Today, U.S. District Court Judge Charles R. Breyer of the Northern District of California issued a decision approving the settlement program for people who owned or leased a Volkswagen (VW) or Audi 2.0-liter turbocharged direct injection (TDI), or “Clean Diesel,” vehicles as of September 18, 2015. This approval comes only 10 months after the Plaintiffs’ Steering Committee (PSC) was appointed. At nearly $15 billion, this is the largest auto-related consumer class action settlement in U.S. history.
In the decision, Judge Breyer stated, “The settlement in its current form is fair, adequate and reasonable, and is in the best interest of class members. Benefits under the settlement shall immediately be made available to class members.”
The settlement is the result of negotiations involving the PSC, Volkswagen AG and the U.S. government, including officials from the Department of Justice (DOJ), the Environmental Protection Agency (EPA), the Federal Trade Commission (FTC) and the California Air Resources Board (CARB). Joe Rice, co-founder of Motley Rice LLC, one of the nation’s largest plaintiffs’ firms, was one of the lead negotiators of the settlement for consumers. On behalf of the PSC, Joe and fellow attorney and PSC chair Elizabeth Cabraser worked closely with all parties.
The total settlement is $14.7 billion, with $10 billion allocated for consumers and $4.7 billion for environmental restitution. This includes $2.7 billion for a trust with the purpose of supporting environmental programs throughout the country that will reduce nitrogen oxides (NOx) in the atmosphere by an amount equal to or greater than the combined excess NOx pollution caused by the cars that are the subject of this lawsuit. Secondly, VW will spend $2 billion toward developing additional new, clean technology on top of what it had already allocated for new, clean technology.
The settlement offers eligible 2.0-liter vehicle owners, sellers and lessees the option of a buyback, to have their car fixed or the ability to wait and see what each owner believes is best for their situation. Starting today, Volkswagen will begin processing claims so that consumers can participate in the settlement program and receive compensation. The compensation for consumers is free of attorney fees and taxes and also takes into account insurance paid for the affected vehicles.
The earliest buybacks and lease terminations should take place in November. Although VW has not detailed an emissions modification fix at this time, included in the settlement is a 12-month schedule in which it may propose a modification. If the modification is not approved by the Court and the EPA, then VW must buyback the vehicles.
“This settlement is all about giving the consumer options while ensuring Volkswagen does its part to remedy its harm to the environment as well as fairly compensate those impacted,” said Rice. “Speed was critical in developing these options. I commend all parties for their teamwork to ensure that a resolution was reached quickly. Having led negotiations on behalf of plaintiffs in some of the largest civil settlements this country has seen, this is one of the fastest to reach a resolution that I have seen, making it a model for future litigations. The faster we are able to help consumers get the assistance they need, the better job we have done on their behalf. We look forward to continuing negotiations and finding a resolution for impacted 3.0-liter owners.”
On September 18, 2015, news broke that Volkswagen had programmed more than 11 million vehicles worldwide, including approximately 482,000 vehicles in the U.S., to cheat environmental standards by emitting lower emissions in official tests than in real-world use.