Attorney General Schwalb Announces Nearly $150 Million Multistate Settlement with Mercedes-Benz USA and Daimler AG Over Emissions Cheating

Attorney General Schwalb today joined a coalition of 50 attorneys general announcing a $149,673,750 settlement with Mercedes-Benz USA and Daimler AG (Mercedes) for deceptively marketing, selling, and leasing more than 200,000 diesel vehicles in the United States, including approximately 380 vehicles registered in the District of Columbia, that violated DC and federal emissions standards and resulted in thousands of tons of excess air pollution.

The attorneys general allege that Mercedes designed and deployed software defeat devices intended to allow vehicles to effectively cheat emissions testing-allowing cars and vans to pass tests, even when they exceeded air pollution limits in normal, real-world operation. They also concealed the defeat devices-and the true levels of air pollution produced by their diesel vehicles-from the public and from state and federal regulators. Now, under the terms of a settlement agreement, Mercedes will pay significant penalties to the states, including $250,000 to the District, repair the affected vehicles that remain on the road so they meet emissions standards moving forward, and pay $2,000 in restitution to impacted consumers who have approved emission modification software installed by Mercedes on their vehicles.

"My office will not allow companies to profit by cheating the system, lying to consumers, or polluting our environment," said Attorney General Schwalb. "This bipartisan investigation and settlement holds Mercedes-Benz USA and Daimler AG accountable for years of fraud and sends a strong message that this type of deceptive and illegal behavior is unacceptable anywhere and at any time."

From 2008 through 2016, the states allege that Mercedes manufactured, marketed, advertised, and distributed more than 211,000 diesel passenger cars and vans equipped with software defeat devices that optimized emission controls during emissions tests, while reducing control of emissions during normal operations. The states allege that, when operated outside of emissions tests, these vehicles can emit many times the legal limits of nitrogen oxides (NOx), a harmful pollutant that causes respiratory illness and that contributes to the formation of smog. Mercedes allegedly engaged in this conduct to avoid implementing available NOx control technologies, which can decrease fuel efficiency and may require additional maintenance.

Mercedes violated DC consumer protection laws by:

• Deceptively obtaining needed certifications from federal and District regulators to market and sell their diesel vehicles.
  
• Concealing the fact that their diesel vehicles did not comply with applicable local and federal emission standards, subjecting residents of the District of Columbia and others to the health risks of added air pollution.
  
• Misleadingly marketing the vehicles to consumers as "environmentally-friendly" and in compliance with emissions regulations.

Under the terms of a multistate settlement agreement, Mercedes is required to:

• Pay $120 million to the states immediately, including $250,000 to DC. (An additional $29,673,750 will be suspended and potentially waived pending completion of a comprehensive consumer relief program.)
  
• Provide relief to impacted consumers, including the owners of 380 vehicles in DC. Mercedes must pay to have approved emissions modification software installed on an estimated 39,565 impacted vehicles that have not yet been repaired or permanently removed from the road in the US. The company must provide such consumers with an extended warranty and will pay restitution of $2,000 per vehicle.

The company must also comply with reporting requirements and reforms to their practices, including a prohibition on any further unfair or deceptive marketing or sale of diesel vehicles, or misrepresentations regarding emissions and compliance.

A copy of the settlement agreement is available here.

The District's complaint, filed in DC Superior Court along with the settlement agreement, is available here.

The attorneys general of Alabama, Connecticut, Delaware, Georgia, Maryland, New Jersey, New York, South Carolina, and Texas led today's settlement, joined by Alaska, Arkansas, Colorado, the District of Columbia, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and Puerto Rico joined in today's settlement.

This settlement follows similar settlements reached previously between the states and Volkswagen, Fiat Chrysler, and German engineering company Robert Bosch GmbH over its development of the cheat software. Automaker Fiat Chrysler and its subsidiaries paid $72.5 million to the states in 2019. Bosch paid $98.7 million in 2019. Volkswagen reached a $570 million settlement with the states in 2016.

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