Volkswagen will set up a fund to compensate owners of its diesel cars that cheat on emission tests, and it tapped Kenneth Feinberg to decide how much each should receive.
Feinberg told CNNMoney that he has been promised a free hand by Volkswagen (VLKAY) in deciding how much each owner should be paid. But he said it is premature to discuss how much money each might receive.
"I think we can have a claims program designed relatively quickly. The emphasis is on 'relatively,'" he said.
Feinberg is a Washington lawyer who has made a career out of figuring out compensation by companies that have admitted to wrongdoing. Most recently he awarded nearly $600 million in payments to victims of the General Motors (GM) faulty ignition switch, including money to the families of 124 people killed because of the flaw. He also awarded damages caused by the BP (BP) oil spill in the Gulf of Mexico caused by the explosion on the Deepwater Horizon oil rig. And he decided on compensation for victims of the 9/11 terrorist attack.
"His extensive experience in handling such complex matters will help to guide us as we move forward to make things right with our customers," said Michael Horn, head of VW's U.S. operations.
VW said it hasn't yet been decided whether the program will be just for U.S. owners of the affected cars or if it will expand to owners in other countries. There are about 500,000 cars on U.S. roads who have cars affected by the problem and about 11 million cars worldwide.
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Volkswagen has admitted that it illegally installed software on its diesel cars that allowed them to pass U.S. emissions tests even though the vehicles were dumping up to 40 times the allowed level of some pollutants when driven. The company is still working to come up with a fix of the problem that is acceptable to U.S. environmental regulators.
How that fix might affect the car's performance and mileage could figure into Feinberg's compensation formula.
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It offered $500 in cash and $500 in discounts to U.S. owners of the cars as a first step to compensate them. Some owners objected to the offer and many have stated they want VW to repurchase their cars, a suggestion that VW rejected.
VW also faces a federal class action lawsuit by owners of the cars seeking compensation. But Feinberg said as in the case of the GM compensation fund, the VW fund he will administer will be separate from any lawsuit or court proceeding.
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Several of the plaintiffs' attorneys in the federal class action had nominated Feinberg to handle settlement negotiations on behalf of VW. The judge in the case has yet to pick someone to fill that role. Feinberg said he does not know if he would still be considered for that position by the judge.
"I'm honored by the fact that so many people asked me to serve," he said.
