SAN FRANCISCO (CN) - Volkswagen will pay $48 million to settle one of two lawsuits claiming it misled American investors about its emissions cheating scandal and compliance with U.S. environmental laws.
A group of investor plaintiffs, led by retirement funds for Arkansas State Highway employees and the Miami police, filed a motion for preliminary approval of the deal on Tuesday afternoon.
If approved, $48 million would go to U.S. investors who purchased American Depositary Receipts, or ADRs - certificates of shares in a foreign company - for Volkswagen between Nov. 19, 2010, and Jan. 4, 2016.
“We are extremely pleased with the proposed settlement, which represents an excellent recovery for the class of Volkswagen ADR investors," class attorney James Harrod, of Bernstein Litowitz Berger and Grossmann in New York, said in an email.
The plaintiffs had alleged that Volkswagen's "highest ranking executives" omitted material information about its use of defeat devices in “clean diesel” vehicles. The devices allowed the cars to pass emissions tests and deceive regulators while spewing up to 40 times more nitrogen oxide than allowed on the road.
Volkswagen Group of America spokesman Mike Tolbert said of the settlement in an email: “The proposed settlement agreement eliminates the uncertainty and considerable costs of protracted litigation in the United States and is in the best interests of the company.”
In June 2017, U.S. District Judge Charles Breyer advanced the investor lawsuit but limited its scope to statements made after May 2014 when then-CEO Martin Winterkorn was allegedly put on notice that researchers discovered its diesel cars were spewing more pollution than allowed.
Volkswagen faces a separate securities class action brought by institutional investors who purchased $8.3 billion in bonds between May 2014 and May 2015. The lead plaintiff in that case is a retirement fund for Puerto Rico's government employees.
In March, Breyer granted a motion to dismiss that complaint with leave to amend, finding the plaintiffs failed to show they relied on allegedly misleading statements in a May 2014 offering memo.
Volkswagen distributed more than 11 million diesel vehicles worldwide with emissions cheating software. About 600,000 of those vehicles were sold in the U.S.
The German automaker pleaded guilty in March 2017 to conspiracy and obstruction of justice, and agreed to pay $4.3 billion in criminal and civil penalties. Volkswagen has also struck three settlements with U.S. car owners, regulators and dealerships, totaling more than $17 billion, to settle claims related to the emissions cheating scandal.
U.S. prosecutors filed criminal charges against Winterkorn in May, but Germany only allows extradition of its citizens to another European Union country or international tribunal.
A hearing on preliminary approval of the settlement is scheduled for Oct. 5 in San Francisco.
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