Daimler settles US diesel emission legal action

Daimler AG and its subsidiary Mercedes-Benz USA have taken a step toward resolution of various diesel legal proceedings. Daimler says US regulatory authorities have approved a settlement of civil and environmental claims, comprehensively resolving the respective regulatory proceedings regarding emission control systems of around 250,000 diesel vehicles. US authorities have lodged the Consent Decrees with the US District Court for the District of Columbia, which has to approve the settlement.

The company has also agreed with plaintiffs‘ counsel to settle the consumer class action, which is pending before the US District Court for the District of New Jersey. Daimler says that settlement was also submitted for court approval.

According to Daimler, by concluding the proceedings, the company avoids lengthy court actions with respective legal and financial risks.

As stated in the consent decrees and the class action settlement, the company denies the authorities’ allegations as well as the class action plaintiffs’ claims and does not admit any liability to the United States, California, plaintiffs, or otherwise. Daimler says the settlement resolves the company’s pending civil proceedings with the US authorities without reaching any determinations as to whether functionalities in Daimler’s vehicles are defeat devices.

As part of the settlement and in addition to the payment of civil penalties in the amount of US$875 million, the company will enhance its technical Compliance Management System and conduct an Emission Modification Program for certain diesel vehicles. The company will also conduct mitigation measures nationwide and provide funding for additional NOx emissions mitigation initiatives in California.

Daimler says that unlike other OEMs’ diesel settlements, the consent decrees do not require an external compliance monitor.

Daimler says that since 2016 it has built on its compliance programme with a group-wide technical Compliance Management System (tCMS), strengthening its technical compliance measures and controls. Significant resources have been invested and jobs created.

As part of the settlement, Daimler has committed to enhance its tCMS.

Daimler says with tCMS, its compliance systems can stay current with the ever-increasing legal complexity and ever-changing risk environment. In addition to delineating responsibility and processes for prompt decision-making in connection with technical questions of engineering judgment and regulatory interpretation, the tCMS includes regular training for employees and special programmes, comprehensive dialog events, and guidelines to support Daimler’s specialists in the development departments.

As part of the settlement, Daimler will also offer an emission modification programme to owners and lessees of eligible model year (MY) 2009 through 2016 Mercedes-Benz BlueTEC II diesel passenger cars and MY 2010 through 2016 Mercedes-Benz and Freightliner BlueTEC II diesel Sprinter vans registered in the US. 

The emission modifications will be rolled out in different phases. Customers will be informed about the measure by mail as soon as the emission modification can be undertaken for their vehicle. With the start of the Emission Modification Program (estimated late 2020), the company will also publish a website where customers can gather information.

Daimler says the vehicles subject to the US settlement were not sold in the same configurations in Europe and the emission control system of the US vehicles is different from the models sold in Europe due to differing certification and legal frameworks.

As part of the settlement, the company will fund the engine repowering of 15 line-haul locomotives in the US to reduce NOx emissions. The project shall be completed within 40 months. In addition, Daimler will pay US$110 million to CARB (California Air Resources Board) for the implementation of additional measures to reduce NOx emissions in California.

Daimler has also reached a settlement in the consumer class action “In re Mercedes-Benz Emissions Litigation” to fully resolve the proceeding by mutual agreement.

The company says it has agreed to settle this action to avoid further litigation costs and return focus to its core business. Daimler denies the material factual allegations and legal claims asserted by the plaintiffs and settlement class members.

The settlement applies to MY 09-16 Mercedes-Benz diesel passenger cars and diesel-powered MY 10-16 Mercedes-Benz and Freightliner Sprinters with BlueTEC II emission control systems sold or leased in the US.

Daimler says class members can find detailed information about the settlement, including eligibility and benefits, on the class settlement website. Class members will also be notified with further details by mail after the settlement receives preliminary approval from the court and can use the claim form in their mailer or on the website to file claims for benefits.

Daimler will also pay class counsel’s attorneys’ fees and costs in an amount to be determined by the court. Daimler has agreed not to oppose class counsel’s request for attorneys’ fees and costs up to US$83.4 million.

For the settlements with US authorities, Daimler expects costs of approximately US$1.5 billion, including civil penalties as well as expected costs for mitigation and the implementation of the Emission Modification Program. The estimated cost of the class action settlement is approximately US$700 million, including the court’s anticipated award of attorneys’ fees and costs. In addition, Daimler says it estimates further expenses of a mid-three-digit-million EUR amount to fulfill requirements of the settlements.