Some of former FBI director’s testimony irrelevant in VW trial, judge rules

SAN FRANCISCO -- Retired federal judge and former FBI director Louis Freeh will not be permitted to testify that criminal fines against Volkswagen in the clean diesel emissions scandal were too low, because his evidence is unreliable and irrelevant in a civil trial, a federal judge ruled Tuesday.

U.S. District Judge Charles Breyer declined to admit Freeh's testimony claiming the Detroit federal judge who approved the fines did not consider that Volkswagen executives were involved in a cover-up to conceal further fraud.

Claims from 10 consumers who opted out of settlements will serve as test cases in a trial scheduled to start Feb. 24.

The trial will be split into two phases. The first will be a liability stage concerning damages while the second will consider whether additional damages are warranted to deter future misconduct.

Volkswagen has maintained it's been punished enough over the installation of emissions cheating devices in roughly 600,000 vehicles from 2009 to 2015. In addition to a $2.8 billion criminal penalty imposed by the Department of Justice, the German automaker has paid at least $23 billion to settle various legal battles over the scandal.

At Tuesday's hearing, Breyer considered whether to allow testimony from Freeh that Volkswagen's criminal fine should have been in the range of $34 billion to $68 billion because then-company executives participated in a cover-up and federal prosecutors miscalculated the fine, among other assertions. Plaintiffs' attorneys sought Freeh's testimony to bolster arguments that Volkswagen deserves to face more consequences over the scandal.Defense attorney Robert Giuffra Jr. argued Freeh should be disqualified from testifying because he had privileged communications with Volkswagen when was prospective counsel in civil lawsuits and criminal indictments stemming from the scandal. He said Freeh discussed with former VW general counsel David Geanacopoulos and himself strategies of how to respond to pending litigation.

Freeh, a former New York federal judge had access to at least 550 pages of privileged documents when he was considering representing Volkswagen for $15 million, according to Giuffra.

Freeh acknowledged part of his testimony would be based on a memo from former company executive Oliver Schmidt that he first saw when he was in discussions to contribute to Volkswagen's defense. But Freeh but added the entirety of his opinions were formed reviewing other documents and information.

Among the conclusions he formed was former VW CEO Michae Horn lied to Congress when he asserted he learned of Volkswagen's use of cheat devices in September 2015, according to Freeh.

"When [Horn] testified in Congress, he lied with respect to when he was made aware, which was at least in May 2015," Freeh said.

Responding to assertions the $2.8 billion fine did not sufficiently punish Volkswagen, Giuffra argued Freeh's opinion is irrelevant to the jury's determination of whether additional damages should be imposed and is an attempt to mislead jurors. He continued that federal prosecutors accepted a discounted figure to avoid the risk of going to trial, in addition to other reductions, which U.S. District Judge Sean Cox in Detroit approved.

Freeh said Cox was "not aware of the miscalculation." In re: Volkswagen Clean Diesel Marketing, Sales Practices, and Product Liability Litigation, 15-MD-02672 (N.D. Cal., filed Dec. 8, 2015).

Plaintiffs' attorney Fred Heather argued Freeh's specialized knowledge of federal sentencing procedures is vital since the Department of Justice improperly reduced Volkswagen's criminal penalties. "Somebody has to explain or give [jurors] the opposing viewpoint, which they can weigh as evidence that this was an inaccurate calculation," Heather said.

Breyer prohibited testimony from Freeh because it's irrelevant, among other concerns.

"The court has serious questions as to the accuracy of the underlying information that this witness has based his opinion on," the judge said.

Allowing Freeh to testify might also require a federal judge to serve as a witness, which there is no precedent for, because the issue concerns what information he was aware of at the time, Breyer continued.

"You're giving an opinion that the judge didn't know something," he said. "Usually when people give opinions about what somebody knew, that person becomes a relevant witness."