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December 22, 2016

Proposed Settlement reached for 3.0-liter Volkswagen owners and lessees

by: Joseph F. Rice

Having spent the last several months participating daily, in what has been an arduous negotiation process, I can now inform you that the Plaintiffs’ Steering Committee and Volkswagen/Audi and Porsche have reached proposed resolution for owners and lessees of 3.0-liter diesel vehicles. While the Environmental Protection Agency, California Air Resources Board, and the California Attorney General’s Office announced earlier this week they had reached an agreement, that agreement focused on the environment and the regulatory compliance. We have been focusing on consumer claims and relief.

As is often the case with potential settlements, there are many complex issues and implications to work through and finalize, but I wanted to provide a brief overview of the proposed terms.

The Plaintiffs’ Steering Committee has not wavered in its advocacy for the best interest of the consumer, and as such would not support this deal if it failed in that regard.

That said, I know owners and lessees have endured significant challenges since learning more than a year ago of Volkswagen’s deceit and false advertising in the “Clean Diesel” scandal. We share in your desire to find a resolution as quickly as possible.

I again commend all the parties for their fast work in reaching this resolution. Overall, both the 2.0-liter and 3.0-liter settlements remain the fastest-moving litigation that I have ever been involved with.

As announced by Judge Breyer, the terms of the proposed consumer class action settlement for the 3.0-liter vehicles include:

“Generation 1” Vehicles

Includes 2009-2012 Volkswagen Touareg and Audi Q7 (approximately 19,000 vehicles)

  • Owners will have an option of a buyback and, if approved, an emission modification NOT yet available. The buyback would commence soon after the Settlement gets approved, which is projected to occur in early Summer 2017.
  • Consumers who leased affected vehicles will have the option to cancel the lease and return the vehicles to VW and receive compensation as will the post-September 2015 sellers and post-September 2015 purchasers.
  • While a modification for “Generation 1” vehicles is not currently available, if a modification meeting government requirements is approved in a timely manner, consumers will be given the option to have their vehicles modified.

“Generation 2” Vehicles

Includes 2013-2016 Volkswagen, Audi and Porsche diesel vehicles (approximately 57,000 vehicles)

  • Unlike “Generation 1” vehicles, VW and the regulatory agencies believe these vehicles can be made compliant with the government emissions standards to which they were originally certified. Giving VW an opportunity to pursue approval of compliant emissions fixes for “Generation 2” vehicles made environmental sense to the regulators. The consumer class settlement will put finite deadlines on the approval process, with the Court ultimately making the fix or buyback decision if necessary in 2017.
  • If a fix is approved, VW will not be required to buy back affected vehicles as under the regulatory settlement this is deemed a vehicle recall only.
  • If a fix is not approved, owners will be given the option of a buyback, and lessees the option to cancel and return the vehicles to VW. The process to implement the fix may take most of 2017 due to the number of vehicles, but consumers will not have to wait for compensation as some portion will be paid on district court approval and the balance at the time of the fix.  

The Plaintiffs’ Steering Committee and VW are in the process of solidifying a more detailed agreement, which will include what Judge Breyer described in a status hearing on Dec. 22, 2016, as “substantial” compensation payments for consumer class members. Deadlines for the fix and other dates are still being finalized. I will share more as soon as I am able.

A motion for preliminary approval of the proposed settlement is expected to be filed Jan. 31, 2017. After this time, 3.0-liter consumers will receive a notice detailing the exact terms of the proposed settlement to review. At this time, consumers do not need to take any action. More information will be coming your way in the New Year.

Any class member will have the option to opt out of the settlement. There also may potentially be some facts that come to light in the future that may make the settlement not workable for some lessees and owners.

Those claimants will need to exercise the right to opt out and proceed on their individual claims.