Volkswagen AG received a preliminary go-ahead from a federal court on Tuesday for a $14.7 billion settlement on the diesel emissions-cheating scandal.
U.S. District Court Judge Charles Breyer in San Francisco issued a preliminary decision affecting car owners, the U.S. government, and 44 states. The total will go up to $15.3 billion if VW’s $603 million settlement with the states goes through. A final approval hearing has been set for Oct. 18.
“An enormous effort has been devoted to achieving a series of goals,” Breyer said. “I think from what I’ve seen, those goals have been achieved, at least preliminarily.”
The judge’s ruling is expected to facilitate resolution of more than 1,000 U.S. lawsuits coming from the diesel-cheating scandal. The settlement resolves claims over VW and Audi models made since 2009 with 2.0-liter engines, but still leaves the automaker without an agreement for 82,000 3.0-liter diesel engines. Another unresolved issue is the additional state lawsuits recently filed by attorneys general in New York, Massachusetts, and Maryland that could add billions of dollars to the cost.
“The parties believe that the proposed settlement program will provide a fair, reasonable and adequate resolution for affected Volkswagen and Audi customers,” VW said in a statement.
The settlement before Breyer includes $10 billion for buybacks, plus $4.7 billion in government penalties and remediation. Drivers who participate in the deal will get at least $5,100 each as part of a buyback program that will begin in October and run through June 30, 2019.
Car owners not satisfied with the settlement can now file objections with the court. Those who want to fight for their claim separately can opt out of the agreement. Few opt-outs are expected, said Steve Berman, a plaintiff’s attorney in the case who represents almost 14,000 VW owners.
A Justice Department lawyer told the judge Tuesday that VW is expected in August to submit a new proposal for fixing the 3-liter engines. The models covered by the 2-liter agreement include: the 2013-15 Beetle; 2010-15 Golf; 2009-15 Jetta; 2012-15 Passat; and Audi A3 from 2010-13 and 2015.
VW may have to tap into more funds than originally anticipated the 16.2 billion euros ($17.8 billion) set aside last year. In addition to investor class actions in the U.S. and lawsuits in Germany and South Korea, the company faces criminal probes in all three countries.