Volkswagen reaches settlement agreements with private plaintiffs and US Federal Trade Commission on 3.0L TDI V6 vehicles in US
Volkswagen AG and Volkswagen Group of America, Inc. (together, Volkswagen) has reached proposed agreements to resolve outstanding civil claims regarding approximately 78,000 affected 3.0L TDI V6 diesel engine vehicles in the United States.
Volkswagen submitted two agreements to the Court for approval: (1) a proposed class settlement with private plaintiffs represented by a Court-appointed Plaintiffs' Steering Committee (PSC) on behalf of a nationwide class of current and certain former owners and lessees of eligible 3.0L TDI V6 vehicles; and (2) a proposed Consent Order submitted by the US Federal Trade Commission (FTC).
Under the 3.0L TDI settlement program, Volkswagen has agreed, among other terms, to provide cash payments to all eligible members of the class, and take the following specific actions:
Recall and repair, free of charge to the customer, approximately 58,000 affected 2013-2016 Model Year Volkswagen, Audi and Porsche 3.0L TDI V6 vehicles (Generation 2 vehicles) to bring them into compliance with the emissions standards to which they were originally certified, if an appropriate Emissions Compliant Repair is approved by US regulators.
Buy back or offer trade-in credit of equal value for, or terminate the leases of, approximately 20,000 eligible 2009-2012 Model Year Volkswagen and Audi 3.0L TDI V6 vehicles (Generation 1 vehicles) or, if approved by US regulators, modify the vehicles to substantially reduce their nitrogen oxide (NOx) emissions so as to allow eligible owners and lessees to keep them.
Volkswagen has agreed to pay up to approximately $1.2 billion in benefits for the 3.0L TDI settlement program, assuming 100% participation in the program, a 100% buyback of all eligible Generation 1 vehicles and availability of an Emissions Compliant Repair for Generation 2 vehicles. Volkswagen expects to be able to bring affected Generation 2 vehicles to the same emissions standards to which the vehicles were originally certified.
However, if an Emissions Compliant Repair foes not become available by deadlines detailed in the settlement, Volkswagen has agreed to pay approximately $4.04 billion dollars.
Volkswagen will begin the 3.0L TDI settlement program as soon as the Court grants final approval to the settlement agreements. At the earliest, approval will occur in May 2017.
Potential claimants under the class settlement do not need to take any action at this time. Individual class members will receive extensive notification of their rights and options (including the option to “opt out” of the settlement agreement) if the Court grants preliminary approval of the proposed class settlement at a hearing scheduled to take place on February 14, 2017.
The proposed settlement applies to all 3.0L TDI V6 diesel engine vehicles that Volkswagen, Audi, or Porsche marketed or sold in the United States for Model Years 2009 through 2016.
If Volkswagen is unable to obtain a timely approved Emissions Compliant Repair for eligible Generation 2 vehicles, it will offer to buy back or provide trade-in credit of equal value for, or terminate the leases of, eligible Generation 2 vehicles and may also seek approval by US regulators to offer customers a modification to substantially reduce their NOx emissions.
The 3.0L TDI settlement program also includes a proposed Consent Decree reached with the US Department of Justice (DOJ) on behalf of the Environmental Protection Agency (EPA) and a proposed agreement with the State of California by and through the California Air Resources Board (CARB) and the California Attorney General on 20 December 2016. The program is subject to the approval of Judge Charles R. Breyer of the United States District Court for the Northern District of California, who presides over federal Multi-District Litigation (MDL) proceedings related to the diesel matter.
As announced previously, under its proposed Consent Decree with the DOJ, Volkswagen will contribute $225 million to the environmental remediation trust that is being established under Volkswagen’s 2.0L TDI settlement program in the United States to fully mitigate the excess, lifetime NOx emissions of the affected 3.0L TDI V6 vehicles. As part of its agreement with the State of California, Volkswagen will also pay $25 million to CARB to support the use of zero emissions vehicles (ZEVs) in the State.
By their terms, the proposed agreements announced today are not intended to apply to or affect Volkswagen’s obligations under the laws or regulations of any jurisdiction outside the United States. Regulations governing NOx emissions limits for vehicles in the United States are much stricter than those in other parts of the world and the engine variants also differ significantly. This makes the development of technical solutions in the United States more challenging than in Europe and other parts of the world.