Judge Breyer steers VW case with extremely firm hand

February 26, 2016

(Reuters) – U.S. District Judge Charles Breyer of San Francisco does not intend to permit the consolidated litigation between Volkswagen and owners of clean diesel VWs to be detoured by Volkswagen’s negotiations with the U.S. government or by the company’s proposal to resolve car owners’ claims out of court. Based on the transcript of the first substantive hearing since Judge Breyer appointed lead counsel for the car owners, the judge wants the consolidated litigation to be the arena where Volkswagen solves its problems in the United States.

“I want to say that in some sense the court represents the public. It’s an independent branch that must weigh in on this matter,” Breyer said.

Breyer told Volkswagen’s lead lawyer, Robert Giuffra of Sullivan & Cromwell, that before the next scheduled hearing on March 24, he wants “a definite answer” from the company and the U.S. Environmental Protection Agency about whether VW will be able to fix clean diesel vehicles to meet the EPA’s emissions standards. By then, it will have been six months since the government revealed Volkswagen rigged its cars to trick emissions tests, and Breyer said that’s time enough.

The judge also said VW’s board members must sit down with his court-appointed settlement mediator, former FBI director Robert Mueller of Wilmer Cutler Pickering Hale & Dorr, so it is clear to the company that the litigation is going forward and “it is in their interests sooner rather than later” to resolve it. “It’s important that the decision-makers know that if they can’t come to a resolution within the time period prescribed by the court, there will be certain things that will happen,” Breyer said. (VW counsel Giuffra told the judge that Mueller has already met with high-level VW officials and he will make sure the mediator has access to the company’s top echelon.)

If there is a settlement with car owners, Breyer suggested, it will be reached under his auspices, not through an out-of-court program established by the company. You may remember that in December, Volkswagen hired victims’ compensation expert Kenneth Feinberg to design and implement a voluntary settlement program for clean diesel owners who would rather skip the court case. Giuffra told Judge Breyer that Feinberg is working with company officials to develop protocols, though he said that, ideally, Feinberg will end up administering a court-approved settlement reached with Mueller as the mediator.

“The only process that’s going to go forward is the litigation process,” Judge Breyer said. “Mr. Feinberg, his hands are tied. He cannot offer a protocol and – he can’t offer a protocol without the company saying, ‘These are the things that we can do.’ The company hasn’t said that, as you advised me. So we’ve stopped that process.”

The judge said he is pushing so hard because the fallout from the emissions cheating case is ongoing. “It’s not just that these vehicles on the road can’t be sold or can’t be crated,” he said. “It is the fact that they are polluting; and, therefore, we must address it.” One of the reasons he appointed Elizabeth Cabraser of Lieff Cabraser Heimann & Bernstein as lead counsel for VW owners, Breyer said, is because of his drive for efficiency: Cabraser is one of the most experienced multidistrict litigation leaders in the country and knows how to manage these cases.

I’ve previously pointed out that it’s no coincidence Judge Breyer ended up in charge of the Volkswagen MDL, since he sits on the panel of judges that decided where to consolidate the litigation. He signaled his determination to control the case when he appointed Mueller as special master instead of any of the mediators suggested by plaintiffs’ lawyers. And though the judge picked a lead counsel and a plaintiffs’ steering committee loaded with MDL experience, the transcript of Thursday’s hearing leaves no doubt who is driving this litigation.

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