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Fiat Chrysler in Hot Seat Vacated by VW

With lengthy settlement talks on the horizon, Fiat Chrysler on Tuesday sought to fight off the same emissions cheating claims that cost Volkswagen billions of dollars in fines and settlements over the last two years.

SAN FRANCISCO (CN) — With lengthy settlement talks on the horizon, Fiat Chrysler on Tuesday sought to fight off the same emissions cheating claims that cost Volkswagen billions of dollars in fines and settlements over the last two years.

Fiat Chrysler attorney Robert Giuffra Jr., who also defended Volkswagen in its dieselgate scandal, told U.S. District Judge Edward Chen that consumers cannot sue his client for emissions cheating because only U.S. regulators can enforce those rules under the Clean Air Act.

“Any attempt to enforce emission standards is preempted," Giuffra, of Sullivan & Cromwell in New York, told Judge Chen.

But class attorneys say their clients are not suing for Clean Air Act violations. They seek damages for a conspiracy to trick them into paying more for “EcoDiesel” cars that Fiat Chrysler claimed were environmentally superior to other diesels.

“These were not environmentally friendly diesels, and they never have been,” class attorney Stacey Slaughter with Robins Kaplan in Minneapolis said.

The class accuses Fiat Chrysler of installing emissions cheating software in nearly 104,000 Grand Jeep Cherokees and Ram 1500 EcoDiesel trucks between 2014 and 2016.

Like Volkswagen, Fiat Chrysler used defeat devices created by German auto parts maker and codefendant Robert Bosch to mask nitrogen dioxide pollution during emissions tests, the class claims. The cars spew up to seven times more pollution on the road than when hooked up for tests, according to a 378-page class action complaint.

The parties will spend several days hammering out a potential settlement in January, according to court-appointed settlement master Kenneth Feinberg, a veteran who also handled claims from victims of the Sept. 11 terror attacks and the BP oil spill.

On Tuesday, the two sides spent more than two hours arguing over Fiat Chrysler’s motion to dismiss the consumer class action.

Giuffra said Fiat Chrysler never orchestrated a nationwide advertising campaign to tout its vehicles as environmentally friendly, as Volkswagen did. Volkswagen has paid more than $20 billion in U.S. penalties and settlements, and one of its executives was sentenced to seven years in federal prison for it this month.

Giuffra argued that the Fiat Chrysler complaint lacks allegations that even one car buyer relied on any false statement the automaker made about emissions.

“The only thing they can point to is a vague label: EcoDiesel, which is actually puffery,” Giuffra said.

Puffery is defined as an exaggerated statement that no reasonable consumer could rely on as factual. For instance, “Our cars are the best in the world,” is puffery, whereas, “Our cars are better than Volkswagens” states a specific claim.

“No consumer could think EcoDiesel means these cars are compliant,” Giuffra argued.

Slaughter replied that whether “EcoDiesel” is puffery is a question of fact that must be resolved at a later stage of litigation.

Turning to the question of preemption under the Clean Air Act, Chen asked how the class could show misrepresentations were made about emissions without proving noncompliance with emissions rules.

If the Clean Air Act did not exist, class attorney Kevin Budner said, consumers could still sue Fiat Chrysler for fraud.

“It’s about telling consumers you’re getting a clean diesel vehicle,” said Budner, with Lieff, Cabraser, Heimann and Bernstein in San Francisco.

Chen said that even if Chrysler Fiat had a duty to tell consumers about emissions, the issue still overlaps significantly with Clean Air Act rules.

“The knowledge was exclusively in the hands of the defendant. It’s completely one-sided knowledge of a material fact, and there’s a duty to disclose,” Chen said. “Assuming that's true, isn't that claim squarely in the bull’s eye of the Clean Air Act?”

Budner replied that the alleged fraud does not turn on compliance with the Clean Air Act, but on Fiat Chrysler’s misstatements and omissions.

Giuffra said Fiat Chrysler is confident it can create a fix that will make the vehicles compliant with federal emissions standards.

Leigh Rende, with the Department of Justice, said the Environmental Protection Agency might approve an emissions fix for the nearly 104,000 vehicles by April 2018.

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Categories / Business, Consumers, Technology

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