In September 2015, the US Environmental Protection Agency surprised the consumer auto industry when it announced it was investigating claims that Volkswagen manufactured and installed “defeat device” software in the brand’s leading 2.0-litre diesel vehicles. The EPA claimed that this software could bypass or shut down elements of the vehicles’ emissions control systems that exist to ensure compliance with environmental regulations.
When the dust settled, the list of subject vehicles included: Volkswagen Jetta TDI (model years 2009-2015); Volkswagen Jetta Wagon TDI (model year 2009); Volkswagen Golf TDI (model years 2010-2013, 2015); Volkswagen Passat TDI (model years 2012-2015); Volkswagen Beetle TDI (model years 2013-2015); Volkswagen Golf Wagon TDI (model years 2010-2014); Volkswagen Golf Sportwagon TDI (model year 2015); and Audi A3 (model years 2010-2013, 2015).
Volkswagen was soon embroiled in litigation across the globe in what became known as the “Volkswagen emissions scandal.” Roughly 35 proposed class actions were commenced in Canada alone.
Eight Canadian class action law firms agreed to work together to prosecute this massive and time-sensitive case. The national Quenneville class action was run out of Ontario, where co-lead counsel for the class were Harvey T. Strosberg, Q.C., of Strosberg Sasso Sutts LLP, and Charles Wright of Siskinds LLP. A parallel class action (Option consommateurs) was run out of Québec by Belleau Lapointe, s.e.n.c.r.l., led by Daniel Belleau.
Certification of the Quenneville action was scheduled to be heard in June 2016, but the hearing was adjourned to allow the parties to continue settlement talks that began in the spring of that year. The talks were mediated by the former chief justice of the Superior Court of Québec, François Rolland.
In December 2016, after nine months of intense negotiation, Volkswagen agreed to resolve claims relating to roughly 105,000 affected vehicles sold and leased in Canada for a settlement sum of up to $2.1 billion, by far the largest consumer settlement ever obtained in Canada.
The Settlement Class is composed of more than 105,000 individuals with various reasons for buying or leasing their cars, various feelings about the alleged conduct, and various types of cars (taking into account mileage, model, model year, trims, options, enhancements, etc.). To account for all these differences, the settlement was structured to offer consumers their choice of benefit combined with a damage payment.
Owners may choose to have Volkswagen repurchase their vehicle for a price aligned with the vehicle’s value at the time the “defeat device” software was first made known (“Buyback”); they may choose to have Volkswagen repurchase their vehicle and apply its current fair-market value toward a new Volkswagen- or Audi-brand vehicle, reducing the replacement car’s tax base (“Buyback with Trade-In”); or they may choose to have their car’s emissions system repaired (“Approved Emissions Modification”) and receive an extended warranty covering the affected components. Owners whose car loans exceed their settlement compensation packages qualify for additional compensation where there was no Approved Emissions Modification for their vehicles as of June 15, 2016.
Lessees can choose to receive an Approved Emissions Modification, obtain the extended warranty and remain in their lease; or to end their lease early with no termination penalty (“Early Lease Termination”). All owners, including certain former owners, and lessees will receive monetary damages, in addition to their preferred settlement benefit.
On April 21, 2017, the settlement was approved by Justice Edward Belobaba of the Ontario Superior Court of Justice. Justice Belobaba found that the settlement provided Canadian consumers with compensation on par with the compensation available to American consumers under the parallel US settlement agreement, and in excess of what could be achieved in a successful tort or Consumer Protection Act (Ontario) claim.
That same day, the settlement agreement was approved by Justice Marie-Claude Lalande of the Superior Court of Québec. Settlement class members were eligible to start submitting claims on April 28, 2016.
The settlement administration is expected to conclude in December 2018.
Related litigation with respect to Volkswagen’s 3.0-litre diesel vehicles (including Audi and Porsche vehicles) that were allegedly affected by the “defeat device” software is ongoing, as is litigation against Robert Bosch GmbH (and related entities), which is alleged to have designed and supplied the software.
Charles Wright, Daniel Bach and Emilie Maxwell of Siskinds LLP; Harvey Strosberg, Q.C., and Heather Rumble Peterson of Strosberg Sasso Sutts LLP; Reidar Mogerman and Jennifer Winstanley of Camp Fiorante Matthews Mogerman LLP; Joel Rochon and Golnaz Nayerahmadi of Rochon Genova LLP; David O’Connor and Adam Dewar of Roy O’Connor LLP; Kirk Baert and James Sayce of Koskie Minsky LLP; Michael Peerless and Sabrina Lombardi of McKenzie Lake Lawyers LLP; and Ward Branch, Q.C., and Luciana Brasil of Branch MacMaster LLP acted for the National Settlement Class in the Quenneville action.
Daniel Belleau, Maxime Nasr and Violette Leblanc of Belleau Lapointe, s.e.n.c.r.l. acted for the Québec Settlement Class in the Option consommateurs action.
Cheryl Woodin, now of Bennett Jones LLP; Robert Bell of Lerners LLP; and Robin Squires, John Hunter and Robert Charbonneau of Borden Ladner Gervais LLP acted for the defendants, Volkswagen Group Canada, Inc., Volkswagen Aktiengessellschaft, Volkswagen Group of America, Inc., Audi Canada, Inc., Audi Aktiengesellschaft, Audi of America, Inc., and VW Credit Canada, Inc.