Judge moves forward $14.7 billion Volkswagen diesel settlement

A federal judge in San Francisco gave preliminary approval Tuesday to a $14.7 billion settlement with automaker Volkswagen in a pollution cheating scandal.

The action by U.S. District Judge Charles Breyer clears the way for notices of the settlement to go out to people who bought or leased 475,000 diesel-fueled Volkswagens or Audis with two-liter engines in the United States between 2009 and 2015.

The next step in the case is an Oct. 18 fairness hearing at which Breyer may give final approval, allowing buyback and repair provisions of the agreement to go into effect.

Volkswagen owners and lessees who don’t like the settlement can submit objections or opt out of the settlement.

Breyer wrote in a 32-page ruling:

“The settlement is sufficiently fair, adequate, and reasonable to the 2.0-liter diesel engine vehicle consumers to move forward with class notice.”

A settlement has not been reached for about 80,000 larger vehicles with three-liter engines.

Under the pact, Volkswagen will provide a $10 billion fund to compensate owners, who can either sell the cars back to Volkswagen or accept a not-yet-developed fix of the emissions cheating devices in their vehicles.

Owners will receive an additional $5,100 to $10,000 cash payment and those who leased Volkswagens will receive $3,500 and can terminate their leases, according to attorney Elizabeth Cabraser of San Francisco.

Cabraser was appointed by Breyer as the lead lawyer in hundreds of cases filed by consumers nationwide and consolidated in Breyer’s court for judicial efficiency.

The settlement resolves those cases and two other lawsuits filed by the U.S. Department of Justice and Federal Trade Commission.

Volkswagen began marketing the diesel vehicles in 2008 as “clean” cars with low emissions of pollutions.

In September, it admitted to the U.S. Environmental Protection Agency and California Air Resources Board that the cars were in fact equipped with defeat devices that registered low emissions when the cars were tested, but turned off the controls when the vehicles were driven normally.

The vehicles released up to 40 times the allowed limit of nitrogen oxides, Breyer noted in his ruling.

The settlement also includes Volkswagen payments of $2 billion for investments in zero emissions technology and $2.7 million to states nationwide to mitigate pollution.

Cabraser said in a statement:

“We have designed a settlement that places consumers, the owners and lessees in a central, decisive role.”

Volkswagen stated:

“The parties believe that the proposed settlement program will provide a fair, reasonable and adequate resolution for affected Volkswagen and Audi customers.”