Get­ting VW own­ers their share

San Francisco at­tor­ney says the pay­ments are sub­stan­tial

The Guardian (Charlottetown) - - BUSINESS - BY TOM KR­ISHER

About a year ago, Volk­swa­gen agreed to spend up to $15.3 bil­lion to set­tle con­sumer law­suits and gov­ern­ment al­le­ga­tions that its diesel ve­hi­cles cheated on U.S. emis­sions tests. In­cluded was up to $10 bil­lion for own­ers of about 450,000 VWs and Audis to ei­ther buy back or repair ve­hi­cles with 2-litre en­gines.

Own­ers would get $5,100 to $10,000 in ad­di­tion to buy­backs or fixes. As of late June, VW had paid $6.3 bil­lion to 2-litre own­ers. About 62 per cent of the cars, or 300,000, have been pur­chased by VW, mod­i­fied or scrapped. Own­ers have un­til Septem­ber of 2018 to ap­ply.

El­iz­a­beth Cabraser, a San Francisco at­tor­ney who led ne­go­ti­a­tions for peo­ple su­ing the com­pany, says the pay­ments are sub­stan­tial be­cause VW ad­mit­ted guilt. Her in­ter­view has been edited for length and clar­ity.

Q: Con­sumers ap­peared to be bet­ter com­pen­sated here than in most class-ac­tion suits. How did you man­age that?

A: Con­sumer class ac­tions some­times get a bum rap, I think. This case was dif­fer­ent. It’s about cars. That’s a ma­jor in­vest­ment for peo­ple, par­tic­u­larly be­cause they bought these cars for very spe­cific rea­sons. Hav­ing a sit­u­a­tion where VW was caught red-handed and forced to ul­ti­mately con­cede li­a­bil­ity helped.

But we had to make the case that there would be no en­vi­ron­men­tal solution with­out ac­tive par­tic­i­pa­tion of the own­ers and leasees. The gov­ern­ment couldn’t and wouldn’t go out and take peo­ple’s cars, and if there was a fix, couldn’t make peo­ple fix them. We had to in­cen­tivize peo­ple to come in and have their cars re­paired or have their cars bought back. We couldn’t make it work by pay­ing peo­ple small dol­lars.

Q: Ear­lier this year VW had prob­lems tak­ing back cars and mak­ing pay­ments. Have those been cleared up?

A: For the most part. No one has ever been through a buy­back of this mag­ni­tude. VW spent a lot of time and money ramp­ing up the pro­gram to have it ready. There’s a lim­ited in­fra­struc­ture there, lim­ited by the num­ber of deal­ers. We did such a good job in the fi­nan­cial fea­tures of the set­tle­ment that ev­ery­body showed up early to get their buy­backs. That put a tremen­dous stress on the sys­tem. In or­der to make this work for peo­ple, more re­sources had to be put into the sys­tem.

Q: You’re now lead coun­sel for peo­ple su­ing Fiat Chrysler over al­le­ga­tions of diesel truck emis­sions cheat­ing. Will the set­tle­ments be smaller than with VW?

A: The gov­ern­ment has strong al­le­ga­tions, as do we. It’s too early to project. The fact re­mains that emis­sions con­trols were evaded. (The com­pany says it did not in­stall soft­ware with the in­tent to cheat on tests and says it will de­fend it­self in court) The num­ber of ve­hi­cles is smaller. (104,000) That means this is a less-ex­pen­sive prob­lem to solve. If re­pair­ing the cars is less com­pli­cated, ei­ther from a soft­ware re­flash­ing or a me­chan­i­cal stand­point, that saves money.

But also we still have the chal­lenge of suf­fi­ciently in­cen­tiviz­ing own­ers to have mod­i­fi­ca­tions made. Own­ers are not go­ing to do that if they are con­cerned that the mod­i­fi­ca­tions are go­ing to sig­nif­i­cantly af­fect the mileage or per­for­mance of these ve­hi­cles.

ERIC RISBERG/AP PHOTO

In this Tuesday, June 28, 2016, file photo, El­iz­a­beth Cabraser, the lead at­tor­ney for con­sumers who sued Volk­swa­gen, poses in her of­fice in San Francisco. Volk­swa­gen agreed to spend up to $15.3 bil­lion to set­tle con­sumer law­suits and gov­ern­ment al­le­ga­tions that its diesel ve­hi­cles cheated on U.S. emis­sions tests.

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