Facts

Valeria Mercado and Andrea Kristyanne Holmes brought a class action complaint against Volkswagen Group of America, Inc. under the Consumer Legal Remedies Act, the California Unfair Competition Law, negligence, product liability or design defect, the Magnuson-Moss Warranty Act, the Song-Beverly Consumer Warranty Act, and other states' statutes prohibiting unfair and deceptive acts and practices. The class members included persons who purchased or leased 2017-2018 Audi Q7 vehicles that were imported and distributed by Volkswagen Group of America, Inc. for sale or lease in the United States or Puerto Rico.

PLAINTIFFS' CONTENTIONS: Plaintiffs contended that the front brakes of the Audi Q7 were defective because they squealed or manifested a high-pitched noise during normal driving when a driver pressed the brake pedal, creating a safety hazard. Plaintiffs contended that defendants knew or should have known that the vehicles had one or more defects. Plaintiffs asserted that although the brakes were specifically designed, manufactured, and approved by defendant to be installed on the Audi Q7, they frequently, yet intermittently, emitted a loud, high-pitched squealing noise when the brakes were applied. Plaintiffs alleged that the brake defect distracted the vehicle driver and third parties, endangering their physical safety and well-being due to a loss of concentration and focus on the road. Likewise, nearby pedestrians heard the loud braking noise then payed attention to the noise rather than having their full attention on other hazards in their path. Plaintiffs contended that, as a result of the brake defect, plaintiffs and class members made driving decisions based upon the likelihood, duration, and severity of the noise that was emitted when they used their brakes, and that this powerful and startling environmental distraction while operating an automobile made the vehicles unreasonably dangerous and unable to meet a minimal level of quality or safety. Plaintiffs alleged that, because defendants did not disclose the brake defect, this omission of that material fact constituted a deceptive business practice in violation of California statutory law and further constituted a breach of implied warranty.

DEFENDANT'S CONTENTIONS: Defendant denied all contentions. Defendant maintained that the vehicles were not defective and were properly designed, manufactured, marketed and sold.

Result

The case settled. Pursuant to the settlement agreement, defendant extended its new vehicle limited warranties applicable to the class vehicles to cover one repair of a diagnosed condition of squealing of the front brakes by an authorized Audi dealer, during a period of four years or 48,000 miles from the in-service date of the class vehicle. The extended warranty repair consisted of replacement of the front brake pads and installation of one new lower spring in each caliper of the front brake so that there are two springs per caliper. In addition to the extended warranty, all class members who paid eligible out-of-pocket expenses for a covered repair of a class vehicle prior to the notice dates and within 48,000 miles, and who timely submitted a claim form with proof of repair expense, were entitled to reimbursement subject to the terms of the settlement agreement.