Of­fi­cials brief cham­ber on area’s econ­omy

Judge ap­proves $15 bil­lion set­tle­ment in wake of com­pany’s diesel emissions scan­dal; some own­ers still say au­tomaker ‘got off easy’

Daily Local News (West Chester, PA) - - FRONT PAGE - By Sud­hin Thanawala and Tom Kr­isher The As­so­ci­ated Press

SAN FRAN­CISCO » A fed­eral judge ap­proved the largest auto-scan­dal set­tle­ment in U.S. his­tory Tuesday, giv­ing nearly a halfmil­lion Volk­swa­gen own­ers and lease­hold­ers the choice be­tween sell­ing their cars back or having them re­paired so they don’t cheat on emissions tests and spew ex­cess pollution.

U.S. Dis­trict Judge Charles Breyer said the nearly $15 bil­lion deal “ad­e­quately and fairly” com­pen­sates con­sumers and gets the pol­lut­ing ve­hi­cles off the road as soon as pos­si­ble.

The Ger­man au­tomaker ac­knowl­edged last year that about 475,000 Volk­swa­gens and Audis with 2-liter, four-cylin­der diesel en­gines were pro­grammed to cheat on emissions tests.

Un­der the agree­ment, own­ers can choose to have Volk­swa­gen buy back their ve­hi­cle re­gard­less of its con­di­tion for the full trade-in price on Sept. 18, 2015, when the scan­dal broke, or pay for re­pairs. Ei­ther way, Volk­swa­gen also will pay own­ers $5,100 to $10,000, de­pend­ing on the age

of the car and whether the owner had it prior to Sept. 18 of last year.

Volk­swa­gen has agreed to spend up to $10 bil­lion com­pen­sat­ing con­sumers and could start buy­ing back the cars as early as next month. Reg­u­la­tors have not ap­proved any fixes.

The set­tle­ment also in­cludes $2.7 bil­lion for un­spec­i­fied en­vi­ron­men­tal mit­i­ga­tion and $2 bil­lion to pro­mote zero-emissions ve­hi­cles.

“We’re go­ing to sell it back as soon as hu­manly pos­si­ble and try to put this be­hind us,” said Joe Azam, a 35-year-old at­tor­ney in New York who owns a 2014 Jetta wagon.

Still, Azam said he thought Volk­swa­gen “got off easy” in how much it was pay­ing ve­hi­cle own­ers.

Blair Ste­wart, a 2012 Jetta wagon owner in Palo Alto, California, said Volk­swa­gen should have paid own­ers the full pur­chase price of their ve­hi­cle, given the com­pany’s fraud.

“This is not enough to de­ter the kind of be­hav­ior they did,” he said.

Breyer con­cluded that af­fected car own­ers were not en­ti­tled to a full re­fund be­cause many had “re­ceived a great deal of use out of their ve­hi­cles.” He also raised the specter of bank­ruptcy for Volk­swa­gen if it had to pay the full pur­chase price.

The scan­dal has dam­aged Volk­swa­gen’s rep­u­ta­tion and hurt its sales. The com­pany is still fac­ing po­ten­tially bil­lions more in fines and penal­ties and pos­si­ble crim­i­nal charges. It also will pay up to $332.5 mil­lion in at­tor­ney fees and costs and up to $1.2 bil­lion to its U.S. deal­ers.

The set­tle­ment’s ap­proval “is an im­por­tant mile­stone in our jour­ney to mak­ing things right in the United States,” Hin­rich J. Woe­bcken, pres­i­dent and CEO of Volk­swa­gen Group of Amer­ica Inc. said in a state­ment. “Volk­swa­gen is com­mit­ted to en­sur­ing that the pro­gram is now car­ried out as seam­lessly as pos­si­ble for our af­fected cus­tomers and has de­voted sig­nif­i­cant re­sources and per­son­nel to mak­ing their ex­pe­ri­ence a pos­i­tive one.”

The lead at­tor­ney for car own­ers, El­iz­a­beth Cabraser, said in a state­ment that the deal “holds Volk­swa­gen ac­count­able for its il­le­gal be­hav­ior and breach of con­sumer trust.” More than 330,000 peo­ple have signed up for set­tle­ment ben­e­fits, with about 3,200 opt­ing out, she told the judge last week.

Peggy Scha­ef­fer, a North Carolina li­brar­ian with a diesel 2010 Jetta wagon, said she was pleased with the set­tle­ment terms and has sub­mit­ted her buy­back pa­per­work. She ex­pects to get close to $15,000 for a car she bought for $16,000 in 2010.

“It’s hard to be grumpy about that,” she said.

The com­pany said in April that it has set aside $18.2 bil­lion to cover the cost of the global scan­dal, which erupted last year when the U.S. En­vi­ron­men­tal Pro­tec­tion Agency said Volk­swa­gen had fit­ted many of its cars with soft­ware to fool emissions tests. Car own­ers and the U.S. De­part­ment of Jus­tice sued.

The soft­ware rec­og­nized when the cars were be­ing tested on a tread­mill and turned on pollution con­trols. The con­trols were turned off when the cars re­turned to the road. The EPA al­leged the scheme let the cars spew up to 40 times the al­low­able limit of ni­tro­gen ox­ide, which can cause res­pi­ra­tory prob­lems in hu­mans.

Through Septem­ber, VW Group’s sales in the U.S. are down nearly 7 per­cent from 2015 fig­ures, to just un­der 386,000 ve­hi­cles.


New York At­tor­ney Gen­eral Eric Sch­nei­der­man an­nounces a law­suit against Volk­swa­gen in New York on July 19.

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