Audi, VW Reach Reimbursement Deal Over Faulty Headlights

Law360, New York (April 22, 2013, 5:52 PM ET) — A New Jersey federal judge on Friday preliminarily approved a settlement in which Volkswagen Group of America Inc. agreed to reimburse and extend warranties for a conditionally certified class of Audi and Volkswagen vehicle owners who launched suit over allegedly defective headlights.

U.S. District Judge Kevin McNulty signed off on the proposed settlement in which VW agreed to fully reimburse the cost to repair high intensity discharge headlights that would randomly flicker or shut off for current and former owners and lessees of 2005 and 2006 model year Audi A4 (B6) vehicles, 2005 model year Audi A4 (B7) vehicles, and 2004 to 2007 model year Volkswagen Touareg vehicles.

“The court has preliminarily reviewed the parties’ proposed settlement and finds that its terms appear sufficiently fair, reasonable, and adequate to warrant dissemination of notice of the proposed settlement to the settlement Class and the scheduling of a formal fairness hearing,” Judge McNulty said. “The court finds that the parties entered into the settlement in good faith, following arm’s length negotiation between their respective counsel.”

Under the deal, VW will fully reimburse vehicle owners in the class, which was conditionally certified for settlement purposes only, for headlight repairs performed within five years or 50,000 miles of the first date of original sale or lease.

In addition, VW agreed to extend the new vehicle limited warranties for affected vehicles to five years or 50,000 miles from the date of the original sale or lease, which is a substantial bump from existing express warranties on the affected cars that range from one-year or 12,000-mile warranties to four-year or 50,000-mile warranties, according to court documents.

The plaintiffs’ attorneys have agreed to seek no more than $1.5 million in attorneys’ fees and litigation expenses, while named plaintiffs Marie Rita Kennedy-Lebar, Chris Murphy, D. Alexander Davis and Ludette Crisler will get $1,000 each for serving as class representatives.

They launched the putative class action on behalf of a nationwide class of current and former owners and lessees of more than 75,000 Audi A4 and Volkswagen Touareg vehicles equipped with factory installed HID headlights, which were optional, that randomly flickered or shut off and cost hundreds of dollars to repair.

They argued that VW touted the superiority of the HID headlights — and charged consumers extra for them — by claiming they produced a greater amount of light, consumed less power and were intended to last longer than the less expensive halogen headlights that were another option on the vehicles, according to the complaint.

VW has vigorously disputed the class claims but says it supports the settlement to avoid dragging out litigation, according to court documents.

“In particular, while defendants maintain they have acted properly and in compliance with applicable laws and rules, defendants are also mindful that future protracted litigation and the burdens and uncertainties it creates may not be in the best interests of their customers,” VW attorney Jeffrey L. Chase of Chase Kurshan Herzfeld & Rubin LLP said in a declaration supporting preliminary approval of the settlement.

Plaintiffs are represented by Jonathan Shub and Scott Alan George from Seeger Weiss LLP, Gene Williams and Matthew T. Theriault of Initiative Legal Group APC, Robert L. Starr of The Law Office of Robert L. Starr, Steven Marchbanks of Premier Legal Center APC, William Craft Hughes of Hughes Ellzey LLP, Payam Shahian of Strategic Legal Practices APC, Craig Madison Patrick of Patrick Law Firm PC and Fletcher V. Trammell of Bailey Perrin Bailey PLLC.

VW is represented by Jeffrey L. Chase of Chase Kurshan Herzfeld & Rubin LLP.

The case is Kennedy-Lebar et al. v. Volkswagen Group of America Inc., case number 2:10-cv-05126 in the U.S. District Court for the District of New Jersey.

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