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January 10, 2019

Miller announces proposed settlements with Fiat Chrysler, Bosch over ‘defeat devices’

Iowa consumers could receive restitution of about $3.2 million

DES MOINES – Attorney General Tom Miller announced that Iowa has negotiated settlements that, when finalized, will provide an estimated $3.2 million for Iowa consumers who purchased or leased Fiat Chrysler vehicles allegedly containing illegal defeat devices.

In addition, the settlements include payments of more than $171 million to 52 states and territories, including $1,466,585 to Iowa, from 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.

“Fiat Chrysler deceived customers who thought they were buying an environmentally friendly vehicle. These customers paid several thousands of dollars more for a ‘green’ diesel engine,” Miller said. “The settlements also send the message that auto suppliers will be held accountable for knowingly going along with automakers’ wrongful conduct.”

The Iowa attorney general is pursuing a consent judgment with the companies in Polk County District Court. Here are the details of the proposed agreements:


Fiat Chrysler settlement


Following a nearly two-year investigation, Miller’s office alleges 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. installed unlawful defeat device software and undisclosed Auxiliary Emissions Control Devices in 1,073 model year 2014-16 Jeep Grand Cherokee and Ram 1500 diesel vehicles that the automaker sold or leased in Iowa.  The Attorney General alleges 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 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 announced Thursday will require Fiat Chrysler to pay Iowa more than $670,625 in civil penalties under Iowa consumer protection laws for deceptively and unfairly marketing, selling and leasing the vehicles to consumers.  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 payments totaling $72.5 million to 49 states, Puerto Rico, the District of Columbia and Guam.

Iowa’s settlement will also prohibit Fiat Chrysler from engaging in future unfair or deceptive acts and practices in connection with its dealings with consumers, and it will require Fiat Chrysler to carry out its obligations under a related settlement agreement in the Multidistrict Litigation pending in the U.S. District Court for the Northern District of California. The MDL Consumer Settlement, once approved by the MDL court, will resolve claims brought by a national class of affected consumers.  

The MDL Consumer Settlement requires Fiat Chrysler to:  eliminate the defeat device features from the relevant software through a software “flash fix”; provide eligible owners and lessees 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.  Related settlements between Fiat Chrysler and the U.S. Department of Justice, the Environmental Protection Agency, the California Air Resources Board and the state of California 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.

Assuming all owners and lessees nationwide participate, this will result in total available restitution of approximately $307 million, including an estimated $3.2 million to affected owners and lessees of 1,073 vehicles in Iowa.   

The proposed settlements with Fiat Chrysler follow earlier comprehensive settlements reached between Iowa, 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 Iowa civil penalties of $3.5 million, fixed or repurchased the affected vehicles, and paid an estimated $18.7 million in restitution to Iowa consumers.


Bosch settlement 


Bosch is a multinational engineering company and a major supplier to the global automotive industry.  It supplies the electronic control units that house the complex software that controls nearly all aspects of an engine’s performance, including emissions systems. When Volkswagen, a Bosch customer, was revealed to have systematically used defeat device software in its diesel vehicles, several states began a separate investigation into Bosch’s role in enabling its customers to potentially violate federal and state emissions regulations. 

Miller’s office alleges that Bosch facilitated the implementation of the defeat device software in more than 600,000 Volkswagen and Fiat Chrysler vehicles — including 3,355 vehicles in Iowa — 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 Attorney General alleges 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 Iowa $795,960 in consumer and environmental civil penalties. 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 Iowa 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 consumer protection and environmental laws and make a separate $5 million payment to the National Association of Attorneys General 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.  


Information for consumers


More information on the settlements, and how it affects consumers who purchased or leased the vehicles, will be available at www.EcoDieselSettlement.com. The website is still under construction, so consumers should check back as more information is added.

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