Federal judge approves $15 billion Volkswagen settlement

By Joe Dyton | Nov 25, 2016

SAN FRANCISCO – A federal judge recently approved a $15 billion settlement, one of the largest in the history of the United States, concerning Volkswagen Groups' diesel car emissions scandal.

SAN FRANCISCO – A federal judge recently approved a $15 billion settlement, one of the largest in the history of the United States, concerning Volkswagen Groups' diesel car emissions scandal.

The settlement kicks off a big vehicle buyback program and environmental remediation efforts.

San Francisco United District Court Judge Charles Breyer approved the agreement that included customers, the government, state regulators and Volkswagen. Breyer believed the agreement was “fair, reasonable and adequate.”

The settlement was reached just a year after the automaker admitted it rigged 11 million vehicles around the world with software in order to circumvent emissions standards.

“The defendants had incentives to settle early and quickly,” UC Davis School of Law Dean Kevin Johnson told the Northern California Record. “The negative public relations and marketing consequences for Volkswagen sales around the world could have long-term economic consequences for the company. The lawsuits would be difficult to defend and the litigation would have been in the news regularly.”

Although the case has been settled, Volkswagen is still looking at criminal investigations by the U.S. Justice Department and German prosecutors. The U.S.’ examination could lead to more financial penalties and criminal indictments.

"It’s hard to see a defense (for Volkswagen) except that there was negligence by the leadership of the organization,” Johnson said.

Approximately 475,000 Volkswagen owners in the United States have the option of a buyback or a free repair and compensation if a fix is available. Volkswagen will waste no time distributing the settlement and has already dedicated several hundred team members to taking care of the process.

“The priority was to get the polluting cars off the road as soon as possible,” Breyer said. “The settlement does that.”

The buybacks will vary between $12,475 to $44,176, include restitution payments and will vary based on mileage. Anyone who chooses an Environmental Protection Agency (EPA)-approved repair will get a payout from $5,100 to $9,852 based on the book value of their vehicle.

Volkswagen will also pay $2.7 billion for environmental mitigation and another $2 billion for clean-emissions infrastructure.

Not everyone involved with case was happy with the settlement. About 24 Volkswagen owners were against the deal during an Oct. 18 hearing. The objectors complained about the amount of the payout, while others expressed displeasure about the company’s “clean diesel" advertising and intentional environmental pollution.

Breyer rejected all of these arguments when he made his ruling. He felt that the belief that compensation shouldn’t be connected to a vehicle’s mileages ignores the fact that people, “who frequently drove their vehicles undeniable got more use out of them,” he said. “The number of objections is small and their substance doesn’t call into doubt the settlement’s fairness.”

“This seems to be a sensible approach to resolving a case affecting a large group of customers,” Johnson said. “It shows how a class action can efficiently, expeditiously and fairly resolve a claim by large numbers of consumers against a set of defendants who committed one legal wrong.”

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