On October 25, 2016, Judge Charles Breyer of the U.S. District Court for the Northern District of California approved a $14.7 billion partial settlement in the Volkswagen “defeat device” MDL litigation. The settlement resolves injunctive relief claims brought by the United States and the State of California, as well as consumer class action claims related to Volkswagen’s 2.0 liter vehicles.

The United States had sued Volkswagen (and its subsidiaries, including Audi and Porsche) in January 2016, alleging that over 500,000 vehicles sold by Volkswagen in the United States from 2009 through 2016 contained software, known as a “defeat device”, that senses when the vehicle is being tested for compliance with emission standards. The defeat devices produced compliant emission results during testing but then reduced the effectiveness of emission control systems during normal driving. The United States alleged that the defeat devices cause increased NOx emissions up to 40 times allowable levels in 2.0 liter vehicles and 9 times allowable levels in 3.0 liter vehicles.

A consolidated consumer class action complaint was filed in federal court in the Norther District of California in February 2016. The consumer class action alleged that Volkswagen used defeat devices in the subject vehicles and also alleged that damage to consumers was compounded by Volkswagen’s false and misleading “clean” diesel advertising.

The United States complaint, along with dozens of other complaints filed by individual states and other parties, were transferred to a Multi-District Litigation (MDL) docket in the U.S. District Court for the Norther District of California.

The partial settlement just approved by the court totals approximately $14.7 billion, and contains the following, key elements:

  • Volkswagen will invest $2 billion to support zero emission vehicle technology.
  • Volkswagen will create a $2.7 billion environmental remediation fund to mitigate the excess emissions.
  • Volkswagen will set aside over $10 billion to buy back cars and provide cash compensation to owners.

Notably, this settlement does not resolve the following claims:

  • Claims related to 3.0 liter vehicles – Volkswagen sold approximately 80,000 3.0 liter vehicles containing defeat devices in the United States, compared to 500,000 such 2.0 liter vehicles.
  • Claims for civil penalties under the Clean Air Act – which have the potential to reach $65 billion.
  • Potential criminal claims.

The district court has a hearing scheduled on November 3, 2016, to address claims related to 3.0 liter vehicles.

Due to the level of interest in this case, the United States District Court for the Northern District of California has created a website to provide important news and information about the Volkswagen MDL to the public.