In VW class actions, three trial judges are raring to go

November 5, 2015

On Tuesday, U.S. District Judge Liam O’Grady of Alexandria, Virginia, appointed three plaintiffs’ firms – Cohen Milstein Sellers & Toll, Kessler Topaz Meltzer & Check and Cooper & Kirk – to lead the Virginia wing of the ever-expanding clean diesel emissions cheating litigation against Volkswagen.

That could turn out to be a great development for the law firms, which will be well positioned to lead the nationwide litigation against Volkswagen if emissions cheating class actions end up being consolidated in Judge O’Grady’s court.

But meanwhile, federal judges in two other jurisdictions have selected different plaintiffs’ firms to act, at least for now, as lead counsel against Volkswagen. In October, Chief U.S. District Judge Gerald Rosen of Detroit appointed Keller Rohrback, Lieff Cabraser Heimann & Bernstein and the Miller Law Firm for Michigan cases; and U.S. District Judge Jose Linares of Newark, New Jersey, picked Seeger Weiss and Carella Byrne Cecchi Olstein Brody & Agnello for all of the Volkswagen class actions filed in his district.

Judge Rosen and Judge Linares didn’t stop with interim lead counsel assignments, either. They have both also appointed mediators to oversee settlement talks between Volkswagen and owners of diesel-powered vehicles that contained software allegedly designed to cheat emissions tests. Rosen picked retired federal district judge Layn Phillips and retired U.S. bankruptcy judge Steven Rhodes; Linares appointed Phillips and former federal district judge Faith Hochberg.

In the VW litigation, in other words, three different federal courts are pushing ahead to structure and resolve a big docket-jamming mess. The trouble is, however, that only one judge is going to end up overseeing the VW litigation – and it might be none of the three who seem to be eager to take on the job.

The jurisidictional kerfuffle will be resolved next month. On Dec. 3, seven judges known as the Judicial Panel on Multidistrict Litigation will hear arguments about whether to consolidate the VW litigation. That is pretty much a no-brainer. There are already about 350 class actions on file against Volkswagen in courts across the country, all raising the same basic allegations that the automaker duped car buyers and dealers about the emissions and efficiency of VW clean diesel vehicles. These cases are precisely the sort of litigation the multidistrict litigation panel was created to address. Everyone in the litigation agrees that consolidation in one court will promote efficiency and produce a quicker outcome.

There is not such an overwhelming consensus about which court should be assigned the cases. Plaintiffs’ lawyers rallied around more than a half-dozen jurisdictions in briefs before the multidistrict litigation panel. Los Angeles, Detroit, Newark and Alexandria all received significant support from plaintiffs’ firms but so did Chicago, Washington and even Chattanooga.

Volkswagen’s lawyers from Herzfeld & Rubin pushed for the cases to be consolidated in Alexandria or Detroit. (The Volkswagen brief specifically argued against Los Angeles, whose support from plaintiffs’ firms seemed to be “largely the construct of certain counsel jockeying for post-transfer ‘lead counsel’ status in a ‘race to the courthouse.'”)

The Justice Department, which almost never gets involved in the multidistrict litigation panel’s jurisdictional considerations, took the unusual step of filing a brief in this case, arguing for the litigation to be consolidated in federal court in Detroit.

Usually, trial judges stay cases that might be consolidated and transferred by the multidistrict litigation panel. At least 13 courts where VW class actions have been filed, including the Central District of California, agreed to wait for the panel to make a decision before issuing substantive orders. “The court is concerned that resolving any pending motions would lead to conflicting pretrial rulings and limit the ability of the judge who is ultimately assigned the consolidated litigation to manage the litigation in the way he or she sees fit,” wrote U.S. District Judge David Carter of Santa Ana, California, in his Oct. 28 stay ruling. “For instance, decisions regarding the appointment of lead counsel and formulation of classes are better left to the judge who is assigned the cases.”

Volkswagen filed stay motions before Judges Rosen, Linares and O’Grady, but those judges exercised the discretion they are allowed under the federal rules to allow the cases to proceed. “These cases present circumstances that need immediate attention,” Judge O’Grady said in his Oct. 27 decision, citing the prospect that the cars are emitting unlawful levels of toxins and may fail state emissions tests. “The court strongly believes the litigation should move as far along as possible without interfering with the work the chosen district court will do if and when these cases are consolidated.”

The appointment of settlement mediators in Detroit and Newark led to some heated filings before the multidistrict litigation panel. Plaintiffs’ lawyers who want the cases to be consolidated in Alexandria complained that “piecemeal” settlement talks would be premature. “Any decentralized, head-long rush to resolution should be slowed, if only for a short period, so that this panel can centralize the cases in one district for coordinated pretrial proceedings,” said the Oct. 26 brief by Hausfeld and two other firms.

That provoked responses from the interim lead plaintiffs’ lawyers in the Michigan and New Jersey cases, arguing that the mediators were appointed with VW’s consent and talks are extremely preliminary. Volkswagen’s brief confirmed that the defendants agreed to the mediators but suggested the multidistrict litigation panel might obviate the whole controversy by quickly naming a transfer court.

No such luck: On Tuesday – the same day that Judge O’Grady in Alexandria named lead counsel in the Virginia cases – the multidistrict litigation panel said it wasn’t going to change the schedule in the VW cases. Oral arguments will be on Dec. 3 in New Orleans. The panel will presumably name a transfer court soon after that.

Will the three judges who have refused to stay the VW litigation have an edge? Or will the multidistrict litigation panel be irritated that they couldn’t wait a month for order to be imposed on the sprawling class actions?

There are going to be an awful lot of lawyers in New Orleans on Dec. 3 awaiting an answer to those questions.

(This article has been corrected. An earlier version misspelled the name of the law firm Keller Rohrback.)

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