U.S. judge signals likely approval of VW
diesel buyback settlement
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[October 19, 2016]
By David Shepardson
(Reuters) - A federal judge in San
Francisco on Tuesday said he was "strongly inclined" to approve a
record-setting $10.033 billion proposed buyback and compensation offer
from Volkswagen AG <VOWG_p.DE> for 475,000 owners of polluting 2.0-liter
diesel vehicles.
U.S. District Judge Charles Breyer said he will issue a final decision
in the matter, stemming from Volkswagen's use of illegal software to
defeat U.S. emissions testing, by Oct. 25.
Owners, lawyers and others appeared before Breyer during a hearing
raising arguments about why they think Volkswagen has failed to offer
enough money for buybacks or refunding for other out-of-pocket costs
like extended warranties, maintenance and government licensing fees.
Breyer said he would consider the objections before deciding whether to
recommend any changes, but added that it was "imperative" to act
quickly.
VW has agreed to spend up to $16.7 billion to address its so-called U.S.
"Dieselgate" costs.
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Elizabeth Cabraser, lead counsel for the owners, said that while the
buyback settlement was not perfect, it represents the best efforts of
the government, Volkswagen, court and plaintiffs to reach a settlement
that is "fair, reasonable and adequate."
Volkswagen lawyer Robert Giuffra defended the settlement, saying the
goal was a deal that was "efficient and made sense."
Breyer also on Tuesday granted preliminary approval during the
three-hour hearing to a $1.21 billion settlement with VW's U.S. brand
dealers.Jeannine Ginivan, a VW spokeswoman, said it welcomed Breyer's
"positive comments" at the hearing. "We thank our customers for their
continued patience as the approval process moves forward," she said.
The German automaker has hired 900 people to handle the buybacks and
will have a dedicated person in each dealership to oversee the
repurchases that could begin next month if the judge approves the
settlement. Volkswagen is also offering $5,100 to $10,000 in
compensation in addition to the repurchase price.
Volkswagen may also offer 2.0-liter vehicle fixes if regulators approve.
Under a timetable announced this summer, regulators could approve a fix
for some 2015 VW diesel vehicles as early as next month but talks are
still ongoing.
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A worker shines the grill of a Volkswagen car displayed on media day
at the Paris auto show, in Paris, France, September 30, 2016.
REUTERS/Benoit Tessier
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About 3,200 of the owners have opted out of the settlement, while
nearly 340,000 have registered to take part.
Volkswagen still faces billions of dollars in potential fines from
the U.S. Justice Department due to a criminal probe into VW's
cheating scandal.
VW and U.S. regulators are in separate intense discussions over
whether the automaker should agree to buy back 85,000 larger
3.0-liter Porsche, Audi and VW vehicles that also exceeded U.S.
emission standards, and whether it should offer additional
compensation to those owners. Breyer set a Nov. 3 hearing on the
issue.
In addition to other settlement costs, VW will pay more than $600
million to 44 U.S. states, spend $2 billion on zero-emission vehicle
promotion and infrastructure, and another $2.7 billion to offset
diesel pollution. Breyer must still approve those settlements.
VW in September 2015 admitted using sophisticated secret software in
its cars to cheat exhaust emissions tests, with millions of vehicles
worldwide affected. The cheating allowed VW's U.S. vehicles sold
since 2009 to emit up to 40 times legally allowable pollution
levels.
(Reporting by David Shepardson; Editing by Tom Brown)
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