferred an additional 1,349 tag-along actions to the Court. (Dkt. No. 3175.) Many MDL cases have also been filed directly in this Court. In January 2016, the Court appointed Elizabeth J. Cabraser of Lieff, Cabraser, Heimann & Bernstein, LLP as Lead Plaintiffs' Counsel and Chair of the Plaintiffs' Steering Committee ("PSC"), to which the Court named 21 other attorneys. (Dkt. No. 1084.) On September 2, 2016, Class Counsel filed its Amended Consolidated Consumer Class Action Complaint against 13 named defendants: VWAG; VWGoA; Audi AG; Audi of America, LLC; Porsche AG; PCNA; Martin Winterkorn; Mattias Müller; Michael Horn; Rupert Stadler; Robert Bosch GmbH; Robert Bosch, LLC; and Volkmar Denner. (Dkt. No. 1804.) The complaint asserts against Volkswagen claims under (1) the Racketeer Influenced and CorruptOrganizations Act ("RICO"), 18 U.S.C. § 1962(c)-(d), and the Magnusson-Moss Warranty Act, 15 U.S.C. § 2301 et seq.; (2) state fraud, breach of contract, and unjust enrichment laws; and (3) all fifty States' consumer protection laws. Class Counsel also filed a Second Amended Consolidated Reseller Dealership Class Action Complaint against the same 13 defendants; that complaint asserts against Volkswagen RICO, fraud, failure to recall/retrofit, and unjust enrichment claims. (Dkt. No. 1805.)
The MDL also includes actions brought by federal and state government entities. The United States Department of Justice ("United States") on behalf of EPA sued VWAG, VWGoA, Audi AG, Porsche AG, Volkswagen Group of America Chattanooga Operations, LLC ("VW Chattanooga"), and PCNA for claims arising under Sections 204 and 205 of the Clean Air Act, 42 U.S.C. §§ 7523 and 7524. The Federal Trade Commission ("FTC") also brought an action against VWGoA pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §53(b), for violations of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). Additionally, the State of California, on behalf of the People and CARB, sued VWAG, VWGoA, Audi AG, Porsche AG, VW Chattanooga, and PCNA for violations of the Consumer Financial Protection Act, 12 U.S.C. § 5536, and various California state laws.
In January 2016, the Court appointed former Director of the Federal Bureau of Investigation Robert S. Mueller III as Settlement Master to oversee settlement negotiations. (Dkt. No. 973.) The parties and government entities subsequently engaged in extensive negotiations, which, in September and October 2016, resulted in the Court approving settlements and consent decrees between Volkswagen and (1) consumers who purchased or leased 2.0-liter diesel engine vehicles (Dkt. No. 2102); (2) the Volkswagen-branded dealerships (Dkt. No. 2807); and (3) EPA, the FTC, and CARB with respects to claims relating to the 2.0-liter diesel engine vehicles (Dkt. Nos. 1801; 2103-04). Today in separate orders, the Court also (1) approved the United States' Second Partial Consent Decree, which together with an unopposed and previously granted Third Partial Consent Decree (Dkt. No. 3155), fully resolves the United States' claims against Volkswagen relating to the 3.0-liter vehicles, and partially resolves California's claims for injunctive relief with respect to the 3.0-liter vehicles (Dkt. No. 3228); (2) entered the FTC'sAmended Partial Stipulated Order for Permanent Injunction and Monetary Relief, which resolves the FTC's claims related to the 3.0-liter vehicles (Dkt. No. 3227); and (3) entered a California-only consent decree, with further resolves certain of the State's claims related to the 3.0-liter vehicles (Dkt. No. 3226).
The Court granted preliminary approval of the 3.0-liter Settlement on February 16, 2017. (Dkt. No. 2919.) In accordance with the Court's preliminary approval order, Plaintiffs filed a statement regarding their prospective request for attorneys' fees and costs on February 24, 2017 and a motion for final approval on March 24, 2017. (Dkt. Nos. 2970, 3088.) The Notice Administrator implemented the court-approved Notice Program beginning February 16, 2017, by sending email notice to potential Class Members, and on February 24, 2017, the Notice Administrator mailed Notice of the proposed Settlement to potential Class Members by first class mail. (Dkt. No. 3190-3 ¶¶ 10-12; Dkt. No. 3190-4 ¶¶ 8-15.) By April 14, 2017, there were 32 timely objections and 593 opt outs. (Dkt. No. 3190 at 6.)
The key provisions of the Settlement are as follows.
The proposed Settlement Class consists of:
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