Judge orders new talks in Fiat Chrysler diesel emissions case

By David Shepardson

WASHINGTON (Reuters) - A federal judge in San Francisco on Wednesday ordered the U.S. Justice Department and Fiat Chrysler Automobiles NV to hold new talks with a court-appointed settlement master to try to settle the government's civil suit over the Italian-American automaker's diesel vehicle emissions.

The Justice Department is seeking "substantial" civil fines from Fiat Chrysler in a suit filed in May 2017 accusing the company of illegally using software that led to excess emissions in 104,000 U.S. diesel vehicles sold since 2014.

A person briefed on the matter said the government and Fiat Chrysler have reached agreement on almost all aspects of a settlement after months of lengthy talks but remain "hundreds of millions of dollars" apart on how big the fines will be.

In a written order, Judge Edward Chen directed both sides to "fully cooperate and communicate" with settlement master Ken Feinberg "in light of the delay in resolving the United States' case." Feinberg was ordered "to engage directly with the parties and employ his best effort in facilitating settlement negotiations, including terms of any monetary relief."

Feinberg has scheduled a new round of talks with all sides for Dec. 3 in Washington, the person briefed on the matter said.

Feinberg declined to comment, saying Chen's order speaks for itself. Fiat Chrysler had no immediate comment.

U.S. and California regulators stepped up scrutiny of diesel vehicles after Volkswagen AG admitted in 2015 to illegally installing software in U.S. vehicles for years to evade emissions standards.

VW has agreed to pay more than $25 billion in the United States for claims from owners, environmental regulators, states and dealers.

Regulators have said Fiat Chrysler diesel vehicles had undisclosed emissions controls that allowed vehicles to emit excess pollution during normal driving.

The company has denied any wrongdoing and said there was never an attempt to create software to cheat emissions rules. Last month, the company set aside 713 million euros ($810 million) to cover potential costs related to the case.

Reuters reported in February that a settlement offer sent to Fiat Chrysler lawyers by the Justice Department on Jan. 27 would require the company to offset excess pollution and take steps to prevent future excess emissions. The letter included language that a settlement must include very substantial civil penalties.

The Justice Department has a separate ongoing criminal investigation into the excess emissions.

(Reporting by David Shepardson; Editing by Sonya Hepinstall)