Judge Approves California-VW Diesel Scandal Settlement

Volkswagen AG’s agreement with California to resolve unfair competition claims tied to the company’s emissions-cheating scandal won final approval from the federal judge overseeing hundreds of lawsuits in the U.S.

California’s consent decree is part of VW’s more than $16.5 billion in settlements with car owners, dealerships and regulators in the U.S. over the sale of diesel vehicles armed with devices to beat pollution tests. The carmaker will pay $86 million to California, home to the largest share of the almost 600,000 cars on U.S. roads rigged to cheat tests.

The deal will help pay for research grants, consumer protection programs and the cost of the investigation by California Attorney General Kamala Harris’s office, according to the final judgment signed Thursday by U.S. District Judge Charles Breyer in San Francisco. No more than 20 percent of the funds can be earmarked for a single recipient.

The deal also prohibits VW and Porsche from advertising, selling, leasing or distributing in California any vehicles containing the so-called defeat devices used to cheat pollution tests. The carmaker will have to report back to the California attorney general annually for five years on its efforts to meet the terms of the deal.

Consumers ‘Tricked’

“Volkswagen tricked consumers seeking to purchase an eco-friendly car by misleading the public about the level of harmful pollutants their so-called ‘clean diesel’ vehicles were emitting,” Harris said in a statement on July 7, when the $86 million deal was announced. “We must conserve and protect our environment for future generations and deliver swift and certain consequences to those who break the law and pollute our air.”

VW’s settlement costs could expand if it fails to remove 85 percent of the cars from U.S. roads by June 2019. Of the 475,000 2.0-liter engines that must be fixed or repurchased, owners 210,000 of those cars have already registered to participate in the settlement. Most of those owners and lessees have so far opted for the buyback.

The German automaker also faces lawsuits by investors and criminal probes in the U.S., Germany and South Korea.

The U.S. case is In Re: Volkswagen “Clean Diesel” Marketing, Sales Practices and Products Liability Litigation, MDL 2672, U.S. District Court, Northern District of California (San Francisco).