Photographer: Luke Sharrett/Bloomberg

VW Judge ‘Optimistic’ as Diesel-Cheating Deal Talks Continue

  • Carmaker ordered with owners, U.S. to return to court Tuesday
  • More progress reported toward deal for Audi, Porsche models

A federal judge said Volkswagen AG continues to make progress in settlement talks with car owners and regulators to fix or get about 80,000 Audi, VW and Porsche vehicles with emissions-cheating 3.0-liter diesel engines off U.S. roads.

U.S. District Judge Charles Breyer, saying he was optimistic a resolution would be reached, ordered a "final continuance" and told lawyers for the carmaker, the U.S. and vehicle owners to return to court Tuesday at 11 a.m. in San Francisco. The fourth delay this month followed a pair of postponements on Friday that allowed for what Breyer had described as “intense discussions” to continue over the weekend.

While VW has a fix for the 3-liter engine, it’s been reluctant to offer drivers a full buyback option similar to the deal extended to owners of 480,000 2.0-liter vehicles. Lawyers for the carmaker, consumers and the Justice Department have have assured the court that negotiations are ongoing, but VW may be headed to trial if an agreement isn’t reached.

What to do over 3-liter vehicles is one of the last civil disputes in U.S. courts for VW and its resolution would be a major milestone for the carmaker as it tries to move beyond the self-inflicted, diesel-cheating scandal whose worldwide cost is already approaching $19 billion.

Breyer gave his final approval in October to VW’s settlement covering the 2-liter engines. The judge allowed parties in the dispute to come to an agreement before regulators approved a repair for the engines. He hasn’t given them the option with 3-liter vehicles to settle first and work out the details, including fixes, later.

As negotiators continue to search for common ground on what could be a $1 billion pact in the U.S., according to the Wall Street Journal, VW, its Audi AG unit and plaintiffs in Canada agreed to a C$2.1 billion ($1.57 billion) settlement covering 2-liter engines. The deal includes cash payments and the option of a buyback or fix, if approved by regulators.

“Volkswagen’s primary goal has always been to ensure our Canadian customers are treated fairly, and we believe that this proposed resolution achieves this aim,” said VW Group’s Chief Executive Officer in Canada, Maria Stenstroem. “We are working hard to earn back the trust of our customers, dealers and regulators, and today is an important step in that effort."

Progress Demanded

Since U.S. legal proceedings were consolidate in San Francisco last December, Breyer has demanded swift progress to get the almost 600,000 cars off U.S. roads. The pressure may be intensifying now, especially on consumers and regulators, as President-elect Donald Trump is expected to move quickly after his Jan. 20 inauguration to deregulate the energy industry and scale back the EPA’s role.

Volkswagen has now agreed to pay an industry-record $18.17 billion to resolve claims over the 2-liter diesel cars in the U.S. and Canada. As of Nov. 20, more than 80 percent of the 2-liter owners have registered to participate in the settlement. Eighty-five percent of those cars must be removed from U.S. roads or VW will face additional penalties.

In addition to the unresolved 3-liter issue, the carmaker is still under criminal investigation in the U.S. and on the hook for outstanding civil claims from several states. It also faces hundreds of investor lawsuits in Germany and is the subject of a criminal probe there as well as in South Korea.

The case is In Re: Volkswagen “Clean Diesel” Marketing, Sales Practices and Products Liability Litigation, 15-02672, U.S. District Court, Northern District of California (San Francisco).

— With assistance by Christoph Rauwald, Jennifer A Dlouhy, Greg Quinn, and Jamie Butters

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