I was hesitant to write about the ongoing saga involving Volkswagen and that’s because the landscape changes daily with nothing good so far for the automaker. But I will give an update on the situation at this juncture. Volkswagen is hiring a Daimler executive to lead a new post devoted to integrity and legal affairs. In mid-October, the German automaker announced that Christine Hohmann-Dennhardt would become its new board member for integrity and legal affairs as of Jan. 1, 2016. While that move is a step in the right direction, there was an urgent need for ethical conduct at Volkswagen long before this hiring took place.
Hohmann-Dennhardt held an identical role at Daimler until it recently agreed to terminate her contract early at Volkswagen’s request. The new position puts Hohmann-Dennhardt at the center of the global crisis that has enveloped Volkswagen in the wake of the U.S. Environmental Protection Agency’s (EPA) disclosure that the company installed manipulative software on diesel cars to fool regulators into believing the vehicles met emissions standards. The cheating software affects up to 11 million cars worldwide, including nearly 500,000 in the U.S. On Oct. 15, Volkswagen ordered a recall of 8.5 million vehicles in Europe – the first step toward fixing the non-compliant cars.
U.S. owners of Volkswagen cars can now determine whether their vehicle is fitted with the manipulative software. Volkswagen announced that owners can input their Vehicle Identification Number (VIN) into an online database to ascertain the status of their vehicles. The 2-liter, 4-cylinder diesel cars affected by the crisis include models ranging from 2009 to 2015. To find the VIN, vehicle owners should check the identification plate on the driver’s vertical doorframe. The VIN database is available at www.VWdieselinfo.com.
It’s quite obvious that Volkswagen is facing a massive recall of vehicles and it appears the recall will begin in January. While the automaker says it’s planning to fix all of the recalled vehicles included in the emissions-rigging scandal by the end of 2016, I seriously doubt that can be done that quickly. Volkswagen has previously said that up to 11 million vehicles worldwide across several of its brands contain the diesel engine with the software used to cheat on U.S. emissions tests. The company will have to fix the EA 189 diesel engine “in combination with various transmissions and country-specific designs.”
Older models will be particularly difficult to fix because they will require hardware and software changes. At press time Volkswagen hadn’t proposed an official fix to U.S. regulators. As for the emissions defeat program, the software causes vehicles to emit nitrogen oxide – which can exacerbate respiratory conditions such as asthma – at rates of up to 40 times U.S. standards. But in controlled regulatory tests, the software runs the vehicle in clean mode, to make it appear compliant. Volkswagen is already the target of numerous investigations, including a U.S. Justice Department criminal probe and European inquiries.
Volkswagen claims that a software update will suffice to fix the problem in most cases, but that some vehicles could need new injectors and catalyzers. The automaker says it may need to set up temporary specialist workshops to deal with the more complex cases. Volkswagen so far has set aside 6.5 billion euros ($7.3 billion) to cover the cost of recalls and other efforts to win back customers’ trust. Volkswagen can expect to face fines from the U.S. Environmental Protection Agency, which could in theory amount to as much as $18 billion.
Volkswagen has hired the law firm Jones Day to conduct an internal investigation into the cheating scandal. Interestingly, House lawmakers were told by Volkswagen Group of America President and CEO Michael Horn that the installation of defeat devices in the Volkswagen vehicles was “not a corporate decision,” but instead the work of a few rogue engineers. He claims that neither he nor anyone else at VW of America knew the software was installed in VW vehicles until a few days before the information became public. Where have we hard that line before?
The bottom line simply put is this – Volkswagen has no fix available that will both maintain high performance and also meet the emission requirement. It just can’t happen and therein lies the problem. Our firm has partnered with several nationally recognized class action law firms to file two class action lawsuits, one in New Jersey and the other in California. Dee Miles, Archie Grubb and Clay Barnett from our firm are handling the cases.
Volkswagen is working hard to steer the hundreds of class-action lawsuits over its emissions-cheating software to the court nearest its current U.S. headquarters or to Detroit, its former location. The automaker has asked a panel of federal judges to combine the more than 350 lawsuits filed against it in federal court in Alexandria, Va. Detroit was listed by Volkswagen as an alternate choice. We believe the proper court would be in New Jersey. A hearing before the Judicial Panel on Multidistrict Litigation to decide where the cases will be consolidated is set for Dec. 3 in New Orleans. The seven-judge panel will determine whether the cases will be combined and which judge will oversee the suits. We are confident the lawsuits will be combined in an MDL.
If you need more information concerning any aspect of the ongoing saga, contact Dee Miles, Archie Grubb or Clay Barnett at 800-898-2034 or by email at Dee.Miles@beasleyallen.com, Archie.Grubb@beasleyallen.com or Clay.Barnett@beasleyallen.com. They will be glad to assist you.
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