Volkswagen AG cleared a key hurdle Thursday in resolving a civil case in the U.S. over its diesel emissions crisis, winning court approval for a roughly $1.2 billion deal to compensate drivers of larger, more expensive cars equipped with cheating devices.
U.S. District Judge Charles Breyer in San Francisco gave his blessing Thursday to the deal, which involves around 82,500 vehicles with 3-liter engines, including newer Volkswagen, Audi and Porsche cars and sport-utility vehicles.
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The 3-liter settlement brings Volkswagen's tab for civil payments in the emissions scandal to around $17.4 billion, U.S. Justice Department attorney Joshua Van Eaton said in court Thursday. Taken together, the series of deals "sends the message to Volkswagen and to others who would consider gaming the system that it does not pay to cheat," Mr. Van Eaton said.
Robert Giuffra, an attorney for Volkswagen, said Thursday that the company is nearing the end of the road in resolving its diesel issues in the U.S. "We have made things right with...the environment, with consumers, and with regulators," he said. The scandal came to light in late 2015.
Resolution of the civil case comes after another federal judge ordered the German auto maker in April to pay a $2.8 billion criminal fine as part of a plea deal with U.S. prosecutors. The company continues to face a criminal probe in Germany.
The 3-liter deal, which was given initial approval in February, offers a mix of buybacks for older models and the prospect of an emissions modification for the rest. If a modification doesn't win government approval, Volkswagen must buy back all the vehicles, which could increase its price tag from $1.2 billion to as much as $4 billion.
Less than 1% of consumers included in the deal objected to its terms or chose to opt out, plaintiffs' lawyer Elizabeth Cabraser said in court, adding that more than 70% of affected drivers have already registered to take part. "We are faced with a very high level of participation," she said.
State and federal agencies also took part in the deal, which requires Volkswagen to put an additional $225 million toward environmental remediation efforts, on top of $2.7 billion already agreed to in earlier settlements.
Separately, Judge Breyer also gave final approval to a $327.5 million settlement with German parts supplier Robert Bosch GmbH that resolves civil allegations that the company helped create the so-called defeat device software for use during emissions testing. An attorney for Bosch said the money is ready to be distributed.
"The court finds the settlements are fair, adequate and reasonable," Judge Breyer said.
The defeat devices made the vehicles appear to be compliant with emissions standards when in reality they were emitting illegal levels of pollutants. Volkswagen has admitted to installing the software on nearly 600,000 diesel-powered vehicles in the U.S. and some 11 million vehicles globally.
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(END) Dow Jones Newswires
May 11, 2017 15:02 ET (19:02 GMT)