Volkswagen Gets Initial Approval On $15 Billion Settlement
Approval clears the way for German automaker to start making amendsby Kirby, on
For almost all automakers, a fine adding up to $14.7 billion would be the equivalent of a death knell. But for the biggest automaker in the world, it’s the first step in putting a debilitating scandal behind it. That’s the position Volkswagen AG finds itself in after a federal judge granted preliminary approval for the German automaker to begin putting its billion-dollar settlement to action.
U.S. District Judge Charles Breyer gave his initial approval of the deal, allowing Volkswagen to begin the initial process of settling all the claims levied against it. According to a VW attorney, the automaker plans to hire as many as 300 people to oversee the processing of the settlement claims. In turn, 40 employees from Volkswagen Group of America would oversee the proceedings.
The settlement covers a wide range of items that were laid out in June 2016 in a joint announcement made by Volkswagen and the Environmental Protection Agency. In total, owners of around 475,000 diesel-powered vehicles are likely to be part of the settlement. Depending on their specific situations, the owners have the option of either selling back their cars, have them repaired by the company to make them compliant with U.S. emissions standards, or have their leases terminated at no cost to them. Owners will also be paid additional compensation amounting from $5,100 to $10,000 regardless of what option they take. In addition to the settlements, Volkswagen is also required to spend $4.7 billion in investments towards green vehicle technology.
Despite the initial approval granted by Judge Breyer, the settlement is still subject to final court approval, which could happen as early as October 18, 2016. Once that is granted, the settlement proceedings are expected to follow shortly. Owners affected by the emissions scandal will be notified of the options available to them through various means, including traditional mail, emails, website and media advertisements, and a hotline.
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Why it matters
It’s not the kind of victory that you’d expect, but given what Volkswagen has been through since it admitted to cheating diesel emissions tests in September 2015, the initial approval it got from U.S. District Judge Charles Breyer to begin the settlement cases is the closest thing to positive news that the company has had in recent memory. That means the German automaker can start the process that will eventually lead to finally putting the emissions scandal to rest.
I can’t even begin to imagine how bad Volkswagen wants this whole episode to be over, and while there’s still actually a lot of work to be done, not to mention a lot of other potential lawsuits to face, clearing away this $14.7 billion settlement with affected owners in the U.S. will be a huge load off of its shoulders.
Once the process begins, VW’s lawyers can turn their attention on other cases stemming from the emissions scandal, including a similar settlement to about 85,000 owners of VW diesel models with 3.0-liter engines. That’s a different settlement entirely, albeit one that’s on a smaller scale compared to those who own 2.0-liter diesel engine models. A hearing has been scheduled on August 25 to address this settlement, at which point there should be more clarity on how Volkswagen plans to proceed with the settlement.
Unfortunately, VW is still subject to other pending lawsuits, including one filed by New York Attorney General Eric Schneiderman that’s seeking up to $450 million in civil penalties for alleged violations of state environmental laws, among others. Other countries could also slap their own lawsuits against the German automaker so while this billion-dollar settlement is a good a sign as any that the company’s road to redemption has begun, it still has a long way to go before it can even get a sniff of the finish line.
Still, one step at a time, right?