Updated: 2:15 p.m.
(Bloomberg) -- Volkswagen AG agreed to pay $1.2 billion to resolve U.S. consumer claims over tainted large diesel engines, the latest step in working through a pile of legal challenges resulting from its emissions-cheating scandal.
The proposed settlement, with the Federal Trade Commission and owners of about 78,000 cars, includes compensating consumers as much as $16,114 and fixing or buying back affected 3-liter diesel models such as the Porsche Cayenne and VW Touareg SUVs and Audi A8 sedan, according to filings in San Francisco federal court.
We will continue to work to earn back the trust of all our stakeholders,” Hinrich Woebcken, Volkswagen Group of America’s chief executive officer, said in a statement. The agreement means that all customers with affected vehicles in the U.S. now have “a resolution available to them.”
The accord comes as partisan bickering escalates over President Donald Trump’s pick to lead the Environmental Protection Agency, the nation’s chief regulator of auto emissions. Senate Democrats on Wednesday boycotted a committee vote to advance the confirmation of Oklahoma Attorney General Scott Pruitt amid questions about his commitment to upholding clean air and water protections.
Consumers don’t have to worry about Trump interfering with the settlement through any overhauls at the EPA or Justice Department, said lead plaintiffs’ attorney Elizabeth Cabraser.
“We are very confident that no matter what happens in Washington, we have a federal district court that all the plaintiffs have entrusted to have ongoing jurisdiction over this case until everything is resolved," she said in a conference call. “It’s not just the Department of Justice and Environmental Protection Agency who can enforce the consumer’s interests. It’s also up to us as well as the FTC.”
|Biggest carmaker
Volkswagen, the world’s biggest automaker, admitted in September 2015 that about 11 million cars with small diesel engines were rigged to cheat on emissions tests, sparking the worst crisis in the automaker’s history. Costs resulting from the scandal so far have blown past the 18.2 billion euros ($19.6 billion) that the company has set aside to deal with the issue.
The tally of costs in North America includes a $14.7 billion agreement reached last year to buy back cars with 2.0-liter diesel engines and a $4.3 billion settlement of criminal and civil penalties in the U.S. reached in January, in which the company pleaded guilty to three felony counts.
Volkswagen is also involved in investor lawsuits in the U.S. and in Germany related to how the emissions-test rigging affected the stock price, as well as consumer lawsuits and a criminal probe in Germany.
|'Defeat device'
The 3-liter settlement, filed just before midnight Tuesday in San Francisco, requires Volkswagen to compensate affected customers, fix about 58,000 cars and buy back as many 20,000 Touareg and Audi Q7 sport utility vehicles. Repurchasing those cars comes on top of the 482,000 2-liter autos that are being bought back or repaired under a previous agreement.
Owners of unfixable cars will be eligible for cash compensation of as much as $13,880, according to a statement from the plaintiffs’ lawyers. Drivers with vehicles that can brought up to standard could receive as much as $16,114. The deal finalizes terms outlined in December, when the cost was estimated at about $1 billion. VW’s burden from the issue will increase to as much as $4.04 billion if the repairs don’t take place on time, according to the filing.
|Bosch deal
In a separate U.S. settlement on Tuesday, German parts supplier Robert Bosch GmbH, which provided the engine-control software to Volkswagen, agreed to pay $327.5 million over allegations that it played a role in developing the cheating technology.
U.S. District Judge Charles Breyer is scheduled to consider the proposed 3-liter settlement on Feb. 14. If he grants preliminary approval, car owners and others would be given a chance to comment on the agreement before it becomes final.
The case is In Re: Volkswagen “Clean Diesel” Marketing, Sales Practices and Products Liability Litigation, 15-02672, U.S. District Court, Northern District of California (San Francisco).
Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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