California firms get Arizona’s $40M in VW case

Two California firms helped Arizona secure a settlement from Volkswagen that dwarfs what the German carmaker paid the vast majority of other U.S. states.

On Wednesday the Copper State received a $40 million settlement from Volkswagen to resolve accusations it sold Arizona residents thousands of vehicles fraudulently advertised as clean-burning diesel.

Stephen Larson, an attorney with the Los Angeles-based firm Larson O’Brien LLP, said the deal will provide payments of up to $1,000 to each of the roughly 10,000 Arizonans who bought or leased Volkswagens, Porsches or Audis from 2008 through 2015. An additional $20 million is being allocated to the state general fund to support public education.

The remaining money will go toward paying the state’s legal fees and a special account for the state attorney general to investigate future fraud claims.

“We’re very pleased with the result,” Larson said. “Arizona takes its consumer fraud laws very seriously, and we were able to support them in maximizing the impact of those laws.”

According to Larson, Arizona is one of the few states to hire outside counsel to resist settling with Volkswagen in multi-district litigation. The Arizona deal is significantly higher than settlements the car manufacturer cut with other states. Larson noted that West Virginia received just $2.65 million to resolve identical claims.

Volkswagen attempted to move the Arizona matter to the multidistrict litigation, but Larson and Richard McCune of McCune Wright Arevalo LLP successfully fought to keep the case in the state. Larson said the plaintiff had filed summary judgment papers and was sliding into the discovery process when Volkswagen decided to settle.

“The state of Arizona elected to do the hard work in holding Volkswagen accountable for their false advertising,” McCune said. “After a couple years of litigation, the attorney general, with our assistance as outside counsel, was able to accomplish that.”

The Arizona settlement is Volkswagen’s latest payment to resolve a slew of legal and regulatory complaints about its use of software to cheat emission tests in the U.S. The so-called “defeat device” installed in hundreds of thousands of Volkswagen-manufactured diesel engines disguised high emissions, allowing the company to market its vehicles as environmentally friendly.

Volkswagen has already paid $17.5 billion in civil lawsuits to resolve claims that it duped consumers into buying cars that didn’t meet clean emission standards. The company has also paid over $4 billion in penalties to the Environmental Protection Agency.

A representative for the company did not respond to a request for comment.

Larson’s and McCune’s firms also represent Oklahoma in similar litigation against Volkswagen. Neither attorney was able to comment on the state of that case.