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VW’s Diesel Deception: The Company Hires Top Compensation Attorney

In the wake of what some in the media now call the “diesel dupe,” German automaker Volkswagen AG has retained the services of one of the nation's foremost legal experts in the field of compensation to come up with a plan for handling what could be hundreds of claims over diesel-powered vehicles. Kenneth R. Freiberg, who also specializes in mediation and alternative dispute resolution, has overseen compensation involving Agent Orange, asbestos liability, victims of the 9/11 attacks, the BP oil spill of 2010, and the 2014 General Motors recall involving defective ignition switches, among other high-profile cases. According to Michael Horn, who heads VW's U.S. division, Feinberg's experience and expertise in handling such complex and massive cases “will help to guide us as we move forward to make things right with our customers.”

VW has a great deal to do in order to “make things right” with consumers who purchased diesel-powered vehicles in good faith, believing them to be cleaner-running. What those consumers did not know – and what finally came to light this past September – was that the vehicles' onboard computers have been programmed to cheat emissions tests, making them appear to give off lower levels of emissions than they were.

What has been described as a “cheat device” was actually a software program installed in the vehicles' main computers. This software was designed to operate emissions equipment while the vehicle was being operated under test conditions. Once the vehicle was driven under actual road conditions, however, the software would disable emissions controls. The reason this was done was for the sake of performance: the use of emissions control equipment does indeed reduce toxic gases in vehicle exhaust, but does so at the expense of throttle response and fuel economy. For several years, Volkswagen used the claim of “clean diesel” in order to sell these cars to consumers, tricking them into believing the vehicles to be environmentally-friendly while offering the same high performance and fuel economy as a gasoline-powered vehicle.  Customers were charged a premium price in order to feel “environmentally responsible” while operating a vehicle that was enjoyable to drive.

Now that the scandal has come to light, VW and Audi owners face mandatory recalls of their automobiles. The engine computers will have to be reprogrammed, reducing vehicle performance. At the same time, these consumers will face increased maintenance costs going forward as well as lower resale values, should they decide to get rid of their vehicles. At the same time, Volkswagen faces massive losses – not only in consumer trust and confidence (which may never be regained, despite company's attempts to place the blame on “rogue engineers” and promises to “make things right”). Volkswagen may never recover from economic losses that will result from the massive number of impending lawsuits in addition to plummeting sales and stock value as shareholders divest themselves of  their investments.

VW's decision to hire Feinberg is an attempt to mitigate the economic damage. Feinberg, who also serves as adjunct professor at several of the nation's top law schools, will design and oversee the claims resolution program for those who own diesel-equipped Volkswagen, Audi and Porsche models. At this point, Feinberg does not yet know how long it will take to resolve impending claims, or what settlement options will be available to plaintiffs. He said that at this point it is too early in the process to discuss any details. He added, “We are concerned that we come up with a menu of solutions that, in combination, will satisfy individual owners, [but will] have to wait and see what the legal remedies will be.” Such remedies may include company repurchase of affected vehicles, cash payments, and repairs that would include reprogramming of the computer, modification or replacement of the exhaust system, and the installation of a chemical treatment device.

At this point, VW has not said what the company is prepared to do in order to repair affected vehicles and bring them into compliance with emissions standards. It is hoped that Feinberg will help in settling many of the half million anticipated lawsuits. It may also turn out to have a positive effect on the company's tarnished public image. According to Matt DeLorenzo, news editor for Kelley Blue Book, Volkswagen is attempting to “look like they’re doing something to keep this thing going along.” 

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