VW wants to bar former FBI chief from testifying in emissions trial

As Volkswagen prepares for trial in a multi-district litigation relating to the emissions controversy of 2015, the car company asked a judge to disqualify retired judge and former FBI director Louis Freeh from testifying as an expert witness on grounds he had privileged communications with the company when he was vying to represent it for a $15 million fee.

Years after Volkswagen paid out at least $23 billion to settle multiple disputes arising from the Environmental Protection Agency's finding that the company intentionally installed a "cheat device" in certain vehicles to help them pass laboratory emissions tests, car purchasers who opted out of the settlements are heading to trial in federal court.

In anticipation of the Feb. 18 trial date, New York attorney Robert J. Giuffra of Sullivan & Cromwell LLP, representing Volkswagen, filed a pretrial motion late Monday asking U.S. District Judge Charles Breyer in San Francisco to disqualify Freeh because "he had a prior relationship with Volkswagen as prospective counsel in its diesel matter" and had access to at least 550 pages of privileged documents.

"This comes four years after Volkswagen rejected Mr. Freeh's demand for $15 million in guaranteed fees, plus 10% of any 'savings' he could net Volkswagen, to represent the company in its U.S. diesel-related investigations and litigations," the motion reads.

Responding in a phone interview Wednesday, plaintiffs' counsel Fred Heather of Glaser Weil Fink Howard Avchen & Shapiro LLP, said Freeh is out of the country and could not comment. "However, there are two sides to every story, and the response we will file to this motion will set the record straight," Heather said.

In late 2015 and early 2016, while Volkswagen discussed with Freeh the possibility of hiring him as a senior lawyer, Freeh gave legal advice on the diesel emissions investigations, met with Volkswagen's supervisory board at its headquarters in Germany, communicated with its new CEO and spoke regularly with Giuffra, Volkswagen's lead U.S. counsel, according to the motion.

Giuffra's motion says Freeh is expected to testify during the punitive damages phase -- if the case reaches it -- and will "try to inflame and confuse the jury" into believing Volkswagen was under-punished by the Department of Justice and U.S. District Judge Sean F. Cox of the Eastern District of Michigan, when he imposed a $2.8 billion fine against the car company.

According to the motion, Freeh is expected to testify that Volkswagen must have "intentionally or negligently concealed [this information] from Judge Cox" and "not admit[ted] the full scope of its fraud in [its] plea agreement," and that the proper fine range should have been $34.1 billion to $68.3 billion.

Former director of the FBI, Louis J. Freeh (New York Times News Service)

The motion also said Freeh is expected to opine that the reason Cox imposed the $2.8 billion fine was because, "'the criminal conduct supposedly sanctioned'" at Volkswagen's April 2017 sentencing was not fully revealed to Cox and the DOJ was not aware of and did not consider the possible involvement of upper management in the alleged fraud.

It also said Freeh acknowledged the sensitive nature of his relationship with Volkswagen in media interviews given after the company deciding not to hire him.

"'Last January, I had discussions with [Ms. Hohmann-Dennhardt] and [Volkswagen]. However, these were confidential communications. I cannot talk about it,'" Freeh said, according to the motion.

Last year while presiding over a related lawsuit brought by the Securities and Exchange Commission three years after Volkswagen settled with the DOJ and other parties, Breyer seemed skeptical of the pursuit of more fines.

"I'm attempting in my own way to determine the progress of the case, and in particular the allocation of resources to prosecuting an action in which many aspects of the case have already been settled years ago," Breyer said.

He also chided SEC attorneys at a May 2019 hearing when he said he wanted to remind them the SEC's symbol is of an eagle and not "a carrion hawk that simply descends when everything is all over and sees what it can get from the defendants."

It is unclear whether Breyer will have a similar disposition in the related multi-district litigation in which litigants also seek payouts from Volkswagen. In re: Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation., 15-md-02672 (N.D. Cal., filed Dec.8, 2015).