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Volkswagen Hires Kenneth Feinberg to Handle Diesel Emissions Claims


Posted on behalf of D'Amico & Pettinicchi, LLC on Dec 23, 2015 in Product Liability

volkswagen emissions scandalIn anticipation of around half a million claims over its emission scandal, Volkswagen (VW) has hired attorney Kenneth Feinberg to handle a compensation fund. Feinberg achieved national notoriety after overseeing 9/11 victims compensation claims and claims for the British Petroleum (BP) oil spill.

Earlier this year, VW admitted to using cheating software in devices used to measure pollution emissions on a new line of diesel vehicles. They used the false data when reporting to various regulatory agencies and heavily marketed the cars as “clean diesel.”

The devices temporarily lowered the output of Nitrogen Oxide during the testing procedure, but the real world output was later found to be 40 times as high.

They were sent a notice of violation of the Clean Air Act by the U.S. Environmental Protection Agency in September 2015.

Since the scandal broke, VW has been figuring out how to address the problem. Although a recall may be likely, correcting the emissions problem will drastically reduce a VW car’s performance. Many customers are demanding a full refund. About 500,000 Audi, VW and Porsche vehicles with two and three liter engines in the U.S. were affected.

Why Feinberg?

Kenneth Feinberg gained public notoriety when he was appointed to oversee the September 11th Victim Compensation Fund, by U.S. Attorney General John Ashcroft. He decided which families would receive money, and how much, from a total of $7 billion in payouts. The disputes were often contentious and emotionally charged.

He has since been hired by companies such as BP, and General Motors (GM) to mediate and resolve claims regarding their large liability cases. For BP, this was the 2010 Deepwater Horizon oil spill. For GM, this was the faulty ignition switch claim. Now VW is seeking his services.

What does VW hope to gain by hiring such a high profile attorney? Feinberg is known for being adept at handling claims in an alternative dispute resolution (ADR) format. ADR covers many different forms of resolving disputes between parties other than a traditional court room, including mediation and arbitration.

Feinberg has stated that ADR offers a speedier, less contentious resolution that is preferred by both parties. A recent New York Times article stated that Feinberg’s goal was “to attract owners of affected cars away from litigation and into this private program.”

Volkswagen lied to regulators and the public. Although the details of Feinberg’s strategy have not been revealed, this appears to be more about VW trying to make this scandal go away as quickly as possible.

In theory, a mediator is supposed to be a neutral third-party. But when the mediator is hired by a defendant, there may be a conflict of interest. The right to sue in court is a central tenet of our justice system and should not be given up without serious consideration of the alternative.