Not Everyone Is Happy With the $14.7 Billion Volkswagen Settlement

Volkswagen sign clouds

A federal district court judge will decide in October whether to grant final approval to a tentative $14.7 billion settlement between Volkswagen, class action consumers and the federal government.

If approved, the settlement will allow owners of 2.0-liter Volkswagen diesels equipped with illegal emissions test-cheating technology to sell their cars back to the automaker later this fall.

More than 200,000 Volkswagen owners and lessees registered to participate in the settlement as of the end of August. However, the proposed settlement hasn’t received universal praise: at least 15 different parties filed formal objections with the court.

Here are three common complaints about the settlement:

1. $324 Million in Legal Fees

In August, the attorneys who represented the class of Volkswagen consumers told the court they intend to seek up to $324 million in fees from Volkswagen, which would be paid out on top of the $14.7 billion.

The size of the likely fee request drew criticism from a number of parties, including the Competitive Enterprise Institute’s Center for Class Action Fairness and numerous VW owners. One Volkswagen customer noted that the attorneys’ court filing makes “no reference at all” to how much work was actually done, who performed it and how much work was performed by Justice Department attorneys.

2. No Fees for Individual Attorneys

On the other hand, some Volkswagen owners are upset that the proposed settlement doesn’t require Volkswagen to pay more legal fees.

While the settlement would require VW to pay “reasonable fees and costs” to the consumer class counsel, it doesn’t award legal fees to any other attorneys. That means that any Volkswagen customer who retained a lawyer once the scandal broke last fall would have to cover those fees out of any benefits received under the settlement.

Volkswagen cars tow

3. What Happens to the Leftover Money?

Another common complaint about the settlement is a provision that would allow Volkswagen to recover any money left in the consumer compensation fund in 2018, when the claims period would end.

That $14.7 billion settlement figure is based on a 100 percent participation rate by Volkswagen diesel owners, with an assumption that all of those consumers choose to either sell back their cars or terminate their leases instead of waiting for a potential technical fix that would bring the cars into compliance with emissions standards.

Several owners objected to the idea that Volkswagen would be able to get some of the promised funds back, with one Volkswagen Jetta owner suggesting instead that leftover money be used for a “second round” of compensation to people who participated in the settlement.

The final approval hearing on the Volkswagen settlement is scheduled for Oct. 18 in San Francisco.