Arent Fox Negotiates Exceptional Carve-Out Settlement on Behalf of Volkswagen Dealer

NEW YORK, NY – Arent Fox LLP is pleased to announce that the firm negotiated an exceptional carve-out on behalf of Volkswagen dealer Palisades Volkswagen in a nationwide VW dealer diesel scandal class action settlement – the largest ever of its kind.

On January 23 the court approved a modified settlement carving out Palisades’ claims from the class action settlement regarding the diesel scandal. This is a win not just for Palisades, but for all VW dealers holding non-diesel related claims against VW.
The dispute began when Palisades sued VW in the New York Supreme Court (later removed to the US District Court for the Southern District of New York) over a discriminatory sales incentive program. While that lawsuit was progressing, the public learned that Volkswagen had illegally modified vehicles equipped with diesel engines to pass emissions tests when they should have failed. As a result, consumers, regulatory agencies, and VW dealers sued VW. The VW dealer’s claims were consolidated into a class action.
In the fall of 2016, class counsel for the VW dealers negotiated a settlement that released VW of a multitude of claims, including claims that were unrelated to the diesel scandal. Under the settlement, even though VW would only compensate class members for their damages related to the diesel scandal, VW dealers would have to release many non-diesel related claims.
The Arent Fox team filed an objection to the settlement and challenged its fairness. On the day before the settlement fairness hearing, Palisades and VW resolved the objection. VW agreed to carve out from the release all pre-existing non-diesel related claims provided they were asserted in a lawsuit prior to April 4, 2016.
“We’re thrilled to have reached this agreement with VW,” said Automotive partner Russell P. McRory, who led negotiations on behalf of all VW dealers. “Our client, Palisades and other VW dealers, may now participate in the considerable cash settlement for diesel related claims, which amounts to more than a billion dollars spread among participating VW dealers, and continue to pursue their pending non-diesel related claims.”
Aaron H. Jacoby, chair of the firm’s Automotive group, added, “This was truly a remarkable carve-out settlement and exemplifies the tremendous experience our automotive team has representing dealers in various disputes across the country. I’d like to extend my congratulations to Russ and the entire team who worked tirelessly to secure this settlement for Palisades VW.”
The Arent Fox team representing Palisades was led by Mr. McRory, and included partner Victor Danhi, associate Michael McMahan, and attorney Charles Gallaer.
Arent Fox’s Automotive practice — recognized as a national leader by Chambers USA — provides the roadmap that clients need to navigate an industry in flux. Noted as a firm that is “thinking outside the box,” Arent Fox lawyers vigorously prosecute litigation that cannot be avoided, engage in every form of transaction, and guide companies through the industry’s complex framework.

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