When the “Dieselgate” scandal broke, we suggested Volkswagen couldn’t have chosen a worse jurisdiction. The warp speed at which the US’s highly populated legal sector is moving confirms that assessment. American lawyers are elbowing competitors aside in their efforts to grab their slice of the “Dieselgate” pie. So far, more than 190 class actions claiming billions of dollars have already been lodged in 37 US states. It’s the kind of feeding frenzy for which scavengers of the US legal profession are famous. For VW, however, the legal fees and likely settlements are only part of an potentially bankrupting liability. The waste in terms of management time will be enormous. – Alec Hogg Â
by Margaret Cronin Fisk
(Bloomberg) — As claims against Volkswagen AG for selling “clean diesel” cars that cheated their way past emissions tests pile up across the U.S., the key question for lawyers is which court will wind up hearing them.
Lawyers for car-owners are already jockeying for their preferred venue in hopes that whichever judge winds up with the case will name them as lead counsel, a role that could be worth millions in legal fees.
More than 190 lawsuits — with claims for billions of dollars — have been filed as class actions in federal courts in at least 37 U.S. states with more certain to come. Seven jurisdictions have been proposed already: two in California, as well as courts in New Jersey, Virginia, Texas, Michigan and Ohio. A panel of judges in New Orleans will decide after a Dec. 3 hearing, weighing the jurisdictions by their judges’ skills and experience with complex litigation, as well as their convenience for lawyers and witnesses.
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California is “the most obvious jurisdiction,” said Blair Nicholas, a Bernstein Litowitz lawyer who filed one such request Wednesday. “California has the strictest emissions standard. California had the biggest impact.”
Several law firms asked for California’s central district, which includes Los Angeles as well as Santa Ana, where the Toyota Motor Corp. consumer and injury-and-death cases related to cars’ sudden acceleration were heard. About 25 percent of the cases are in California and drivers there own the largest share of the affected Volkswagens and Audis, about 14 percent of the U.S. total, according to Kelley Blue Book.
In addition, Volkswagen’s largest emissions test center is in Oxnard, just up the coast from Los Angeles, and California judges have had “a tremendous amount of experience” in automotive cases, Nicholas said. Witnesses may include staff technicians with the California Air Resources Board whose investigation at its lab in El Monte helped uncover Volkswagen’s cheating, another point in the state’s favor.
Still, there are solid arguments for other jurisdictions.
“This case really belongs in Virginia,” said attorney Warren Burns. Volkswagen’s U.S. headquarters — with documents and company witnesses — would be near the federal courthouse in Alexandria and the location would help foster coordination between plaintiffs’ lawyers and U.S. Justice Department investigators, one group of lawyers including Burns argued in court papers.
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Jeannine Ginivan, a Volkswagen spokesman, didn’t immediately respond to calls and an e-mail seeking comment.
What isn’t in doubt is that the litigation is going to be very expensive for Volkswagen AG.
Car Refunds?
Some attorneys are demanding the automaker buy back the 482,000 vehicles sold in the U.S. with the so-called defeat device that allowed them to beat emissions tests. That could reach $10 billion, according to Steve Berman, a lead attorney for the $1.6 billion settlement with Toyota for diminished car values. Volkswagen at least should refund customers for the $1,000-to-$7,000 premium they paid for the “clean diesel” technology and cover the cars’ lost value, consumer lawyers contend.
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Brandon Barnes, a litigation analyst at Bloomberg Intelligence in Washington, put the likely range for how much Volkswagen will have to pay for the consumer suits at $2 billion to $4 billion.
“The rough estimate is about $1.5 billion just on your premium damages,” Barnes said. Volkswagen might also face triple or punitive damages, he added.
Volkswagen, which admitted to systematically cheating on U.S. air-pollution tests for years, could also face as much as $18 billion in fines under the Clean Air Act in the U.S., based on the Environmental Protection Agency’s maximum per-vehicle penalty. And there’s the coordinated investigation by at least 27 state attorneys general into suspected environmental and consumer-protection laws. The Texas county that includes Houston has already sued seeking $100 million in penalties.
Authorities in Europe and South Korea are also conducting their own investigations, which could result in further penalties.
Who’s Who
The roster of lawyers suing Volkswagen is a who’s who of the plaintiffs’ bar — with a notable surprise: Berman, who filed in San Francisco the day the EPA announced Volkswagen’s cheating admission, struck an unusual alliance with Quinn Emanuel Urquhart & Sullivan LLP, a firm that’s more often working for the defense in class actions. The Los Angeles-based firm also has three offices in Germany, which could help in this case.
Multiple claims have been filed by Elizabeth Cabraser, another lead lawyer in the Toyota case who is running the General Motors Co. ignition-switch litigation in New York with Berman. Joe Rice, who led negotiations with BP Plc over the 2010 Gulf of Mexico spill that led to an $11.3 billion settlement, has also sued, as has former senator and presidential candidate John Edwards, who jumped in last week on behalf of North Carolina consumers.
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The key in determining the lead will ultimately be who has the most — and most relevant — experience, said University of Richmond law professor Carl Tobias. Berman, Cabraser, Rice and others with prior experience with multidistrict litigation have a head start in gaining those leadership positions.
“They can present strong cases for their appointment,” Tobias said. “However, judges have the final say, so it depends on what district and what judge is assigned the MDL.”
