This is the second in a series of articles taking a look at the recent Multi-District Litigation lawsuits (MDLs) involving General Motors and Volkswagen. In future installments in this series, we will take a look first at the General Motors "ignition defect" MDL, and then at the Volkswagen "pollution defeat device" MDL. Our special focus will be trained on the secrecy involved in these huge lawsuits, secrecy that is built into such lawsuits as an integral part of them. To a great extent secrecy is a major reason such lawsuits exist in the first place.
1. GENERAL MOTORS.
The General Motors ignition defect MDL came about in this way. There were a number of claims that General Motors[1] was responsible for deaths and injuries resulting from an ignition defect. A federal agency, the National Highway Traffic Safety Administration, investigated the alleged ignition defects. Lawsuits were also filed in which people sought damages for wrongful death and for bodily injuries.
In response, GM announced a settlement fund to be administered by Kenneth Feinberg, the person who administered an earlier settlement fund set up by BP after the Deepwater Horizon disaster. Although GM's Final Protocol for how it set up the settlement fund was silent about confidentiality requirements, Mr. Feinberg reportedly said that people who participated in GM's settlement fund would not be required to sign confidentiality agreements.[2]
On the other hand, GM announced that each claimant successfully pursuing a claim against GM's settlement fund would be required to give GM a release. Thus it was reasonable to expect that GM would insist on confidentiality agreements before it paid money to settle claims.
The "Final Protocol" setting out the standards for GM's "Compensation of Certain Death and Physical Injury Claims Pertaining to the GM Ignition Switch Recall," dated June 30, 2014, understandably recited that anyone accepting GM's settlement funds from this program would have to provide GM with a release.[3]
2. VOLKSWAGEN
Volkswagen used software to make around 11 Million diesel cars appear to have cleaner emissions in government testing facilities than they actually gave off on the road. The software VW invented made its diesel cars start running in a different way once they were put into pollution tests, from the way that they actually did on the road.
On the road, VW diesel cars gave off more nitrogen oxide than laws allowed. Nitrogen oxide is one of the causes of smog, breathing problems, and early deaths. It would eventually take up to some $30 Billion for VW to buy its way out of the many claims that resulted. VW has reportedly since recovered most of the share price and profits that plummeted right after the pollution-defeat-device allegations emerged.[4]
There were so many claims against VW that it is hard to keep track of them. Perhaps the surest way to describe them all, and how they were combined into one huge MDL, is to set out a general chronology or timeframe of the most significant claims in terms of their ultimate impact on our searches for concealed evidence and secret settlements.[5] The following chronology is a timeframe of the most significant catastrophe claims in the disaster that resulted from the VW diesel "defeat device."
2013-2014: During these two years, students and faculty from the University of West Virginia got a grant of some $70,000.00 from the International Council on Clean Transportation. Their task was to road-test certain diesel vehicles on California highways. The reason for the road tests was that although the diesel vehicles generally passed pollution testing when it was performed by regulators on their equipment indoors, there were reports that the same types of vehicles spewed foul odors and irritants when on the road.
2014: The California Air Resources Board or "CARB" began testing the VW diesel vehicles itself after the WVU issued its report in 2014. The WVU researchers' report reflected a mysterious but glaring difference between the vehicles passing pollution tests performed indoors by regulators like CARB, and the same kinds of VW diesel vehicles giving off pollutants in measurably large amounts that violated California's pollution laws when the cars were driven on the road.
CARB began discussions with Volkswagen in 2014 about this glaring difference. VW had many explanations which changed over time. VW even offered to recall the diesel vehicles under its own plan. Finally, on September 3, 2015, after more than a year of talks, Volkswagen admitted to the CARB regulators that VW had gamed the tests from the beginning. VW had built the diesel vehicles to defeat pollution tests rather than building vehicles that would not pollute.
September 2015: The first of many lawsuits was filed against Volkswagen on account of the "defeat device" diesel vehicles, which were designed and built with software to defeat pollution tests until VW sold the vehicles and released them onto the streets.
The first lawsuit was a class action. It was consolidated into one multi-district litigation ("MDL") with as many as 1,157 other class actions and other kinds of actions against VW. Ultimately, the MDL would include various makes and models of VW cars, some with 2.0 liter diesel engines and some with 3.0 liter diesel engines, and claims asserted by consumers, dealerships, and others.
On February 22, 2016 the plaintiffs filed "a 719-page Consolidated Consumer Class Action Complaint" in their MDL against VW.[6] Within three to four months, the MDL would settle.
June, 2016: Various announcements tell of a settlement for $570 Million of "consumer deception claims against Volkswagen, " made by "over 45 jurisdictions," and of the same settlement, apparently, but reportedly for "a $603 million agreement" with VW and 46 jurisdictions "that covered 2-liter engines."[7]
On October 25, 2016 the MDL Court entered its Order Granting Final Approval of a "Consumer and Reseller Dealership Class Action Settlement" over claims arising from the defeat devices in 2.0 liter engine VW cars.
A word at this point about the amounts paid for these fines, penalties and damages settlements. The settlement agreements are confusing and vague. By design, it is hard to figure out from these documents what are the amounts of the fines, penalties, and damages settlements that the defendants are supposed to be paying. These documents break out many actions Volkswagen agreed to take as a part of these agreements, and they often assigned arbitrary values to the performance of the obligations that VW agreed to take on, such as various recalls of various things, repurchase of certain makes and models, payments based on mileage on each individual vehicle, and so on. Sometimes the settlement agreements did not even reflect any effort to assign any value in any amount to particular obligations at all.
The words used in these settlement agreements collectively made it very understandable that many individual people asked to report what amount of money VW was going to pay would each be forced to make their own best guess.[8] Media reports announced that the settlements involved VW paying $14.7 Billion.
Given the many settlements and agreements that the defeat devices spawned regarding so many different pieces of the puzzle such as 2.0 liter engines, 3.0 liter engines, certain makes and models of cars, vehicles with various mileage, and so on, it is understandably confusing and extraordinarily difficult to estimate how much Volkswagen has agreed to "pay" over its failed defeat devices schemes. It is also difficult to pin down a figure for the number of vehicles involved.
The numbers variously reported by newspapers and other media outlets have ranged across a wide spectrum. The reports seem to have increased over time to settle down on commonly accepted figures, as illustrated by even a few of the reports:
- "$20 Billion" for 600,000 diesel vehicles reported in January 2017;
- "More than $20 Billion" for "nearly 600,000 vehicles" reported in March and in April 2017;
- "$22 Billion" for 500,000 diesel vehicles in the United States, reported in May 2017, and republished in January 2019;
- "Up to $25 Billion" for 580,000 U.S. vehicles reported in March 2017; and
- "$30 Billion" for 11 Million vehicles reported in March, 2018.
These sums and settlements are not to be confused with reports of other settlement events, such as the Federal Government's Press Release in April 2018 announcing that Federal Regulators had settled with Wells Fargo for $1 Billion in fines and penalties over force-placed auto insurance and mortgage practices,[9] a settlement that drew some criticism as more or less a sham;[10] and in another settlement, that Wells agreed to settle with "shareholders"[11] or with "investors"[12] for $480 Million in May 2018, and equally unrelated claims in August 2018 that Wells Fargo foreclosed on "hundreds" of homeowners due to allegedly faulty software such that Wells Fargo compelled itself to "set aside $8 million to compensate customers affected by the glitch."[13]
For comparison purposes, the GM faulty ignition switch claims involved resulted in over 100 people dead and most of these catastrophe claims resulted in a settlement amount of $2 Billion. Allegedly defective Takata airbags in cars resulted in a settlement of $1Billion.[14]
NEXT: THE STAGGERING GENERAL MOTORS "IGNITION DEFECT" MDL CLAIMS.
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[1] Long before these claims were made, General Motors Corporation in 2009 had already been split between a newly reorganized "new" GM, financed in large part by federal bailout funds, and the "old" GM which was liable in essence for risks from GM's business before there was a "new" GM. See Bill Vlasic and Neal E. Boudette, "Shell of Old G.M. Surfaces in Court Fight Over Ignition Flaw" (New York Times Online, August 17, 2017), posted at https://nyti.ms/2vlpJEs.
[2] "Those who accept settlements, Feinberg says, will not be required to sign confidentiality agreements." Jeff Gilbert, "GM Compensation Fund Expected to Pay Out Billions to Victims" (published online by CBS Detroit on June 30, 2014).
[3] GM Ignition Compensation Claims Resolution Facility FINAL PROTOCOL for Compensation of Certain Death and Physical Injury Claims Pertaining to the GM Ignition Switch Recall, June 30, 2014, § VIII, RELEASE, OFFSETS AND LIENS, ¶ A. Release, at 13 (all emphasis in original).
[4] "Volkswagen used software" and "nitrogen oxide" and "recovered most of its share price and profits": Bloomberg Businessweek television report broadcast on Saturday, March 31, 2018.
[5] Throughout the footnotes showing the sources behind this chronology, I will try to include the developments including other proceedings that were brought against VW on account of the pollution defeat devices, but which did not have as much impact on concealed evidence and secret settlements as the developments listed chronologically in the text at this point.
[6] 2013-2014 and the West Virginia University tests, 2014 and the California Air Resources Board or "CARB," and VW's September 3, 2015 admission: Jack Ewing, "Inside VW's Campaign of Trickery" (New York Times Online, May 6, 2017), available at https://nyti.ms/2pg43ss.
September 2015 The first action was a class action. It was consolidated into one multi-district litigation ("MDL"): See, e.g., In re: Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation, Order Granting Final Approval of 2.0 Liter TDI Consumer and Reseller Dealership Class Action Settlement, Doc. No. 2102, ¶ 1 at pp. 2-3, filed 10.25.16 (N.D. Cal. MDL No. 2672 CRB (JSC)) [hereinafter "10.25.16 Order"]; Id., Plaintiffs' Notice of Motion, Motion, and Memorandum, Doc. No. 1784, pp. 6-7, filed 08.26.16 [hereinafter "Plaintiffs' 08.26.16 Notice"]; Jack Ewing and Neal Boudette, "Business Day / As VW Pleads Guilty in U.S. Over Diesel Scandal, Trouble Looms in Europe" (New York Times Online, March 10, 2017), available at https://nyti.ms/2mtMneV; Jenny Gesley, "The Volkswagen Litigations" (Library of Congress blog "In Custodia Legis," October 27, 2016).
Also in September 2015 the U.S. Environmental Protection Agency began taking steps to request the U.S. Department of Justice to sue VW, and the Federal Trade Commission filed its own administrative complaint, all the while "California and other state attorneys general announced investigations or filed lawsuits, and many other domestic and foreign government entities launched criminal and civil investigations of Volkswagen and related individuals and entities around the world."
On February 22, 2016 the plaintiffs filed "a 719-page Consolidated Consumer Class Action Complaint" in their MDL against VW: Plaintiffs' 08.26.16 Notice at 6.
[7] In the Summer of 2016: Ten States file "environmental lawsuits" against VW on account of VW's "defeat device" software in 3.0 liter diesel engines in certain makes and models of VW cars. See, e.g., "Volkswagen to Pay Over $157m to Settle Emissions Claims by 10 States" (Associated Press copyrighted story published in The Boston Globe on March 31, 2017); Press Release, New York Attorney General, A.G. Schneiderman Announces Volkswagen to Pay New York $32.5 Million -- Marking First-Ever NY State Environmental Enforcement Penalty Against an Automaker for Emissions Violations (March 30, 2017) (describing the lawsuits ultimately joined by 10 States as "the environmental lawsuits").
June, 2016: New York Attorney General March 30, 2017 Press Release; Associated Press March 31, 2017 report.
[8] Would each be forced to make their own best guess: See the 10.25.16 Order, for example.
In January, 2017: Criminal charges are brought against six Volkswagen executives as a result of the diesel defeat devices. On the same day that the charges are brought against the six individuals, Volkswagen the corporation pled guilty "to charges of conspiracy to commit wire fraud and to violate the Clean Air Act, customs violations and obstruction of justice." VW agreed to pay $4.3 Billion "in criminal and civil penalties" as a result of the federal government's "investigation" into VW's diesel defeat devices. "It was the first time the company has pleaded guilty to criminal conduct in any court in the world," a company spokesperson reportedly said. It is later revealed that VW's guilty plea and agreement to pay $4.3 Billion in penalties to U.S. authorities was based on an internal investigation VW performed after retaining a law firm to perform the investigation, and German authorities reportedly questioned "the credibility of the company's efforts to uncover wrongdoing in its ranks." For January, 2017 Criminal charges are brought: See Nick Carey and David Shepardson, "Volkswagen Pleads Guilty in U.S. Court in Diesel Emissions Scandal" (Reuters, March 10, 2017); Hiroko Tabuchi, Jack Ewing, and Matt Apuzzo, "Business Day / 6 Volkswagen Executives Charged as Company Pleads Guilty in Emissions Case" (New York Times Online, January 11, 2017), available at https://nyti.ms/2jwcePe.
For it is later revealed: See Jack Ewing and Bill Vlasic, "Business Day / German Authorities Raid U.S. Law Firm Leading Volkswagen's Emissions Inquiry" (New York Times Online, March 16, 2017), available at https://nyti.ms/2m6ChC1.
In March, 2017: VW agrees to pay $157 Million to a group of 10 states to settle the "environmental lawsuits" filed against VW in the Summer of 2016. These lawsuits were filed by the 10 states over defeat device software installed by VW in certain vehicles with 3.0 liter diesel engines. Associated Press March 31, 2017 report; New York Attorney General March 30, 2017 Press Release. VW's settlement agreement with the 10 states is Exhibit 1, Doc. No. 3114-1, filed on March 30, 2017 in the VW defeat device MDL in the Northern District of California.
[9] See, e.g., Matthew Goldstein, Wells Fargo Pays $1 Billion to Federal Regulators, New York Times Online, April 20, 2018, available at https://www.nytimes.com/2018/04/20/business/wells-fargo-cfpb-penalty-regulators.html?action=click&module=RelatedCoverage&pgtype=Article®ion=Footer; Donna Borak, Wells Fargo Fined $1 Billion for Insurance and Mortgage Abuses, CNN Money, April 20, 2018; Allison Zieve, Wells Fargo Fined $1 Billion for Insurance and Mortgage Abuses, Public Citizen / Consumer Law & Policy Blog, April 20, 2018 (linking to the CNN Money report immediately above).
[10] See, e.g., Jeff Sovern, What Are We to Make of the CFPB's Billion Dollar Wells Fine?, Public Citizen / Consumer Law & Policy Blog, April 20, 2018.
[11] Shareholders: See Stacy Cowley, Wells Fargo Agrees to Settle With Shareholders for $480 Million, New York Times Online, May 4, 2018, available at https://www.nytimes.com/2018/05/04/business/wells-fargo-shareholder-suit-phony-accounts.html?action=click&module=RelatedCoverage&pgtype=Article®ion=Footer.
[12] Investors: See James F. Peltz, Business / Wells Fargo Agrees to Pay $480 Million to Settle Securities-Fraud Lawsuit Over Fake Accounts, Los Angeles Times Online, May 4, 2018.
[13] Jackie Wattles, Wells Fargo Says Hundreds of Customers Lost Homes After Computer Glitch, CNN Money, August 5, 2018, available at https://money.cnn.com/2018/08/04/news/companies/wells-fargo-mortgage-modification/index.html.
[14] See, e.g., Bloomberg Businessweek (television) report broadcast on Saturday, March 31, 2018; Nick Carey and David Shepardson, March 10, 2017 Reuters Report; Jack Ewing, May 6, 2017 New York Times report; Jack Ewing and Neal E. Boudette, March 10, 2017 New York Times report; Hiroko Tabuchi, Jack Ewing, and Matt Apuzzo, January 11, 2017 New York Times report; Bill Vlasic, April 21, 2017 New York Times Report; Associated Press March 31, 2017 report.
For comparison purposes: These comparison figures were reported by Jack Ewing in his May 6, 2017 New York Times reporting.
NEXT: THE STAGGERING GENERAL MOTORS "IGNITION DEFECT" MDL CLAIMS.
Please Read The Disclaimer. ©2019 Dennis J. Wall. All Rights Reserved.