VW Dealerships Seek Approval of $1.2B Diesel Emissions Settlement

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A $1.2 billion settlement has been proposed in a class action lawsuit alleging Volkswagen’s diesel emissions cover-up caused dealerships to lose business.

According to the terms of the proposed settlement, Volkswagen will pay 652 dealerships an average of $1.85 million each to end the diesel emissions class action litigation.

Dealerships will also be entitled to sell vehicles affected by the emissions scandal back to Volkswagen, if the proposed settlement is granted final approval. These are vehicles that cannot meet emissions standards.

The same offer was made to consumers in a class action lawsuit who bought affected Volkswagen vehicles. The consumer class action settlement was preliminarily approved by a judge in July.

Under the terms of that settlement, Volkswagen will pay $14.7 billion, including $2.7 billion for environmental remediation and $2 billion to build zero-emission vehicle infrastructure, along with reimbursement to affected Volkswagen owners.

Under the terms of settlement for the dealers, Volkswagen will pay separate attorneys’ fees.

“This recovery to the franchise dealer class is outstanding, particularly given the immediate need for cooperation among Volkswagen and its franchise dealers to effectuate the terms of the $10 billion-plus consumer class action settlement that is presently pending approval before this court,” the dealerships’ motion states. “Without any obvious deficiencies, the settlement agreement readily meets the standards for preliminary approval.”

VW dealerships who sign a release will receive 50 percent of the cash benefit within 30 days of the settlement opt-out date. Those VW dealers who choose not to sign a release will get their first payment within 30 days of the effective date of the settlement. 

The other half of the cash benefit will be divided into 18 equal monthly payments starting 30 days after each Class Member’s initial pay-out.

Last year, Volkswagen admitted to cheating on emissions tests. The company said it installed software that would allow the cars to emit additional toxins into the air after being tested.

A nonprofit discovered the software that allowed Volkswagen autos to check out at emissions tests and then deactivate and emit higher levels of nitrogen oxide.

Initially a consumer class action was lodged against Volkswagen, followed by a class action on behalf of Volkswagen dealers in April.

A court hearing for final approval of the VW dealership class action settlement is set for Oct. 18.

“The Volkswagen-branded franchise dealer class action settlement filed today represents an outstanding result for Volkswagen’s 652 franchise dealers as of September 18, 2015,”  Steve Berman of Hagens Berman Sobol Shapiro LLP said in a statement.

The proposed settlement Class includes all persons or entities who owned a VW dealership in the U.S. as of Sept. 18, 2015.

Top Class Actions will continue to follow the VW dealerships settlement and post updates as they’re made available. You can receive these updates by signing up for our free newsletter and/or marking this article as a “Favorite” using your free Top Class Actions account to receive automatic notifications when this article is updated.

The VW dealership plaintiffs are represented by Steve W. Berman and Thomas E. Loeser of Hagens Berman Sobol Shapiro LLP and Richard N. Sox of Bass Sox Mercer.

The Volkswagen Dealership Diesel Emissions Class Action Lawsuit is In re: Volkswagen “Clean Diesel” Marketing, Sales Practices and Products Liability Litigation, Case No. 3:15-md-02672, in the U.S. District Court for the Northern District of California.

UPDATE: On Jan. 23, 2017, a federal judge granted final approval to a $1.67 billion class action settlement benefiting VW dealerships. The average award is expected to be $1.85 million per dealer.