A nearly $15 billion settlement over Volkswagen's emissions cheating scandal cleared a key hurdle Tuesday, with a federal judge giving preliminary approval to the deal that includes an option for owners to have the carmaker buy back their vehicles.
U.S. District Judge Charles Breyer called the settlement an "enormous effort" by attorneys from both sides and urged Volkswagen owners who may want to opt out and pursue their own lawsuits to consider the deal's environmental achievements.
"Because that's significant, and that's part of what you're attempting to achieve in this settlement," said Breyer, who is overseeing consumer lawsuits and government allegations that Volkswagen's diesel engines cheated on U.S. emissions tests.
The German carmaker has agreed to spend up to $10 billion buying back or repairing about 475,000 Volkswagens and Audi vehicles with 2-liter diesel engines and paying their owners an additional $5,100 to $10,000 each. Details about the vehicle repairs have not been finalized.
The settlement also includes $2.7 billion for unspecified environmental mitigation and an additional $2 billion to promote zero-emissions vehicles.
The judge's decision allows attorneys to notify vehicle owners of the terms and consumers to use a settlement website to determine how much compensation they would get. They could object and opt out, allowing them to pursue legal action against Volkswagen on their own.
The deal does not cover about 85,000 more-powerful Volkswagens and Audis with 3-liter engines also caught up in the emissions scandal.
Volkswagen has acknowledged that the cars were programmed to turn on emissions controls during government lab tests and turn them off while on the road. Investigators found that the cars emitted more than 40 times the legal limit of nitrogen oxide, which can cause respiratory problems.
The company still faces billions more dollars in fines and penalties and possible criminal charges.
Breyer's preliminary approval of the settlement was expected. The judge, who is set to make a final decision in October, has kept close tabs on the negotiations and praised the efforts of attorneys and a court-appointed settlement master who helped broker the deal.
Still, attorneys for vehicle owners spent considerable time in court Tuesday presenting what they called the benefits of the deal and highlighting positive feedback, including from the media.
"We have designed a settlement that places the consumers — the owners and lessees — in a central, decisive role," said Elizabeth Cabraser, lead attorney for Volkswagen owners.
Robert Giuffra, an attorney for the automaker, said it supported the deal.
"This is a very fair and reasonable settlement ... and it allows Volkswagen to turn the page and begin to make things right in the United States and begin to re-earn the trust of our customers," he said.