Federal Court Hearing on Volkswagen A.G. Emissions Case

Cappello & Noël participated in the April 21, 2016 federal court hearing regarding the Volkswagen emission scandal.  The hearing lasted just 15 minutes.  Clearly, most of the details still are missing from the proposed settlement, and the Court made it clear that these details still needed fleshing out.  We are monitoring the matter closely.  Once we have all the necessary details, we can assess the positives and negatives of the final deal.

Here is an account of the hearing from The Recorder.

VW Reaches Deal in Diesel Emissions Case

Ben Hancock, The Recorder

April 21, 2016

SAN FRANCISCO — A federal judge on Thursday morning said that Volkswagen A.G. has reached an agreement with federal and California state authorities that will compensate car buyers who were affected by the German automaker’s diesel-emissions scandal and attempt to address the environmental damage caused by the vehicles.

The settlement impacts approximately 480,000 two-liter-engine cars. VW owners will have the option of Volkswagen buying back their vehicles or having them repaired to address their excess emissions, subject to government approval pending further testing. People who leased the cars will be able to cancel the lease, U.S. District Judge Charles Breyer of the Northern District of California said.

VW will also have to create a fund to remediate the environmental damage caused by the excess emissions of nitrogen oxide. The final terms of the deal have yet to be worked out, he said.

Lawyers for VW and the class action plaintiffs, as well as U.S. government lawyers, confirmed the deal’s outlines at a court hearing Thursday. Robert Giuffra Jr. of Sullivan & Cromwell spoke for VW, while Elizabeth Cabraser of Lieff Cabraser Heimann & Bernstein spoke for the plaintiffs.

The deal was reached between VW, the U.S. Environmental Protection Agency and the California Air Resources Board in conjunction with the California attorney general’s office, Breyer said.

Also appearing in court Thursday were Joshua Van Eaton for the U.S. Department of Justice and Jonathan Cohen of the Federal Trade Commission. Breyer said he understands the FTC supports the deal in principle reached so far, pending final approval by the full commission.

The FTC filed a consumer-deception complaint in March alleging that VW sold or leased more than 550,000 diesel cars based on false claims that they were low-emission, environmentally friendly, met emissions standards and would maintain a high resale value.

Breyer is overseeing hundreds of lawsuits against Volkswagen related to disclosures that its VW-, Audi- and Porsche-branded vehicles were installed with software to cheat emissions tests and, according to the EPA, release as much as 40 times the standard for nitrogen oxide.

The settlement reached thus far does not address approximately 90,000 cars with three-liter engines affected by VW’s cheating practices. Breyer said he expects that lawyers for the parties “will work expeditiously” to resolve this and the other outstanding issues.

The judge set a June 21 deadline for the lawyers to file a formal motion seeking preliminary approval motion of the deal, after which he said the full terms of the settlement would become public. Breyer said he plans to rule by late July on whether to preliminarily approve the settlement.

Ben Hancock can be reached at bhancock@alm.com.

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