U.S. judge inclined to back Volkswagen emissions scandal deal

A federal judge in San Francisco on Tuesday said he is "strongly inclined" to approve a record-setting $10.033 billion proposed buyback and compensation offer from Volkswagen AG for 475,000 owners of polluting 2.0-liter diesel vehicles and said he will issue a final decision by October 25.

Volkswagen AG will likely secure a US judge's final sign-off on its $14.7 billion settlement with drivers as it continues to seek regulators' approval of a fix for 482,000 pollution-spewing vehicles still on USA roads.

VW reached the settlement covering the 2.0-liter engines in June with consumers and regulators including the U.S. Environmental Protection Agency. He didn't immediately issue a decision after hearing from Volkswagen owners opposed the settlement.

In addition to other settlement costs, VW will pay more than $600 million to 44 US states, spend $2 billion on zero-emission vehicle promotion and infrastructure, and another $2.7 billion to offset diesel pollution. Attorneys' fees will be limited to $324 million, far below the typical share in class-action settlements.

Judge Breyer told those present that he would consider the objections and whether to make any changes to the offer, but said it was imperative to act quickly.

Some owners who spoke at the hearing demanded the full purchase price of their cars. That includes $1.2 billion to its USA franchise dealers, along with $86 million to California and $603 million to other states over violations of consumer protection laws. The EPA alleged the scheme let the cars spew more than 40 times the allowable limit of nitrogen oxide, which can cause respiratory problems in people.

Volkswagen lawyer Robert Giuffra defended the settlement, saying the goal was a deal that was "efficient and made sense". "It's good for the environment, and it's a way for Volkswagen to regain the trust of its customers, the American people, regulators and do right by the environment". More than two dozen people have signed up to address the judge, who may not issue a decision at the hearing.

He also gave preliminary approval to an agreement with VW dealers in the US.

"This was a broken situation". However, lead counsel for owners, Elizabeth Cabraser, said that while not ideal, the offer represented a "fair, reasonable and adequate" settlement. CARB has twice rejected VW's recall plans - once in a January letter related to the 2.0-liter engines and again in a similar July statement for the 3.0-liter models.

Volkswagen still faces potentially billions more in fines and penalties and possible criminal charges.

  • Zachary Reyes