Judge OK’s Volkwagen US $14.7B settlement
KARTIKAY MEHROTRA AND MARGARET CRONIN FISK
Volkswagen AG and drivers suing the company in the U.S. over its diesel-cheating scandal won final approval of their US$14.7-billion settlement to resolve what’s likely to be the largest portion of VW’s civil liability worldwide.
The accord requires VW to buy back cars with 2.0-litre diesel engines armed with so-called defeat devices used to beat emissions tests. Under the deal VW reached in June with consumers and regulators, including the EPA and Federal Trade Commission, car owners will be offered US$5,100 to US$10,000 each in compensation along with the option of a buyback or a fix.
The automaker has earmarked US$19.5 billion (17.9 billion euros) to cover costs stemming from the scandal. With Tuesday’s approval by U.S. District Judge Charles Breyer in San Francisco, VW has committed to almost US$16.6 billion in settlements, including $1.2 billion for U.S. franchise dealers and US$603 million to U.S. states over violations of consumer protection laws.
Breyer set aside objections to the agreement, noting that few VW owners complained “and their substance does not call into doubt the settlement’s fairness.’’
Breyer called the settlement fair, reasonable and adequate and it accomplishes the primary goal of getting the polluting cars off the road. “There is no just reason for delay,” Breyer said in the order, which allows the buybacks to begin immediately.
Volkswagen’s payout for settlements is among the largest in corporate history, exceeded by the US $246billion agreement between the tobacco industry and U.S. states in 1998 and the US$38 billion BP Plc has spent so far over the 2010 oil spill in the Gulf of Mexico to resolve government probes as well as claims for private property and economic losses.
“VW got itself in a lot of trouble on both sides of the Atlantic, basically lying to a host of governmental regulators, its ultimate customers and its many dealers in between,” said Anthony Sabino, a law professor at St. John’s University in New York and an expert on complex litigation. “They’re not getting off cheap, but they’re stopping the bleeding.”
While VW has resolved much of its legal exposure, the company still faces more legal woes.