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$1.6B Settlement Between VW and 652 Franchise Dealerships in Emissions MDL Receives Final Approval

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Santa Clara, CA: Update: Further to an earlier preliminary settlement agreement of $1.2 billion, a $1.6 billion settlement resolving the Volkswagen (VW) AG 2015 diesel emissions multidistrict litigation has received final approval.

According to the terms of the agreement, VW will pay $1.208 billion in cash to 652 dealerships across the US on a pro rata share of the monthly financial assistance payments that Volkswagen paid to eligible dealers in November 2015.

Further, VW has agreed to continue providing those dealerships with multiple incentives and support payments valued collectively at approximately $442 million.

The settlement concludes a portion of lawsuits that were consolidated into multidistrict litigation after Volkswagen’s 2015 announcement that the company deliberately installed defeat device software designed to cheat federal and state emissions tests. The devices were installed in about 600,000 2009-2015 vehicles.

In 2015, the complaint filed by the VW dealerships was amended, claiming violations under the Automobile Dealers’ Day in Court Act, the Racketeer Influenced and Corrupt Organizations (RICO) Act and Florida and Illinois state statutes. According to class counsel, the estimated total lost profit exposure by the dealerships ranged from $1.47 billion to $1.62 billion.

Under the deal, Volkswagen will divide the $1.208 billion cash settlement among dealerships based on pro rata share of the monthly financial assistance payments that Volkswagen paid to eligible dealers in November 2015.

Volkswagen also agreed to continue incentives it currently offers dealerships for an additional 12 months and it agreed to give dealerships the option to defer their obligations to renovate or make capital investments in their facilities.The settlement also requires Volkswagen to repurchase affected vehicles that are unfixable.

The case is In re: Volkswagen “Clean Diesel” Marketing, Sales Practices and Products Liability Litigation, MDL No. 2672, in the U.S. District Court for the Northern District of California.

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