A California federal judge has approved a settlement valued at more than $1.6 billion that resolves lawsuits filed by Volkswagen AG franchise dealerships in the wake of the carmaker’s 2015 diesel emissions scandal. Under the settlement, Volkswagen agreed to pay 652 dealerships $1.208 billion in cash to resolve claims against it, and it agreed to continue providing those dealerships with multiple incentives and support payments that are collectively valued at approximately $442 million. U.S. District Judge Charles R. Breyer approved the settlement, saying it was well supported and exceeds the estimated lost profit calculated by class counsel. Judge Breyer said:
While the parties reached the settlement at an early phase of litigation, class counsel’s careful prefiling investigation and their extensive review of discovery materials indicate they had sufficient information to make an informed decision about the settlement.
Last year, the dealerships amended their complaint, alleging violations under the Automobile Dealers’ Day in Court Act, the Racketeer Influenced and Corrupt Organizations Act and Florida and Illinois state statutes. Class counsel estimated that the dealerships’ total lost profit exposure ranged from $1.47 billion to $1.62 billion. In September, the dealers filed the proposed settlement, which the court preliminarily approved in October.
The court provisionally certified a nationwide class of 652 authorized Volkswagen dealers in the United States that operated a dealership pursuant to a valid Volkswagen Dealer Agreement. Under the settlement, Volkswagen will divide the $1.208 billion cash settlement among dealerships based on pro rata share of the monthly financial assistance payments that Volkswagen paid to eligible dealers in November 2015.
Volkswagen also agreed to continue incentives it currently offers dealerships for an additional 12 months and it agreed to give dealerships the option to defer their obligations to renovate or make capital investments in their facilities. The settlement also requires Volkswagen to repurchase affected vehicles that are unfixable. Judge Breyer noted that only seven dealerships have opted out of the settlement, and eight have objected to it, mainly due to how the settlement is apportioned. This is a relatively low objection rate for a settlement, according to Judge Breyer.
The dealerships are represented by Steve W. Berman and Thomas E. Loeser of Hagens Berman Sobol Shapiro LLP, and Richard N. Sox of Bass Sox Mercer. The case is In re: Volkswagen “Clean Diesel” Marketing, Sales Practices and Products Liability Litigation, (MDL No. 2672) in the U.S. District Court for the Northern District of California.
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