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Quebec, Ontario approve settlement in Volkswagen class-action lawsuit

Volkswagen has admitted that up to 11 million diesel cars worldwide are fitted with devices that can switch on pollution controls when they detect the car is undergoing testing.

PATRICK PLEUL/AFP/Getty Images

Courts in Quebec and Ontario have approved a settlement in a class-action lawsuit brought against Volkswagen Group Canada Inc. by owners of vehicles equipped with diesel engines containing so-called defeat devices that allowed the cars to pass regulatory emissions tests then pump out pollutants during regular use.

The agreement, which applies to owners of about 105,000 vehicles in Canada, comes more than 18 months after the scandal erupted in September, 2015, and after Volkswagen AG was assessed billions of dollars in fines and penalties.

The Canadian settlement offers cash payments to people who bought or leased Volkswagen or Audi vehicles equipped with 2.0-litre diesel engines. Models affected include Jettas and Jetta wagons, Golfs, Golf Wagons, Golf Sportwagons, Passats, Beetles and Audi A3s from model years between 2009 and 2015.

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Options for owners include keeping their vehicles and having them modified to meet regulations, selling them back to Volkswagen, trading them in or terminating their leases without penalties.

Volkswagen Canada also agreed to pay $15-million in penalties for false advertising in an action brought by the Competition Bureau, which said marketing products with defeat devices in them as clean-diesel vehicles was false advertising.

The Canadian settlement was reached more than six months after U.S. regulators imposed penalties on the auto maker, leading to anger among Canadian owners and questions about whether they would receive the same treatment as those in the United States.

Justice Edward Belobaba of the Ontario Superior Court did not issue reasons for his judgment on Friday, but heard from many owners at a court hearing two weeks ago that they were unhappy with the deal. The vast majority of the 105,000 owners did not oppose the settlement, however, court documents show.

The scandal has cost Volkswagen AG more than $10-billion (U.S.) so far – not including the amount of the settlement in the Canadian class-action lawsuit – damaged its reputation among consumers and sent sales of its vehicles skidding.

Volkswagen Canada said in a statement that its agreement to the settlement is not an admission of guilt.

The Canadian settlement was approved as a U.S. judge ordered Volkswagen to pay a $2.8-billion criminal penalty in the United States, blessing a deal negotiated by the U.S. government for a "massive fraud."

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U.S. District Judge Sean Cox stuck to the plea deal during a sentencing hearing in Detroit, which came six weeks after the auto maker pleaded guilty to conspiracy and obstruction of justice in a bold scheme involving nearly 600,000 diesel cars sold or leased in the United States.

"It was an intentional effort on the part of a major corporation to evade U.S. law and lie to U.S. regulators," Assistant U.S. Attorney John Neal told the judge.

Speaking from the bench in the heart of the U.S. auto industry, Justice Cox said he was amazed the company would commit such a crime.

"Who has been hurt by this corporate greed? From what I can see it's not the managers at VW, the ones who get paid huge salaries and large bonuses. As always, it's the little guy," the judge said, referring to car buyers and blue-collar employees of the company who might earn less in the future.

Separately, the auto maker is paying $1.5-billion in a civil case, mostly to settle allegations brought by U.S. environmental regulators, and spending $11-billion to buy back cars and offer other compensation.

With a report from Associated Press

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About the Author
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More

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