Fiat Chrysler Required to Fix Vehicles, Provide Restitution and Address Environmental Harms; State Attorneys General Obtain $72.5 Million in Nationwide Civil Penalties from Fiat Chrysler and Another $98.7 Million from Bosch for its Role in Supplying and Programming the Software Used by Fiat Chrysler and Earlier Violator Volkswagen
The Rhode Island Attorney General's Office today announced that a group of State Attorneys General have negotiated settlements that, when finalized, will provide for more than $171 million to 52 jurisdictions nationwide, including more than $860,000 for Rhode Island, from automaker Fiat Chrysler and Robert Bosch. Bosch allegedly supplied and helped program the illegal emissions "defeat device" software used by both Fiat Chrysler and Volkswagen in their diesel vehicles.
Following a nearly two-year investigation, the State Attorneys General allege that Fiat Chrysler Automobiles N.V., its U.S. subsidiary FCA US, LLC, its Italian affiliate V.M. Motori S.p.A. and V.M. North America, Inc. (collectively, "Fiat Chrysler") installed unlawful defeat device software and undisclosed Auxiliary Emissions Control Devices ("AECDs") in Model Year 2014-16 Jeep Grand Cherokee and Ram 1500 diesel vehicles, including approximately 174 that the automaker sold in Rhode Island. The State Attorneys General allege that Fiat Chrysler cheated on federal and state emissions tests by calibrating the vehicles' software to conceal that the vehicles emitted higher than permitted levels of harmful nitrogen oxides (NOx) in real-world driving conditions, and misled consumers by falsely claiming the "Eco-Diesel" branded Jeep SUVs and Ram 1500 trucks were environmentally friendly and compliant with the law in all 50 states.
The settlements will require Fiat Chrysler to pay Rhode Island more than $236,000. Nationwide, excluding the separate penalties the company will be required to pay to the federal government and California, the multistate agreement is expected to result in civil payments totaling $72.5 million to 49 states, Puerto Rico, the District of Columbia and Guam.
The settlement will also prohibit Fiat Chrysler from engaging in future unfair or deceptive acts and practices in connection with its dealings with consumers and require Fiat Chrysler to carry out its obligations under a series of related settlement agreements in the Multidistrict Litigation ("MDL Settlements") pending in the U.S. District Court for the Northern District of California. Once approved by the court, the MDL Settlement will resolve claims brought by a national class of affected consumers, the United States Department of Justice and Environmental Protection Agency, and the California Air Resources Board and the State of California. The MDL Settlements require Fiat Chrysler to: eliminate the defeat device features from the relevant software through a software "flash fix"; provide eligible owners and lessors extended warranties; and, together with co-defendant Bosch, pay eligible owners who take their vehicle to an authorized dealer for the software repair an average restitution of approximately $2,908 and lessees and former owners who do so restitution of $990. They also require Fiat Chrysler to make available 200,000 upgraded catalytic converters to mitigate air pollution across the country when installed by Fiat Chrysler vehicle owners as replacements to their existing catalytic converters.
Assuming all owners and lessors nationwide participate, this will result in total available restitution of approximately $307 million.
The proposed settlement with Fiat Chrysler follow earlier comprehensive settlements reached between Rhode Island, along with other state, federal and private actors, and Volkswagen for equipping, marketing, selling and leasing more than 570,000 Volkswagen, Audi and Porsche diesel vehicles with illegal defeat devices. Under those settlements, Volkswagen paid Rhode Island more than $7 million.
When Volkswagen, a Bosch customer, was revealed to have systematically utilized defeat device software in its diesel vehicles, several states Attorneys General, including Rhode Island, commenced a separate investigation into the role played by Bosch in enabling its customers to potentially violate federal and state emissions regulations. Today, after another Bosch customer, Fiat Chrysler, has settled claims that it too employed illegal defeat devices, the States Attorneys General are able to announce the conclusion of that separate investigation into Bosch's conduct.
The State Attorneys General allege that Bosch facilitated the implementation of the defeat device software in more than 600,000 Volkswagen and Fiat Chrysler vehicles over a period that spanned more than a decade. Notwithstanding concerns about the illegality of the devices raised internally, to management, and externally, to Volkswagen and Fiat Chrysler, the Attorneys General allege that Bosch continued to assist these customers as they implemented the defeat devices and concealed their misconduct from regulators and the public.
Under the terms of the proposed settlement, Bosch will pay Rhode Island more than $623,000. The agreement also includes precedent-setting injunctive terms and requires Bosch to maintain robust processes to monitor compliance and to refuse to accommodate requests for software development and programming that could result in the installation of defeat device software.
Under a multistate agreement involving Rhode Island and 49 other jurisdictions – including Puerto Rico, the District of Columbia, Guam and all states other than California, Texas and West Virginia – Bosch will pay a total of $98.7 million under the jurisdictions' consumer protection and environmental laws and make a separate $5 million payment to the National Association of Attorneys General (NAAG) for training and future enforcement purposes. Under the related MDL Settlements, Bosch will also pay approximately $27.5 million to consumers who purchased or leased the affected Fiat Chrysler vehicles. Bosch earlier paid more than $275 million to consumers who purchased or leased the affected Volkswagen vehicles.
Rhode Island's work on these matters was handled by Special Assistant Attorney General Gregory Schultz.