Spitfire List Web site and blog of anti-fascist researcher and radio personality Dave Emory.

News & Supplemental  

Big Things Come in Small Packages: “This is dev­as­tat­ing because it sets up all class-actions to fail”

Dave Emory’s entire life­time of work is avail­able on a flash dri­ve that can be obtained here. The new dri­ve is a 32-giga­byte dri­ve that is cur­rent as of the pro­grams and arti­cles post­ed by late spring of 2015. The new dri­ve (avail­able for a tax-deductible con­tri­bu­tion of $65.00 or more) is com­plete through the late spring of 2015.

WFMU-FM is pod­cast­ing For The Record–You can sub­scribe to the pod­cast HERE.

You can sub­scribe to e‑mail alerts from Spitfirelist.com HERE

You can sub­scribe to RSS feed from Spitfirelist.com HERE.

You can sub­scribe to the com­ments made on pro­grams and posts–an excel­lent source of infor­ma­tion in, and of, itself HERE.

COMMENT: “. . .‘This is dev­as­tat­ing because it sets up all class-actions to fail,’ says attor­ney Lori Andrus, who rep­re­sents sev­eral Volk­swa­gen plain­tiffs. . . . . ‘It’s incred­i­bly inap­pro­pri­ate for Con­gress to send the mes­sage that it’s OK to hurt peo­ple by the mil­lions,’ said Volk­swa­gen own­er Rebec­ca Kaplan. ‘The more peo­ple you hurt, the more this law will pro­tect you.’ . . .”

The EPA just filed a law­suit against VW over the diesel emis­sion scan­dal. Wish them luck. Espe­cially if a bill mov­ing its way through Con­gress dubbed the “VW Bailout Bill” becomes law. If it does become law, the EPA just might be the only enti­ty that’s actu­ally able to bring a mean­ing­ful law­suit over the scan­dal. And not just in this case over the VW emis­sions. The “VW Bailout Bill” would effec­tively bailout any enti­ty poten­tially fac­ing a class-action law­suit.

This bill is only 100 words in length!! Big things come in small pack­ages!

“A Bailout for Volk­swa­gen? Con­gress Wants to Do Some­thing Absolute­ly Crazy” by David Dayen; The Fis­cal Times; 1/4/2016.

When Volk­swa­gen admit­ted to cheat­ing on air pol­lu­tion stan­dards tests in Sep­tem­ber, it opened itself up not only to gov­ern­ment pun­ish­ment, but law­suits from 500,000 U.S. pur­chasers of its “clean” diesel vehi­cles. Volk­swa­gen has yet to fix the vehi­cles to bring them into emis­sions com­pli­ance, and even if it does, that will like­ly cre­ate a low­er-per­for­mance car than con­sumers paid for.

“Through­out these years, Volk­swa­gen has been lying to us,” says Rebec­ca Kaplan, an at-large mem­ber of the Oak­land City Coun­cil, who has been active in reduc­ing car­bon emis­sions in her city. “They’ve been under­min­ing the very things that I have been fight­ing for.” Kaplan, who has stopped dri­ving her non-com­pli­ant VW Golf TDI and reject­ed a low­ball trade-in offer from the deal­er, has joined one of hun­dreds of class-action suits against the automak­er, like­ly to be con­sol­i­dated into a large mul­ti-dis­trict case.

The com­bi­na­tion of reg­u­la­tory over­sight and class-action lit­i­ga­tion can keep com­pa­nies in line. But a bill in Con­gress con­sist­ing of a lit­tle more than 100 words would not only pre­vent Kaplan from seek­ing jus­tice but also crip­ple vir­tu­ally all class-action law­suits against cor­po­ra­tions. It’s known as the “Fair­ness in Class Action Lit­i­ga­tion Act,” but lawyers and advo­cates call it the “VW Bailout Bill.”

The bill, which will get a vote on the House floor in the first week of Jan­u­ary, fol­lows a series of steps by the judi­ciary to block the cour­t­house door on behalf of cor­po­ra­tions. “There’s no ques­tion the Supreme Court has ben mov­ing in that direc­tion to lim­it access to courts,” said Joanne Doroshow, exec­u­tive direc­tor of the Cen­ter for Jus­tice and Democ­racy. “But Con­gress has nev­er done some­thing like this, try­ing to step in and wipe out class-actions.”

The sim­plic­ity of the VW Bailout Bill belies the chaos it would cre­ate. Pro­po­nents like the U.S. Cham­ber of Com­merce, the bill’s lead­ing lob­by­ist, say they mere­ly want to get rid of “non-injury” class-action cas­es, based on poten­tial dam­ages from defec­tive con­sumer prod­ucts or cor­po­rate actions that have yet to result in harm. Lawyers for class-action lit­i­gants argue that defec­tive prod­ucts deserve com­pen­sa­tion even if the con­sumer hasn’t yet been injured.

But the bill goes much fur­ther, stat­ing that courts may not cer­tify class-action suits unless the plain­tiff “affir­ma­tively demon­strates that each pro­posed class mem­ber suf­fered the same type and scope of injury as the named class rep­re­sen­ta­tive or rep­re­sen­ta­tives.”

“This is dev­as­tat­ing because it sets up all class-actions to fail,” says attor­ney Lori Andrus, who rep­re­sents sev­eral Volk­swa­gen plain­tiffs. If every class mem­ber must have the same type and scope of injury, it forces exten­sive proofs for class cer­ti­fi­ca­tion — essen­tially a full-blown tri­al up front, where plain­tiffs will have to prove that their injuries match with their fel­low rep­re­sen­ta­tives.

Not only would these tri­als be cost­ly, but they would empow­er cor­po­rate defense lawyers’ schemes to lim­it dam­ages. While cur­rent rules already require class mem­bers to have some lev­el of com­mon­al­ity and typ­i­cal­ity, the words “same type and scope” offer oppor­tu­ni­ties to refine that fur­ther. “It’s not clear what they mean by same injury,” says Andre Mura, anoth­er class-action plaintiff’s attor­ney. The terms are so vague, Mura argued, that they would have to be inter­preted repeat­edly, with unpre­dictable results.

In the Volk­swa­gen case, for exam­ple, “it could mean the same mod­el car, the same defeat device, the same emis­sions sys­tem, the same con­sumer harm,” Mura says. “When real­ly Volk­swa­gen engaged in the same course of con­duct on all their vehi­cles.” Defense attor­neys could claim that a class rep­re­sen­ta­tive who released few­er emis­sions because they drove few­er miles than their col­leagues, or drove in harsh­er weath­er, or with low­er tire pres­sure, should be exclud­ed from the case. That could either whit­tle down class­es to lim­it dam­ages or dis­qual­ify them from cer­ti­fi­ca­tion.

And the appli­ca­tions go beyond Volk­swa­gen. “In a mort­gage fraud case, the class might have all been deceived in same way, but the doc­u­ments signed might have been incon­sis­tent,” says Andrus. “Or with for-prof­it schools, they might have paid dif­fer­ent tuition or tak­en dif­fer­ent class­es.” Andrus has bat­tled these tac­tics before, but the con­gres­sional bill would cod­ify them into law. “There’s no ques­tion this was writ­ten by a defense lawyer whose job it is to defend cor­po­ra­tions,” she says.

With­out a class-action option, VW cus­tomers would have lit­tle recourse. “The dam­ages are not enor­mous in the sense that I could hire indi­vid­ual coun­sel,” says George Far­quar, a sci­en­tist and small busi­ness own­er from Liv­er­more, Calif., who is part of a class-action suit against the car­maker. “It’s amaz­ing this leg­is­la­tion is being con­sid­ered.”

A Con­sumer Finan­cial Pro­tec­tion Bureau study found that vic­tims of just finan­cial-relat­ed class-action set­tle­ments received over $2 bil­lion in com­pen­sa­tion between 2008 and 2012, to say noth­ing of the changes in cor­po­rate behav­ior aris­ing from those cas­es. “The alter­na­tive is that those claims dis­ap­pear,” says the Cen­ter for Jus­tice and Democracy’s Doroshow. “You’re talk­ing about pro­vid­ing basic immu­nity (to cor­po­ra­tions).”


Incred­i­bly, the House is pair­ing the VW Bailout Bill with oth­er leg­is­la­tion designed to lim­it cor­po­rate lia­bil­ity. The FACT (Fur­ther­ing Asbestos Claim Trans­parency) Act would force pub­lic report­ing of per­sonal infor­ma­tion of asbestos vic­tims, in an effort to delay and lim­it com­pen­sa­tion for their poi­son­ing.

The Cham­ber of Com­merce also sup­ports the FACT Act, claim­ing it would pre­vent dou­ble-dip­ping by mesothe­lioma suf­fer­ers who may have been exposed to mul­ti­ple asbestos-lined prod­ucts. But the clear intent is to both chill vic­tims from com­ing for­ward and delay their com­pen­sa­tion. Because mesothe­lioma suf­fer­ers typ­i­cally only live between four and 18 months after diag­no­sis, this would shift many vic­tim claims to wrong­ful death, which has a low­er pay­out rate. Cor­po­ra­tions like Hon­ey­well have finan­cial rea­son to want vic­tims of their use of harm­ful chem­i­cals to die quick­er, so they can pay their fam­i­lies less.

House pas­sage of the VW Bailout Bill and FACT Act is like­ly, but the Sen­ate could pro­vide a road­block. How­ever, as we saw with the year-end omnibus, ide­o­log­i­cal bills that can’t oth­er­wise pass on their own have a ten­dency to ride along with must-pass leg­is­la­tion and become law.

Cor­po­rate immu­nity has been a major pre­oc­cu­pa­tion of John Roberts’ Supreme Court. Rul­ings like AT&T Mobil­ity v. Con­cep­cion and Amer­i­can Express v. Ital­ian Col­ors allow cor­po­ra­tions to force their cus­tomers into manda­tory arbi­tra­tion, rather than the judi­cial sys­tem, to set­tle dis­putes. And 2011’s Wal­mart v. Dukes tossed out class-action cer­ti­fi­ca­tion in a gen­der dis­crim­i­na­tion case, argu­ing that the retail­er couldn’t pos­si­bly have dis­crim­i­nated against all 1.5 mil­lion of its female employ­ees in the exact same man­ner. Sub­se­quent cir­cuit courts have fol­lowed Supreme Court prece­dent and tight­ened class-action restric­tions.

But while the bar for class-action cer­ti­fi­ca­tion is already set incred­i­bly high, the VW Bailout Bill adds an entire­ly new set of require­ments, cir­cum­vent­ing not only judi­cial prece­dent but also a long­stand­ing fed­eral rule (Rule 23) that lays out class-action stan­dards. And it would pro­tect cor­po­ra­tions that engi­neer major frauds, where it is dif­fi­cult to bring thou­sands of indi­vid­ual claims.

“It’s incred­i­bly inap­pro­pri­ate for Con­gress to send the mes­sage that it’s OK to hurt peo­ple by the mil­lions,” said Volk­swa­gen own­er Rebec­ca Kaplan. “The more peo­ple you hurt, the more this law will pro­tect you.”

The GOP’s response to VW’s sys­tem­atic scam­ming of US con­sumers is to make it effec­tively impos­si­ble for not just VW’s con­sumers but ALL Amer­i­can con­sumers to wage a class-action law­suit against any cor­po­ra­tion at all.

VW own­ers can take their com­plaints into pri­vate-arbi­tra­tion courts that’s all the rage these days. The own­ers that accept­ed VW’s ‘good will’ $500 cash pay­ments will prob­a­bly aren’t going to have a choice any­way if they decide to sue since an arbi­tra­tion clause was added to the con­tract required to get the mon­eyThat should go well


2 comments for “Big Things Come in Small Packages: “This is dev­as­tat­ing because it sets up all class-actions to fail””

  1. Since the EPA’s law­suit just might be the only one VW faces if the US if the “VW Bailout Bill” becomes law, it’s worth not­ing that the max­i­mum pos­si­ble fine VW faces in that EPA law­suit is actu­al­ly a much high­er num­ber than the $18 bil­lion that the com­pa­ny was esti­mat­ing back in Sep­tem­ber that the scan­dal could cost: the EPA’s law­suit could poten­tial­ly cost VW $48 bil­lion. Of course, as the arti­cle below notes, it’s also almost cer­tain­ly not going to actu­al­ly end up being that much. And if the $58 bil­lion law­suit Toy­ota faced in the ear­ly 2000’s over its own emis­sions scan­dal (which was reduced to $34 mil­lion) is any indi­ca­tion of what to expect, the final cost of VW’s law­suit might be clos­er to $30 mil­lion:

    VW faces bil­lions in fines as U.S. sues for envi­ron­men­tal vio­la­tions

    WASHINGTON/FRANKFURT | By Julia Edwards and Georgina Prod­han
    Tue Jan 5, 2016 3:48pm EST

    The U.S. Jus­tice Depart­ment has sued Volk­swa­gen for up to $48 bil­lion for alleged­ly vio­lat­ing envi­ron­men­tal laws — a reminder of the car­mak­er’s prob­lems near­ly four months after its emis­sions scan­dal broke.

    Although such U.S. law­suits are typ­i­cal­ly set­tled at a frac­tion of the the­o­ret­i­cal max­i­mum penal­ty, ana­lysts said the size of the claim meant Volk­swa­gen (VW) could face a larg­er bill than pre­vi­ous­ly antic­i­pat­ed.

    “The announce­ment serves as a reminder/reality check of VW’s still unre­solved emis­sions issues,” Gold­man Sachs ana­lysts wrote in a note, main­tain­ing their “sell” rec­om­men­da­tion on the stock.

    VW (VOWG_p.DE) shares fell as much as 6 per­cent to a six-week low on Tues­day, the biggest drop on Ger­many’s blue-chip DAX index.

    The civ­il law­suit, announced on Mon­day, reflects the grow­ing num­ber of alle­ga­tions against VW since the Ger­man com­pa­ny admit­ted in Sep­tem­ber to installing devices to cheat emis­sions tests in sev­er­al 2.0 liter diesel vehi­cle mod­els.

    Accord­ing to a Reuters review of the U.S. com­plaint, VW could in the­o­ry face fines of as much as $37,500 per vehi­cle for each of two vio­la­tions of the law; up to $3,750 per “defeat device”; and anoth­er $37,500 for each day of vio­la­tion.

    The com­plaint says ille­gal devices to impair emis­sion con­trol sys­tems were installed in near­ly 600,000 vehi­cles in the Unit­ed States. (here)

    In Sep­tem­ber, U.S. reg­u­la­tors ini­tial­ly said Europe’s biggest car­mak­er could face fines in excess of $18 bil­lion.

    The law­suit had been expect­ed, and ana­lysts believe any fine will be far below the the­o­ret­i­cal max­i­mum. Although U.S. author­i­ties sued Toy­ota for up to $58 bil­lion for envi­ron­men­tal vio­la­tions around the turn of the cen­tu­ry, they agreed a set­tle­ment that cost the Japan­ese car­mak­er about $34 mil­lion.

    “We have not enu­mer­at­ed a max­i­mum pos­si­ble penal­ty, and will decline to spec­u­late on what the court may ulti­mate­ly choose to do,” said U.S. Jus­tice Depart­ment spokesman Wyn Horn­buck­le.

    Equinet ana­lyst Hol­ger Schmidt cut his rat­ing on VW shares to “reduce” from “neu­tral”.

    “We con­tin­ue to believe that no one is able to make any­thing else than a wild guess on poten­tial fines,” he said.

    Dur­ing Decem­ber, VW’s shares had been recov­er­ing as the car­mak­er announced incre­men­tal­ly pos­i­tive news such as sim­ple fix­es for about 8.5 mil­lion affect­ed cars in Europe.

    The stock fell on Tues­day 22 per­cent below pre-scan­dal lev­els, with ana­lysts par­tic­u­lar­ly con­cerned about the impact on VW in the Unit­ed States, where the firm has long strug­gled to make inroads and tougher reg­u­la­tions mean it faces big­ger poten­tial fines.

    The law­suit, filed on behalf of the U.S. Envi­ron­men­tal Pro­tec­tion Agency (EPA), accus­es VW of four counts of vio­lat­ing the U.S. Clean Air Act, includ­ing tam­per­ing with the emis­sions con­trol sys­tem and fail­ing to report vio­la­tions.

    “The Unit­ed States will pur­sue all appro­pri­ate reme­dies against Volk­swa­gen to redress the vio­la­tions of our nation’s clean air laws,” said Assis­tant Attor­ney Gen­er­al John Cruden, head of the Jus­tice Depart­men­t’s envi­ron­ment and nat­ur­al resources divi­sion.

    The law­suit is being filed in the East­ern Dis­trict of Michi­gan and then trans­ferred to north­ern Cal­i­for­nia, where class-action law­suits against VW are pend­ing.

    “We’re alleg­ing that they knew what they were doing, they inten­tion­al­ly vio­lat­ed the law and that the con­se­quences were sig­nif­i­cant to health,” said a senior Jus­tice Depart­ment offi­cial.

    VW’s cheat­ing of diesel emis­sions tests allowed it to avoid a cost­ly revamp of engines to meet new U.S. stan­dards.

    The Jus­tice Depart­ment has also been inves­ti­gat­ing crim­i­nal fraud alle­ga­tions against VW for mis­lead­ing U.S. con­sumers and reg­u­la­tors. Crim­i­nal charges would require a high­er bur­den of proof than the civ­il law­suit.

    The U.S. law­suit also alleges VW gamed emis­sions con­trols in many of its 3.0 liter diesel mod­els, includ­ing the Audi Q7, and the Porsche Cayenne.

    VW’s ear­li­er admis­sions elim­i­nate almost any pos­si­bil­i­ty that the automak­er could defend itself in court, Daniel Riesel of Sive, Paget & Riesel P.C, who defends com­pa­nies accused of envi­ron­men­tal crimes, said.

    To win the civ­il case, the gov­ern­ment does not need to prove the degree of inten­tion­al decep­tion at VW – just that the cheat­ing occurred, Riesel said. “I don’t think there is any defense in a civ­il suit,” he said.

    Instead, the automak­er will seek to nego­ti­ate a low­er penal­ty by argu­ing that the max­i­mum would be “crip­pling to the com­pa­ny and lead to mas­sive lay­offs”, Riesel said.

    Even after VW first admit­ted to using cheat devices in cer­tain mod­els, the automak­er “failed to come for­ward and reveal” that oth­er vehi­cles con­tained such devices, the gov­ern­ment said.

    To cheat the emis­sions con­trols, VW installed soft­ware that allowed the vehi­cles to detect when they were being test­ed on a flatbed. When the vehi­cles detect­ed they were actu­al­ly on the road, the soft­ware caused the emis­sions con­trol sys­tems to under­per­form or shut­down, the gov­ern­ment said, allow­ing the cars to emit dan­ger­ous lev­els of air pol­lu­tion.

    The civ­il law­suit does not pre­clude the Jus­tice Depart­ment from pur­su­ing crim­i­nal charges against VW, said the Jus­tice Depart­ment offi­cial.


    “The law­suit had been expect­ed, and ana­lysts believe any fine will be far below the the­o­ret­i­cal max­i­mum. Although U.S. author­i­ties sued Toy­ota for up to $58 bil­lion for envi­ron­men­tal vio­la­tions around the turn of the cen­tu­ry, they agreed a set­tle­ment that cost the Japan­ese car­mak­er about $34 mil­lion.
    Yep, and if a sim­i­lar fine is what VW faces, that would come out to about $30 mil­lion.

    So we’ll see what hap­pens with the fine, but note how win­ning the civ­il case sim­ply involves prov­ing that cheat­ing occurred, some­thing which VW already admits hap­pened. And yet VW will still be able to get that penal­ty reduced basi­cal­ly by threat­en­ing mass lay­offs:

    To win the civ­il case, the gov­ern­ment does not need to prove the degree of inten­tion­al decep­tion at VW – just that the cheat­ing occurred, Riesel said. “I don’t think there is any defense in a civ­il suit,” he said.

    Instead, the automak­er will seek to nego­ti­ate a low­er penal­ty by argu­ing that the max­i­mum would be “crip­pling to the com­pa­ny and lead to mas­sive lay­offs”, Riesel said.

    It’s an inter­est­ing argu­ment because it sug­gests one of two pos­si­bil­i­ties: that VW will just go out of busi­ness entire­ly (which would most cer­tain­ly lead to mas­sive lay­offs), or that VW will some­how deter­mine that the law­suit some­how changed the eco­nom­ics of man­u­fac­tur­ing and sell­ing cars in the US. And it’s not real­ly clear how a fine over past cheat­ing would sud­den­ly make VW’s pre-scan­dal strat­e­gy of invest­ing in grow­ing its share of the US mar­ket an unde­sir­able cor­po­rate strat­e­gy, although if cost-cut­ting mea­sures are required after a big fine, the mon­ey-los­ing invest­ments in the US could be on the chop­ping block.

    At the same time, those loss-gen­er­at­ing US invest­ments were done for a rea­son: a bet on high­er future prof­its. And it’s not like those high­er future prof­its that come from a suc­cess­ful growth of VW’s US mar­ket share sud­den­ly evap­o­rate with a large fine. Although it is pos­si­ble that the knowl­edge that VW might get real­ly big fines for real­ly big scan­dals could change the profit/loss cal­cu­lus. For instance, if there are any oth­er big scan­dals yet to be dis­cov­ered in VW’s oper­a­tions (a gaso­line-pow­ered vehi­cle emis­sions scan­dal lurk­ing in there, per­haps?), well, that could poten­tial­ly make the prospect of big future prof­its a lot less like­ly.

    That’s all part of what we get to wait and see play out. But don’t for­get the oth­er pos­si­bil­i­ty: where VW gets its fine dra­mat­i­cal­ly reduced and the “VW Bailout Bill” becomes law. Because that same argu­ment that could get VW’s fine dra­mat­i­cal­ly reduced (it would lead to mass lay­offs) is basi­cal­ly the same argu­ment the cor­po­ratists in Con­gress are going to use to jus­ti­fy the “VW Bailout Bill” that would kill class-action law­suits.

    Is a cor­po­ratist twofer on the way? Quite pos­si­bly. The threat of mas­sive lay­offs makes a pow­er­ful argu­ment. It might be a soon-to-be-out-of-date argu­ment too, but for the time being it’s pret­ty per­sua­sive.

    Posted by Pterrafractyl | January 5, 2016, 7:12 pm
  2. Wow. VW found an rather potent legal strat­e­gy for shield­ing its exec­u­tives from any poten­tial lia­bil­i­ty in the diesel emis­sions scan­dal: just cite Ger­many’s pri­va­cy laws to avoid pro­vid­ing emails or any oth­er com­mu­ni­ca­tions to US inves­ti­ga­tors:

    The New York Times

    VW Refus­es to Give Amer­i­can States Doc­u­ments in Emis­sions Inquiries


    JAN. 8, 2016

    Cit­ing Ger­man pri­va­cy laws, Volk­swa­gen has refused to pro­vide emails or oth­er com­mu­ni­ca­tions among its exec­u­tives to attor­neys gen­er­al in the Unit­ed States, imped­ing Amer­i­can inves­ti­ga­tions into the company’s emis­sions-cheat­ing scan­dal, accord­ing to offi­cials in sev­er­al states.

    The rev­e­la­tion sig­nals a turn­ing point in the now open­ly frac­tious rela­tions between Volk­swa­gen and Amer­i­can inves­ti­ga­tors, after claims by the Jus­tice Depart­ment, in its own inquiry this week, that the com­pa­ny had recent­ly “imped­ed and obstruct­ed” reg­u­la­tors and pro­vid­ed “mis­lead­ing infor­ma­tion.”

    Sig­nif­i­cant­ly, inves­ti­ga­tors say, Volkswagen’s actions lim­it their abil­i­ty to iden­ti­fy which employ­ees knew about or sanc­tioned the decep­tions. Find­ing the peo­ple respon­si­ble for the cheat­ing is impor­tant to the law­suits: Penal­ties would be greater if the states and oth­ers pur­su­ing Volk­swa­gen in court could prove that top exec­u­tives were aware of or direct­ed the activ­i­ty.

    Our patience with Volk­swa­gen is wear­ing thin,” New York’s attor­ney gen­er­al, Eric T. Schnei­der­man, said. “Volkswagen’s coop­er­a­tion with the states’ inves­ti­ga­tion has been spot­ty — and frankly, more of the kind one expects from a com­pa­ny in denial than one seek­ing to leave behind a cul­ture of admit­ted decep­tion.”

    He was one of sev­er­al attor­neys gen­er­al to express dis­sat­is­fac­tion in response to inquiries from The New York Times.

    “I find it frus­trat­ing that, despite pub­lic state­ments pro­fess­ing coop­er­a­tion and an expressed desire to resolve the var­i­ous inves­ti­ga­tions that it faces fol­low­ing its cal­cu­lat­ed decep­tion, Volk­swa­gen is, in fact, resist­ing coop­er­a­tion by cit­ing Ger­man law,” said Connecticut’s attor­ney gen­er­al, George Jepsen. “We will seek to use any means avail­able to us to con­duct a thor­ough inves­ti­ga­tion.”


    When he was named chief exec­u­tive short­ly after the scan­dal broke, Matthias Müller said “My most urgent task is to win back trust” and promised “max­i­mum trans­paren­cy.” But open­ing up a com­pa­ny known for its par­tic­u­lar­ly insu­lar cul­ture has been a tall order.

    Ger­man inves­ti­ga­tors are not mak­ing sim­i­lar com­plaints about Volk­swa­gen. Klaus Ziehe, a spokesman for pros­e­cu­tors in Braun­schweig, a city close to Volkswagen’s head­quar­ters in Wolfs­burg, said that under Ger­man law, pros­e­cu­tors were allowed to car­ry out raids of Volkswagen’s Wolfs­burg offices to gath­er pos­si­ble evi­dence that could include email exchanges. He did not elab­o­rate on what they had found.

    “We are not and do not want to be depen­dent on that which Volk­swa­gen gives us,” Mr. Ziehe said in a writ­ten response to ques­tions. At the same time, he said, the com­pa­ny had been work­ing with Ger­man inves­ti­ga­tors.

    “We can’t com­plain about our coop­er­a­tion with the com­pa­ny,” Mr. Ziehe said. “We have the impres­sion that we have received every­thing that we have specif­i­cal­ly request­ed.”

    Volk­swa­gen, in a state­ment, said it could not com­ment on con­tin­u­ing pro­ceed­ings.

    Ger­many, a close ally of Amer­i­ca, is known for strict pri­va­cy laws like its Fed­er­al Data Pro­tec­tion Act, which lim­its access to data, par­tic­u­lar­ly out­side the Euro­pean Union. And it is not the only Euro­pean coun­try with pri­va­cy laws; sim­i­lar issues with Swiss laws have also ham­pered Amer­i­can inves­ti­ga­tors in their pur­suit of FIFA, soccer’s world gov­ern­ing body. Strains over data-shar­ing between the Unit­ed States and Europe also emerged after the spy­ing rev­e­la­tions linked to Edward J. Snow­den, the for­mer Nation­al Secu­ri­ty Agency con­trac­tor.

    Ger­many also has a his­to­ry of refus­ing to extra­dite its cit­i­zens to the Unit­ed States. Still, Amer­i­can inves­ti­ga­tors have dealt with Ger­man cor­po­ra­tions for many years and often reach ami­ca­ble set­tle­ments.

    The Unit­ed States, where the scan­dal orig­i­nat­ed, is seen as poten­tial­ly con­duct­ing tougher inves­ti­ga­tions of Volk­swa­gen than Ger­many, where the car­mak­er is one of the nation’s largest employ­ers. Pros­e­cu­tors in Braun­schweig ini­tial­ly said they would con­duct a for­mal inves­ti­ga­tion of Mar­tin Win­terko­rn, V.W.’s for­mer chief exec­u­tive, but quick­ly back­tracked.

    The Jus­tice Depart­ment, which filed a civ­il suit against Volk­swa­gen this week, has not ruled out fil­ing a crim­i­nal charge or tar­get­ing spe­cif­ic exec­u­tives. A Jus­tice Depart­ment spokesman declined to say whether it was fac­ing obsta­cles in its own inquiry.

    Lack­ing access to offi­cials at Volk­swa­gen head­quar­ters makes it more dif­fi­cult to deter­mine who was respon­si­ble for the wrong­do­ing, William H. Sor­rell, the Ver­mont attor­ney gen­er­al, said in a recent inter­view in Burling­ton. “One of the things that’s impor­tant to the state and oth­ers in terms of look­ing at the egre­gious­ness or seri­ous­ness of the con­duct is who at Volk­swa­gen knew what and when,” Mr. Sor­rell said.

    “It doesn’t make this attor­ney gen­er­al feel all warm and fuzzy,” he said, that infor­ma­tion “has been com­ing out as grad­u­al­ly as it has been.”

    Mr. Schneiderman’s office declined to com­ment on whether Amer­i­can inves­ti­ga­tors were col­lab­o­rat­ing with Ger­man pros­e­cu­tors. In declin­ing to turn over evi­dence to Amer­i­can inves­ti­ga­tors, Volk­swa­gen has prin­ci­pal­ly cit­ed the Ger­man Fed­er­al Data Pro­tec­tion Act, an aide said in an email, as well as the Ger­man Con­sti­tu­tion, the Euro­pean Con­ven­tion on Human Rights, deci­sions of the Ger­man Con­sti­tu­tion­al Court and the Euro­pean Court of Human Rights, “and (for good mea­sure) pro­vi­sions of the Ger­man Crim­i­nal Code.”

    Volk­swa­gen has main­tained that a rel­a­tive­ly small num­ber of engi­neers and man­agers were respon­si­ble for the cheat­ing. None of the nine Volk­swa­gen exec­u­tives who have been sus­pend­ed in con­nec­tion with the scan­dal were mem­bers of the man­age­ment board. But sev­er­al, like Wolf­gang Hatz, who head­ed engine and trans­mis­sion devel­op­ment, report­ed direct­ly to mem­bers of the board.

    The rev­e­la­tions may raise ques­tions about the com­mit­ment of Mr. Müller to clean­ing house. He was a pro­tégé of Mr. Win­terko­rn and has close ties to a num­ber of the cen­tral fig­ures in the inves­ti­ga­tion. He was V.W.’s head of prod­uct plan­ning when the cheat­ing took place.

    In a tac­it admis­sion by Volk­swa­gen that it needs to smooth tense rela­tions with Amer­i­can offi­cials, Mr. Müller will meet with Gina McCarthy, the E.P.A. admin­is­tra­tor, on Wednes­day at the company’s request, a spokes­woman for the agency said.

    Offi­cials at the office of the Texas attor­ney gen­er­al had no imme­di­ate com­ment. The Cal­i­for­nia attor­ney general’s office declined to com­ment.

    The Envi­ron­men­tal Pro­tec­tion Agency, along with reg­u­la­tors in Cana­da and Cal­i­for­nia, have also accused Volk­swa­gen of installing devices to cheat on emis­sions tests on more vehi­cles than acknowl­edged, a claim Volk­swa­gen dis­putes.

    Ger­many has faced crit­i­cism in the past for laws that place a high­er val­ue on per­son­al pri­va­cy than pub­lic inter­est. Ger­man con­fi­den­tial­i­ty laws may have pre­vent­ed doc­tors from inform­ing the Ger­man air­line Lufthansa that one of its pilots, Andreas Lub­itz, was under­go­ing treat­ment for depres­sion. In March, Mr. Lub­itz delib­er­ate­ly crashed a pas­sen­ger jet oper­at­ed by the Lufthansa sub­sidiary Ger­man­wings into a moun­tain in France, killing him­self and 149 oth­ers who were aboard.

    “In the E.U., data pro­tec­tion is a fun­da­men­tal right that is in the Euro­pean char­ter,” said Paul M. Schwartz, a law pro­fes­sor at the Uni­ver­si­ty of Cal­i­for­nia, Berke­ley and co-direc­tor of its Cen­ter for Law & Tech­nol­o­gy. The Ger­man fed­er­al con­sti­tu­tion­al court has also iden­ti­fied a right to “infor­ma­tion­al self-deter­mi­na­tion,” he said. Such laws are “real obsta­cles,” he said, adding, “Euro­peans real­ly take pri­va­cy seri­ous­ly.”

    Still, while Amer­i­can reg­u­la­tors have faced chal­lenges before from Euro­pean cor­po­ra­tions, the lev­el of frus­tra­tion in the Volk­swa­gen case is strik­ing. Philip Urof­sky, a part­ner at Shear­man & Ster­ling and for­mer assis­tant chief of the Jus­tice Department’s fraud sec­tion, said, “Obvi­ous­ly, a Euro­pean com­pa­ny ought to first and fore­most fol­low its own domes­tic laws.”

    That said, pri­va­cy laws have the poten­tial to be mis­used by com­pa­nies. “They frankly tie U.S. inves­ti­ga­tors’ hands, or even law firms doing inter­nal inves­ti­ga­tions, in ways that, in my per­son­al opin­ion, were not antic­i­pat­ed or expect­ed,” Mr. Urof­sky said.

    Such issues as the invok­ing of pri­va­cy laws are “not fre­quent, but they’re also not unusu­al,” said Ben­jamin M. Lawsky, for­mer super­in­ten­dent of the New York Depart­ment of Finan­cial Ser­vices and a for­mer top offi­cial in the state attor­ney general’s office. But, he said, “it is the rare case that it ends up being a total obstruc­tion.”

    Mr. Lawsky left the depart­ment last year, short­ly after it was involved in a a $2.5 bil­lion set­tle­ment with Deutsche Bank over alle­ga­tions that it had manip­u­lat­ed inter­est rates.

    While he did not want to draw analo­gies to his own pre­vi­ous cas­es, Mr. Lawsky called such issues frus­trat­ing. Still, he said, inves­ti­ga­tors some­times even­tu­al­ly find ways to get what they want — whether by get­ting the infor­ma­tion from Amer­i­can com­put­er servers, through nego­ti­a­tions with com­pa­nies or in coop­er­a­tion with for­eign law enforce­ment.

    “Often when you start dig­ging down, those rules are sub­ject to inter­pre­ta­tion,” he said. “If you real­ly push at how those rules have been inter­pret­ed, you some­times can find ways to get around them.”

    “Lack­ing access to offi­cials at Volk­swa­gen head­quar­ters makes it more dif­fi­cult to deter­mine who was respon­si­ble for the wrong­do­ing, William H. Sor­rell, the Ver­mont attor­ney gen­er­al, said in a recent inter­view in Burling­ton. “One of the things that’s impor­tant to the state and oth­ers in terms of look­ing at the egre­gious­ness or seri­ous­ness of the con­duct is who at Volk­swa­gen knew what and when,” Mr. Sor­rell said.”

    Posted by Pterrafractyl | January 8, 2016, 3:50 pm

Post a comment