Volkswagen has agreed to a $42 million settlement to resolve consumer lawsuits over the use of defective Takata Corp. airbag inflators in its vehicles.
The proposed settlement with Volkswagen Group of America IncAudi of America LLC and their affiliates covers 1.35 million vehicles. The deal is modeled on settlements previously approved with seven other automakers in the sprawling multidistrict litigation.
Volkswagen will pay $33.6 million in cash into a non reversionary common fund over a four-year period, with the remaining 20% coming in the form of its funding an “enhanced rental car program.”
The funds will go in part toward an outreach program overseen by an independent settlement special administrator, which will expand upon Volkswagen and Audi’s existing outreach efforts with the goal of increasing recall completion rates among the estimated hundreds of thousands of class members who remain exposed to the danger of rupturing inflators. The program will involve innovative outreach methods, including in-person visits, social media, telephone calls, email and text messaging as well as multimedia ad campaigns.
The settlement will also provide reimbursement for “uncapped but reasonable” out-of-pocket claims, such as for taxi fare and towing expenses as well as lost wages and child-care costs.
Because the funds will not return to Volkswagen, class members can also apply to receive residual payments of up to $250 from funds remaining at the end of each program year. Class members will be eligible to receive up to $500 in residual payments over the four-year settlement term.
Volkswagen will also provide free rental or loaner vehicles to class members who request one while awaiting repair of their recalled vehicles, and it will provide prospective coverage for repairs and adjustments of current and replacement inflators, including parts and labor, for an extended period.
The MDL arose from consumer suits first filed in 2014 that alleged the cheap but volatile ammonium nitrate that inflates airbags made by Takata can misfire, especially in humid conditions, blasting chemicals and metal fragments at vehicle occupants. Takata’s air bag inflators have been linked to at least 11 deaths in the U.S., and the company has faced massive global recalls.