Volkswagen may have avoided damaging disclosures and further management shakeups by agreeing to settle a diesel emissions class action lawsuit that was scheduled for trial the following week. The embattled car manufacturer has paid nearly $30 billion in penalties after conceding in 2015 that it installed software in its vehicles to register false numbers on diesel emissions tests. In addition to its financial woes, the auto manufacturer’s CEO resigned after the scandal became public and several executives have been sentenced to prison. Volkswagen’s public image has already suffered significantly and future lawsuits related to its emissions cheating devices are soon to follow. Another diesel owner is awaiting trial on June 4, 2018 to seek compensation from Volkswagen for its fraudulent conduct.
The class action lawsuit was brought by David Doar, a Volkswagen owner in North Carolina, and 300 other plaintiffs. The action is based on allegations that Volkswagen engaged in fraud and unfair trade practices. This group of plaintiffs refused to settle under the terms of the 2016 class action lawsuit. The settlement of the class action litigation, which included the vast majority of US owners of Volkswagen cars, was valued at around $25 billion. It required the car manufacturer to buy back cars affected by the scandal and provided supplemental compensation to around 500,000 owners.
Some Volkswagen owners believed that the terms of the settlement offer were inadequate. Approximately 2,000 owners opted out of the settlement offer and any owners are now filing separate lawsuits seeking compensation beyond recuperating the car’s value. Mr. Doar, who purchased a 2014 diesel Jetta for $23,700, sought $725,000 plus attorney’s fees as part of his claim. The terms of the final settlement of his case were not revealed.
Still, a settlement might have been in Volkswagen’s best interest. Volkswagen has been dealing with the aftermath of what is considered one of the largest auto scandals in the industry and the most significant in Volkswagen’s corporate history. It is likely that a trial would have produced testimony and evidence from former and current executives that would further damage the car manufacturer and be used in subsequent trials.
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