S&C Leads Fiat Chrysler to Comprehensive Emissions Settlement

January 10, 2019

Capping nearly two years of litigation over diesel emission issues, Sullivan & Cromwell steered client Fiat Chrysler Automobiles to a comprehensive civil settlement announced on January 10. Litigation partners Robert J. Giuffra Jr., William B. Monahan and Thomas C. White, and corporate partner Scott D. Miller led the efforts that enabled Fiat Chrysler to reach interrelated settlements with the Environmental Protection Agency, the California Air Resources Board, the state attorneys general of all 50 states, car owners and lessees pursuing a putative class action in a federal multidistrict litigation, and the U.S. Customs and Border Protection. 
 
The settlements resolve the vast majority of U.S. civil litigation for Fiat Chrysler regarding its diesel vehicles, and include no admission of any wrongdoing by FCA. Fiat Chrysler agreed to make cash payments to consumers which will incentivize them to obtain the EPA- and CARB-approved emissions modification for their vehicles. 
 
Under this deal, Fiat Chrysler would pay approximately $400 million to the government entities and up to $280 million to consumers. The settlement also includes extended warranties for car owners and environmental mitigation initiatives. 
 
The parties reached this proposed settlement as U.S. District Judge Edward Chen of the Northern District of California was considering S&C's motion to dismiss the consumers' RICO claims.  At the conclusion of S&C's argument at the RICO hearing, the Judge stated that the question of whether the RICO claims should advance beyond the motion to dismiss stage was “not easy” and “not a slam dunk” for plaintiffs.
 
A preliminary hearing on this proposed settlement is scheduled for January 23.