Insider Q&A: Getting VW owners their share
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-liter 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-liter owners. About 62 percent 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.
Follow Tom Krisher on Twitter: @tkrisher