Behind the scenes in VW clean emissions deal, a former FBI director

April 21, 2016

(Reuters) – U.S. District Judge Charles Breyer of San Francisco made the formal announcement in court Thursday morning: Volkswagen has reached an agreement in principle to resolve the clean diesel emissions cheating mess in the U.S. The company’s settlement encompasses U.S. and California officials, including the Justice Department and the Federal Trade Commission, and owners of clean diesel cars, most of whom will have the option of selling their cars back to Volkswagen or getting the cars fixed to meet U.S. emissions standards. All of the details will be revealed in June, when the government and counsel for the car owners submit deal documents.

This was an unbelievably fast resolution of a sprawling case. VW’s lead lawyer, Robert Giuffra of Sullivan & Cromwell, said in court Thursday that he is not aware of any other multidistrict litigation that has settled as quickly as this one. Nor can I. Judge Breyer was assigned the case in mid-December. He appointed lead counsel in mid-January. The class filed its consolidated complaint in February, and two months later, the case settled.

In part, the head-spinning pace was set by Judge Breyer, who made it clear to VW that he wanted the company either to offer customers a fix for polluting cars or pay them to get the cars off the road. At Thursday’s hearing, the judge referred to the “aggressive deadlines” he set for VW, state and federal regulators, and lawyers for the consumer class, led by Elizabeth Cabraser of Lieff Cabraser Heimann & Bernstein. That’s a bit of an understatement. Giuffra said he had logged about 400 hours since the last status conference in March. Cabraser told reporters outside of the courtroom, “Weekends and weekdays are all the same. That’s the way it works.”

VW was also eager to get the case wrapped up so it could begin to try to win back the trust of U.S. car buyers. VW investors were so happy to hear about the settlement (from a Reuters exclusive on Wednesday!) that shares rose 6 percent in anticipation of Thursday’s hearing.

But the unseen hand that guided the case to its quick, multilateral agreement belonged to Robert Mueller, the former director of the Federal Bureau of Investigations who is now a partner at Wilmer Cutler Pickering Hale & Dorr. Mueller was a surprise pick when Judge Breyer appointed him as special settlement master in January. VW and class action lawyers had suggested different mediators, many with long experience overseeing settlement talks in multidistrict cases and class actions. Mueller, by contrast, is known in private practice for his white-collar defense, cybersecurity and crisis management expertise.

Judge Breyer, in fact, knew Mueller as a prosecutor. As he explained in the order appointing the former FBI director, the judge met Mueller 40 years ago when Mueller served as an assistant U.S. attorney in San Francisco, and continued their acquaintance during Mueller’s tenure as U.S. attorney from 1998 to 2001. “There are few, if any, people with more integrity, good judgment, and relevant experience than Mr. Mueller,” wrote Breyer, adding that Mueller was “uniquely qualified to work with and earn the trust of the parties, including the consumer and car dealer plaintiffs, the United States government, the Volkswagen defendants and the interested state governments.”

Breyer showed acute insight. Who’s not going to return calls from the former director of the FBI? Within weeks of Mueller’s appointment, it was already clear that he was pushing VW hard. At a status conference in February, VW counsel Giuffra told Judge Breyer that Mueller had met with senior VW officials and the engineers working on an emissions fix. VW also said it had apprised the former FBI director of its negotiations with state and federal regulators, even providing him with the PowerPoint presentation VW gave to officials from the Justice Department, the EPA and the California Air Resources Board.

Judge Breyer suggested that Mueller wanted even more access. He instructed VW to make top board members available to the former FBI director. By March, Mueller was hosting negotiating sessions between VW, regulators and lawyers for class members at his office in Washington. He attended the status conference on March 24, when Judge Breyer agreed to give the company and its adversaries another month to work out a deal. The judge said he was willing to extend the deadline because of Mueller’s assurances that a deal was in sight.

In the two weeks leading up to Thursday’s hearing, VW and its adversaries from the government and the class action bar were in talks almost every day, for up to 14 hours a day, according to Judge Breyer. “We were all at Director Mueller’s offices at literally 3 o’clock in the morning on Saturday,” said VW lawyer Giuffra, who thanked Breyer and Mueller “for all you’ve done to promote this process.”

The precise details of Mueller’s involvement in the settlement haven’t emerged, and he declined, through a Wilmer representative, to comment for this post. His work isn’t done, either. VW’s agreements in principle must still be put into a consent decree with federal regulators, an agreement with California officials and a proposed settlement of the class action. Judge Breyer joked that he expects all of the lawyers to keep up their brutal work schedule until the deals are done. And if they are in Mueller’s offices until 3 in the morning, you can bet the former FBI director will be there as well.

Judge Breyer and his hand-picked settlement master have shown that it’s possible to get the government, hundreds of thousands of class action plaintiffs and a global corporation to move fast. This may have been Mueller’s first MDL mediation, but given the quick resolution, I have a feeling it won’t be his last.

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