Volkswagen (VW) has reached a tentative settlement worth at least $1 billion over 80,000 3.0 liter cars that were implicated in the company’s emissions scandal. U.S. District Judge Charles Breyer said last month that he was “extremely pleased to report the parties have reached an agreement about what to do about 80,000 3.0 liter cars on the road and the associated environmental consequences of these vehicles.” Judge Breyer said the announcement – which was originally scheduled for Nov. 30 but was delayed several times – was the result of “nearly round the clock” negotiations. At the end of the hearing on Dec. 20, he told the parties to continue working out the details of the settlement.
Volkswagen has divided the class into two generations of cars, determined by engine. “Generation One” includes 20,000 Touaregs and the Audi Q7. Owners of those older cars will have the option to decide whether to have VW buy back their cars or have the cars modified to be more fuel efficient. Lessees will be able to opt out of their leases.
VW says it can fix the remaining 60,000 cars in the “Generation Two” category to make them “fully emissions compliant.” Pending government approval, the automaker will implement this fix on all these cars, but if the settlement isn’t approved, car owners will have the option to sell their cars back to VW and lessees will be able to opt out of their leases. The Environmental Protection Agency (EPA) and the Department of Justice (DOJ) have estimated the settlement to be worth $1 billion, assuming the Generation Two fix works. That amount also includes $225 million that will be allocated to an environmental mitigation trust created by an October settlement for 2.0 liter cars. VW will also pay the California Air Resources Board (CARB) $25 million to support the development of zero-emissions vehicles in the state.
Assistant Attorney General John C. Cruden said at a December press conference that Volkswagen had committed “an egregious breach of duty,” but added that the agreement with 3.0-liter vehicle drivers meant every car with an emissions cheat device would be off the road or fixed. Attorney General Cruden said in a statement:
The settlement marks another significant step in holding Volkswagen accountable for cheating Americans out of the promise of cleaner air by selling vehicles equipped with defeat devices.
The $1 billion figure does not include the “substantial compensation” to which Judge Breyer said the class would be entitled. The exact dollar amounts for those payments to consumers haven’t been made public. The Plaintiffs’ Steering Committee (PSC) updated Judge Breyer on its negotiations with Volkswagen during a telephone conference on Dec. 22.
In a statement, Elizabeth Cabraser, the committee’s court-appointed lead counsel, confirmed that she had reached “an agreement-in-principle” with Volkswagen, but Judge Breyer’s confidentiality order is still in place. As we previously reported, the court has already finalized a $14.7 billion settlement in October allowing 475,000 owners of affected Volkswagen and Audi 2-liter diesel vehicles to sell their cars back to the company or get them fixed. That settlement included payments of $5,100 to $10,000 to most consumers who bought their cars before last September in addition to the buybacks. It also agreed to invest $2 billion in projects that support the increased use of zero emission vehicles, as well as $2.7 billion to mitigate the effects of the emissions from cars equipped with the so-called defeat devices.
Dee Miles from our firm serves on the steering committee in this litigation. Elizabeth Cabraser and the other lawyers on the committee have done a tremendous job in this matter. The case is In re: Volkswagen “Clean Diesel” Marketing, Sales Practices and Products Liability Litigation in the U.S. District Court for the Northern District of California.
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