Volkswagen Reaches Settlement in Emissions Scandal Litigation

Under the agreement, announced at a court hearing on Thursday, Volkswagen is to provide “substantial compensation” to owners of over 500,000 2-liter vehicles that were fitted with high-tech software used to evade U.S. emission requirements. The specific financial details of the settlement, including how much each owner will receive, were not provided. Some news sources have reported that Volkswagen will spend just over $1 billion to compensate owners, but exact amounts were not disclosed as negotiations are still ongoing.

However, at the court hearing it was revealed that Volkswagen will establish a fund that will go towards measures to remediate excess pollution as part of the agreement. Other money may also be set aside for the company’s endorsement of green technology.

The Volkswagen emissions scandal initially gained widespread media coverage after the U.S. Environmental Protection Agency (EPA) issued a notice of violation of the Clean Air Act to Volkswagen AG, Audi AG and Volkswagen Group of America, Inc. on September 18, 2015. In the notice, the agency alleged “the four-cylinder Volkswagen and Audi diesel cars from model years 2009-2015 include[d] software that circumvent[ed] EPA emissions standards for certain air pollutants.” In particular, the EPA contended that Volkswagen manufactured and installed software in some of its vehicles that could sense when the car was being tested for compliance with EPA emissions standards. Purportedly, the software knew when the vehicle was being tested based on various inputs, including the position of the steering wheel, vehicle speed, the duration of the engine’s operation and barometric pressure. Thus, during testing the software produced compliant emission results, but otherwise emissions of nitrogen dioxide (NO2) increased by a factor of 10 to 40 times EPA-compliant levels.

According to Reuters, less than four days after the announcement that Volkswagen cheated on its emissions tests, class actions were filed on behalf of claimants from all 50 states. The cases filed in federal court were consolidated into multidistrict litigation in the Northern District of California, where the settlement was announced.

U.S. District Court Judge Charles R. Breyer has set a deadline of June 21, 2016, for the parties to file a motion for preliminary approval of the agreement.

The case is: In re: Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation, Case No. 3:15-md-2672 (N.D. Cal.)

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