On January 31st, 2017 Volkswagen Group of America, Inc. (VWGoA) filed a proposed class action settlement for the 3.0 Liter vehicles. This preliminary proposed agreement divides the 3.0 Liter owners into two classes that have been denominated Generation I and Generation II. The Generation I vehicles include all Volkswagen Touaregs and Audi Q7 model year 2009 through 2012. The Generation II vehicles include the rest, namely the 2013 through 2016 Volkswagen, Audi, and Porsche TDI vehicles. Although the proposed settlement includes all 3.0 vehicles, each generation will receive different options.
The owners with vehicles under the Generation I class will be offered the option of a buyback or, if approved by the EPA and CARB, an emissions modification (“fix”). If the consumer had a lease, they will be able to cancel the lease and return the vehicle, or they may choose the fix. An additional compensation, denominated owner’s restitution, is expected and will also be available. For Generation II vehicles, Volkswagen will not be required to buyback these vehicles, unless this emission compliant modification can’t be achieved. Namely, Generation II vehicles will only have the option of modification (“fix”).
Parallel to the VWGoA class settlement offer, Volkswagen AG (the German Parent Company) has been working on pleading guilty to federal criminal charges. On January 11, 2017, the United States Attorney General, Loretta Lynch, announced that Volkswagen had reached an agreement with the United States Government to plead guilty to multiple criminal charges including conspiracy to defraud the United States, obstruction of justice, and introduction of imported merchandise into the United States by means of false statements. By pleading guilty to these charges, Volkswagen is exposed to criminal and civil penalties and has agreed to pay a combined total of $4.3 Billion, to accept a term of organizational probation for a period of three years, and to appoint an independent monitor for a period of up to three years who will implement an effective compliance program. To read the complete plea agreementclick here.
Attorney General Lynch characterized Volkswagen’s actions as an egregious violation of “our Nation’s environmental, consumer protection, and financial laws…they obfuscated, denied and ultimately lied.” In response to questions from reporters, Attorney General Lynch stated that “I don’t want to speculate on motivations other than the profit motive”. Assistant Attorney General Leslie Caldwell added that “the level of premeditation was significant and here it was at a very high level of the company.”
The plea agreement hearing took place on March 10, 2017. During the hearing, before the U.S. District Judge Sean F. Cox in Michigan, Volkswagen AG entered the guilty plea and is currently awaiting sentencing. Hon. Judge Cox delayed the sentencing until April 21, 2017, and until he receives a pre-sentencing report. The delayed sentencing seemed to be motivated by objections filed by hundreds on Volkswagen, Audi, and Porsche owners arguing that, per the plea agreement, the government is getting something in exchange for the plea, while the victims of the fraud are getting nothing in “mandatory restitution”.
The U.S. Government, as well as Volkswagen AG, are opposing the victims’ objections arguing that the “number of identifiable victims is so large as to make restitution impracticable”. The lawyers for the victims debate this point since Volkswagen already possesses a list of every person defrauded by the company. Moreover, the mandatory restitution would more likely be awarded to the victims that opted-out of the class settlement, a much smaller number of owners than those involved in the original class. The Hon. Judge Cox ordered the pre-sentencing report to be submitted by April 21, 2017, before making his decision and sentencing Volkswagen AG.
If restitution is achieved, it should have no impact on the civil claims that continue to be pursued in state courts by the victims of the fraud who decided to opt-out of the class settlement. Attorneys at Egerton Law, together with other Virginia and Florida attorneys, are spearheading the objection to the plea agreement.
This criminal plea agreement is the result of a sixteen-month criminal investigation, which is still ongoing. Six Volkswagen executives have been indicted in this case including Oliver Schmidt, a German executive arrested while vacationing in Miami. To read the complete plea agreement click here.
If you or someone you know owns a Volkswagen TDI diesel, contact our firm for a free assessment. Yuo may send an inquiry to [email protected] or call us at 800-800-4529.