Judge OKs evidence of VW settlements in forthcoming trial

SAN FRANCISCO -- Volkswagen scored a pretrial victory Thursday after a federal judge shot down requests to exclude evidence that would boost recovery for consumers who opted out of settlements in litigation arising from the company's emissions scandal and are heading to trial later this month.

Evidence relating to fines, settlements and other actions the German automaker was ordered to take after admitting it cheated to meet emissions requirements will be allowed, U.S. District Judge Charles Breyer tentatively ruled.

Breyer considered various evidentiary decisions as both sides prepare for a Feb. 24 trial for 10 consumers who will serve as plaintiffs in test cases.

The trial will be split into two phases. The first will be a liability stage focused on damages. The second will concern whether additional damages are warranted to deter future misconduct.

Breyer was skeptical of arguments from plaintiffs' attorneys that civil and criminal fines as well as settlements and other measures Volkswagen took after the misconduct was discovered should not be allowed. Since punitive damages are intended to punish the defendant, he asked "why that evidence shouldn't be admissible."

Fred Heather, representing the consumers, responded that Volkswagen has not been sufficiently punished. He said "a settlement is not a punishment" but rather a mechanism to compensate victims.

Volkswagen has maintained it has produced robust and comprehensive settlements to properly resolve its misconduct. Defense attorney Robert Giuffra Jr. said the other side wants the trial to be in "an alternate universe" where the company "can't say that [it] turned a new page. This company acted responsibly. It agreed to pay consumers. It agreed to pay penalties to the government. It didn't fight anyone."

Attorneys representing Volkswagen are expected to argue the plaintiffs are entitled to little recovery, if at all, since they were not harmed as a result of the scandal. The consumers either sold their cars at admittedly diminished value or still drove them, some for hundreds of thousands of miles, according to Giuffra.

Breyer also ruled Tuesday the 10 plaintiffs who opted out of the settlement cannot argue state-based consumer warranty claims. While the cheat devices deceived consumers into believing their cars were more fuel efficient than they actually were, they did not render the cars inoperable, according to Breyer.

Volkswagen admitted in 2015 it installed software programs in its vehicles that inflated fuel efficiency to deceive federal regulators. It paid $4.3 billion in criminal and civil fines, the largest ever against an automaker, to resolve federal charges it conspired for nearly a decade to cheat on diesel emissions tests. In re: Volkswagen Clean Diesel Marketing, Sales Practices, and Product Liability Litigation, 15-MD-02672 (N.D. Cal., filed Dec. 8, 2015).

The automaker sold roughly 600,000 cars containing the cheat device from 2009 to 2015. It has paid at least $23 billion to settle various legal battles over the scandal. Among them was a $96.5 million settlement last September for 100,000 owners of certain vehicles in the litigation that got up to one mile per gallon less than what was represented to them by the automaker.

Jury selection will begin Feb. 18. Breyer indicated nine jurors will be selected.