Volkswagen $10 Billion Consumer Class Action Settlement

On June 28, 2016, Volkswagen AG announced that it reached settlement agreements with individual plaintiffs, the U.S. Department of Justice, and the U.S. Federal Trade Commission to resolve civil claims regarding eligible Volkswagen and Audi 2.0L TDI diesel engine vehicles in the United States.  Volkswagen has submitted this proposed settlement to the Court, and upon approval will establish a funding pool with the maximum of $10.033 billion to settle consumer class action claims. 

The class action, In Re: Volkswagen "Clean Diesel" Marketing, Sales Practices and Products Liability Litigation, MDL No. 15-2672, stems from a notice issued by the Environmental Protection Agency on September 18, 2015, alleging violation of the Clean Air Act to Volkswagen AG, Audi AG, and Volkswagen Group of America, Inc. In the notice, the agency alleged “the four-cylinder Volkswagen and Audi diesel cars from model years 2009-2015 include[d] software that circumvent[ed] EPA emissions standards for certain air pollutants.” The EPA contended that Volkswagen manufactured and installed software in some of its vehicles that could sense when the car was being tested for compliance with EPA emissions standards. Purportedly, the software knew when the vehicle was being tested based on various inputs, including the position of the steering wheel, vehicle speed, the duration of the engine’s operation and barometric pressure. Thus, during testing the software produced compliant emission results, but otherwise emissions of nitrogen dioxide (NO 2) increased by a factor of 10 to 40 times EPA compliant levels. The notice provided that the affected vehicles included: Jetta Sportwagen (MY 2009-2014); Beetle (MY 2012-2015); Beetle Convertible (MY 2012-2015); Audi A3 (MY 2010-2015); Golf (MY 2010-2015); Golf Sportwagen (MY 2015); and Passat (MY 2012-2015).

Of approximately 499,000 2.0L TDL vehicles that were produced for sale in the United States, approximately 460,000 Volkswagen and 15,000 Audi vehicles are currently in use and eligible for buybacks and lease terminations, or emissions modifications. This settlement amount of $10.033 billion makes the assumptions of 100% participation and 100% of the eligible consumers will choose either lease termination or buyback. This settlement is currently subject to the approval of the Court.