Michigan Attorney General Dana Nessel last Thursday announced that settlements have been reached that, when finalized, will provide compensation for Michigan consumers who purchased or leased Fiat Chrysler vehicles allegedly containing illegal defeat devices (i.e., software that changes the way a vehicle performs on emission control lab tests) as well as almost $5 million in combined payments to the State of Michigan. Payments of more than $171 million from Fiat Chrysler and Robert Bosch will be made to 52 jurisdictions nationwide. Bosch allegedly supplied and helped program the illegal emissions "defeat device" software used by both Fiat Chrysler and Volkswagen in their diesel vehicles.
Fiat Chrysler
Following a nearly two-year investigation, Nessel alleges that Fiat Chrysler Automobiles N.V., its U.S. subsidiary FCA US, LLC, its Italian affiliate V.M. Motori S.p.A. and V.M. North America, Inc. (collectively, "Fiat Chrysler") installed unlawful defeat device software and undisclosed Auxiliary Emissions Control Devices ("AECDs") in 3,444 Model Year 2014-16 Jeep Grand Cherokee and Ram 1500 diesel vehicles that the automaker sold in Michigan. Nessel alleges that Fiat Chrysler cheated on federal and state emissions tests by calibrating the vehicles' software to conceal that the vehicles emitted higher than permitted levels of harmful nitrogen oxides (NOx) in real-world driving conditions, and misled consumers by falsely claiming the "Eco-Diesel"-branded Jeep SUVs and Ram 1500 trucks were environmentally friendly and compliant with the law in all 50 states.
The settlements announced last Thursday will require Fiat Chrysler to pay Michigan more than $2.1 million under Michigan consumer protection laws for deceptively and unfairly marketing, selling, and leasing the vehicles to consumers. Nationwide, excluding the separate penalties the company will be required to pay to the federal government and California, the multistate agreement is expected to result in payments totaling $72.5 million to 49 states, Puerto Rico, the District of Columbia and Guam.
Michigan's settlement will also prohibit Fiat Chrysler from engaging in future unfair or deceptive acts and practices in connection with its dealings with consumers, and require Fiat Chrysler to carry out its obligations under a related settlement agreement in the Multidistrict Litigation ("MDL Consumer Settlement") pending in the U.S. District Court for the Northern District of California.
The MDL Consumer Settlement, once approved by the MDL court, will resolve claims brought by a national class of affected consumers. The MDL Consumer Settlement requires Fiat Chrysler to: eliminate the defeat device features from the relevant software through a software "flash fix"; provide eligible owners and lessees extended warranties; and, together with co-defendant Bosch, pay eligible owners who take their vehicle to an authorized dealer for the software repair an average restitution of $2,908 and lessees and former owners who do so restitution of $990.
Related settlements between Fiat Chrysler and the United States Department of Justice, the Environmental Protection Agency, the California Air Resources Board and the State of California also require Fiat Chrysler to make available 200,000 upgraded catalytic converters to mitigate air pollution across the country when installed by Fiat Chrysler vehicle owners as replacements to their existing catalytic converters.
Assuming all owners and lessees nationwide participate, this will result in total available restitution of approximately $307 million, including approximately $10.3 million to 3,444 affected owners and lessees of vehicles in Michigan.
"Today's settlement announcement is good news for Michigan consumers," said Nessel. "Michigan car buyers expect and deserve truth in advertising-especially when it comes to making decisions involving environmental impacts. These settlements set in motion a fix for Fiat Chrysler owners and lessees of affected diesel vehicles and should send a clear message that deceiving consumers is unacceptable."
The proposed settlements with Fiat Chrysler follow earlier comprehensive settlements reached between Michigan, along with other state, federal and private actors, and Volkswagen for equipping, marketing, selling and leasing more than 570,000 Volkswagen, Audi and Porsche diesel vehicles with illegal defeat devices. Under those settlements, Volkswagen paid Michigan approximately $11.7 million, fixed or repurchased the affected vehicles, and paid restitution to affected Michigan consumers.
Bosch
Bosch is a multinational engineering company well known for its consumer products. It is also a major supplier to the global automotive industry. Among the products Bosch supplies to its auto manufacturing customers are the electronic control units ("ECUs") that house the complex software that controls nearly all aspects of an engine's performance, including emissions systems. When Volkswagen, a Bosch customer, was revealed to have systematically utilized defeat device software in its diesel vehicles, several states attorneys general, including the Michigan attorney general, commenced a separate investigation into the role played by Bosch in enabling its customers to potentially violate federal and state emissions regulations. Today, after another Bosch customer, Fiat Chrysler, has settled claims that it too employed illegal defeat devices, Nessel announces the conclusion of that separate investigation into Bosch's conduct.
Nessel alleges that Bosch facilitated the implementation of the defeat device software in more than 600,000 Volkswagen and Fiat Chrysler vehicles over a period that spanned more than a decade. Notwithstanding concerns about the illegality of the devices raised internally, to management, and externally, to Volkswagen and Fiat Chrysler, the attorney general alleges that Bosch continued to assist these customers as they implemented the defeat devices and concealed their misconduct from regulators and the public.
Under the terms of the proposed settlement with Nessel, Bosch will pay Michigan more than $2.7 million. The agreement also includes precedent-setting injunctive terms and requires Bosch to maintain robust processes to monitor compliance and to refuse to accommodate requests for software development and programming that could result in the installation of defeat device software.
Nessel said, "This settlement puts companies on notice that knowingly going along with and affirmatively helping a client perpetuate wrongful conduct is wrong, and you will be held accountable."
Under a multistate agreement involving Michigan and 49 other jurisdictions including Puerto Rico, the District of Columbia, Guam and all states other than California, Texas and West Virginia Bosch will pay a total of $98.7 million under the jurisdictions' consumer protection and environmental laws and make a separate $5 million payment to the National Association of Attorneys General (NAAG) for training and future enforcement purposes. Under the related MDL Settlements, Bosch will also pay approximately $27.5 million to consumers who purchased or leased the affected Fiat Chrysler vehicles. Bosch earlier paid more than $275 million to consumers who purchased or leased the affected Volkswagen vehicles.
When combined, both the Fiat Chrysler settlement and the Bosch settlement will result in total payments to the State of Michigan in the amount of $4,917,120.
Published: Mon, Jan 14, 2019
