Volkswagen’s attempt to overturn a $10 billion settlement reached with almost one half million vehicles owners and former owners has been rejected by the court. The settlement stemmed from multiple legal claims against the automaker for installing illegal emissions cheating devices into 475,000 2-liter vehicles. In all, the automaker has paid nearly $25 billion in the United States to owners, regulators, states, and dealers to resolve claims related to software installation designed to falsify emissions data.
The Volkswagen scandal was first revealed when independent researchers uncovered the emissions discrepancies between the reported emission levels when the car was driving and the levels observed when the devices were installed in the cars. Volkswagen subsequently admitted to placing devices into its cars to circumvent emissions tests and agreed to settle claims against it. A federal judge approved a $10 billion settlement which includes a buyback program as well as compensation in the amount of $5,000 to $10,000 per vehicle for affected consumers. Under the buyback program, the automaker has spent about $7.4 billion to reclaim 350,000 of the 475,000 vehicles as of February. Volkswagen has also repaired or removed approximately 86 percent of the vehicles equipped with cheating devices. Approximately 3,200 VW owners and lessees opted out of the settlement agreement based on disagreements on trade-in values.
Volkswagen objected to various aspects of the settlement and argued that the settlement amount was not equitable. Among its contentions, the automaker disputed the court’s ratification of the class and the fairness of the process for approving the class. The U.S. Ninth Circuit Court of Appeals however concluded that the settlement should stand because Volkswagen owners and lessees were expected to receive significant benefits from the settlement that would be equivalent to what they would have received in litigation. The Court also ruled that Volkswagen will not be eligible to receive any of the $10 billion that remains after the customers are reimbursed under the settlement.
In addition to monetary penalties, Volkswagen executives also face an array of criminal charges. Volkswagen’s former Chief Executive Officer was criminally charged in the scandal and two other executives are serving prison time after pleading guilty to charges.
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