Ken Feinberg, fresh from handling General Motors massive ignition compensation fund, was tapped yesterday to take care of the many lawsuits filed in the Volkswagen Dieselgate scandal. Through today, more than 500 lawsuits have been filed in the emissions-cheating scandal. The lawsuits have been assigned to U.S. District Court Judge Charles R. Breyer in San Francisco.
Feinberg finished up a yearlong stint as head of the independent compensation fund in GM’s ignition switch settlement. The fund paid out more than $564.5 million in 399 death and injury claims filed, said Automotive News.
Feinberg, a longtime attorney, and claims administration expert, has become the most sought after professional in the compensation field. He has served on some of the highest-profile cases in the last 15 years, including the 9/11 Disaster Compensation Fund, the One Fund set up in the wake of the Boston Marathon bombing in 2013 and the 2010 BP Deepwater Horizon oil spill catastrophe.
Feinberg brings his experience as a compensation expert to the Volkswagen emissions-cheating scandal. The scandal involves powerplants based on the EA 189 engine introduced in 2008 for 2009 vehicles. The EA 189 is the base powerplant for VW’s 1.6- and 2.0-liter engine range. Also, the Audi-developed 3.0-liter V-6 diesel has also been implicated. In the scandal, VW has admitted it installed cheatware on its TDI (turbocharged direct injection) engines. As many as 11 million vehicles across Volkswagen’s subsidiaries are involved. The subsidiaries include Audi, Porsche, Seat and Skoda.
The noted compensation expert will be independent of Volkswagen, however, he will take guidance from:
- The automaker
- Owners and their attorneys
- Regulators such as the California Air Resources Board (CARB) and Environmental Protection Agency (EPA)
- Interested parties
In a statement issued yesterday, VW of America’s Michael Horn, chief executive officer, said the well-known attorney’s extensive experience in handling complex matters will help guide “us as we move forward to make things right.”
Feinberg, in a conference call with reporters, said VW’s goal is twofold:
- To satisfy owners
- To avoid time-consuming actions
If customers participate in the compensation program, they waive their rights to sue over Dieselgate. Feinberg said it was too early to discuss specifics, the Camille Buris, deputy administrator, said everything is on the table. “We haven’t ruled anything in or out at the moment,” she noted. The attorneys said they didn’t know how long it will take them to put their program in place. Some compensation programs have taken as long as 60 to 90 days to develop.
Feinberg told reporters the remedies would be attractive enough for owners “to decide voluntarily to accept a solution under this program.” There are a number of solutions that could appear on a “menu of remedies,” Feinberg said. Those solutions could include buybacks of affected vehicles.
The so-called Dieselgate scandal took off in September when Volkswagen admitted it had installed cheatware on its diesel vehicles. Early on in the development of the EA 189 engine, the engineering team realized the motor could not reach the emissions restrictions imposed by the United States in 2008. To reach those goals, the engineers turned to a software routine, also called a defeat switch, that tested for emissions testing. If the software found a test was underway, it branched to a portion of the programmed that tightened up oxides of nitrogen (NOx) emissions so that the could pass. When the test ended the program returned setting to standard, meaning the car emitted too much NOx. Investigators found that the cars issued as much as 40 times the allowable amount.
At the time this occurred, the EPA issued a Notice of Violation to the automaker covering 482,000 Volkswagen vehicles in the United States. Almost immediately the automaker said as many as 11 million vehicles across the globe felt the impact of the scamware installation. These revelations, plus the news that the Audi-developed powerplant was involved led to the dismissal of former chief executive Martin Winterkorn, as well as the replacement of other key executives. It also has brought on the lawsuits and criminal probes in Germany, France and Italy, plus the United States. So far, VW has set aside $7.3 billion to cover current costs, although costs are expected to top $25 billion by the end of the scandal.