That's why we recently spoke with Elizabeth Cabraser, the lead counsel for the Plaintiffs' Steering Committee in the Volkswagen emissions litigation. The settlement was given preliminary approval in late July, so it was a good time to hear what Cabraser has on her plate when it comes to wrangling 475,000 vehicle owners, combining hundreds of lawsuits, and seeing how the VW suit compares to the Deep Water Horizon and Exxon Valdez cases, both of which she worked on. For more details on the settlement itself, read this and this.
ABG: This is obviously a huge deal. As you approach working with the plaintiffs, and working with people who own these cars, and interacting with VW, how do you think of this in terms of a mission? Is it a huge thing that'll be really tough to get through? Is it a thing where we do this, then we do this, and then we do this, and it'll be okay?
EC: We're now in the reality phase of litigation. It's interesting that you ask this because litigation as formal proceedings in court, filing briefs, going to hearings, that's a two-dimensional project. It's very challenging. The stakes can be very high, the issues can be very complex, with all the facts. But it does take place on paper, on transcripts, and it tends to be enforced in the same way when the parties reach settlements or the court reaches a judgement in the case.
This case obviously is different because the project is a three-dimensional one. It's reality. It is, as the court said at the outset of the case, fix the cars or get them off the road to reduce the environmental harm. Those three things are very real. At this point, it's a challenge not in terms of a complicated legal issue or even a complicated factual issue, it's complicated because people have to make decisions about their own cars and then the parties have to make sure those decisions are honored and implemented and compensated in a real and accountable way. We have to do that with approximately 475,000 vehicles, so that's 475,000 decisions that people have to make, and 475,000, essentially, "products" that we all collectively have to deliver. A check for whoever bought that car or a fixed car that's going to pollute less and still perform the way consumers thought it would when they bought it in the first place.
"This case obviously is different."
ABG: That leads me to two questions. The first one is, when you say there's a decision to be made, as of this point there really isn't a decision because the fix hasn't been figured out yet, right? And second, the idea of performing the way that customers thought, isn't that what's holding up the fix, the fact they can't get the emissions down while keeping the miles-per-gallon and the zero-to-sixty and the horsepower, these are all intertwined issues, right?
EC: They're intertwined issues and there isn't a fix that's been approved yet. So far, the process is on schedule on the schedule that was set forth in the class notice and it's really the real-world testing that takes the time to assure, not so much that the emissions will go down to the level that EPA and CARB have decided they'll accept, but that the car is actually going to perform as well in the real world. I'm as impatient as anyone to see these fixes approved and announced, but I also recognize that EPA and CARB have said there aren't going to be any do-overs here, so this time around Volkswagen needs to get it right. And right, not just a less polluting car, but a car that's going to perform. And yeah, it's an engineering challenge. ... We couldn't wait on the fix. The court said, and I believe rightly so, you could wait forever for a fix, but meanwhile you've got pollution, people are uncertain, they're concerned, so figure out how to have a settlement structure that can start now even though the fixes aren't approved.
The decision that people have to make at this point in time is really the front-end threshold position. Do I participate in the buyback now or do I wait for the fix to be approved to see if it's something that's going to work for me? And that's the choice people have, and of course, they can change their minds at any point in the process. The one safeguard that was very important to us to build into this, because we didn't have a fix that had been approved and was in operation, was that if there is not an EPA/CARB-approved fix for a particular car, then the decision the consumer can make is either the buyback or no settlement, no deal. If there's an unfixable car, there's no deal.
"If there's an unfixable car, there's no deal."
[The EPA and CARB's] goal is still to try to get this back to the original level. As a practical matter, if it can't be done, they decide what pre-existing BIN level, or emissions compliance level, they will accept, and they both have to make the same decision, it's their decision to make. It's not a compromise, in other words. It's not something that's negotiated with Volkswagen, that's just an agency decision. They decide how low is low enough.
ABG: This all has to do with trying to get these diesel vehicles to be as promised, and if not the money goes to those other technologies, right?
EC: Yes. For example, on the zero-emissions piece of it, that $2 billion in new investment Volkswagen has to make, that's not investment in their own electric car projects, that's direct investment in infrastructure for everyone. Again, that's the government not only figuring out a practical way to make up for the emissions but also imposing a deterrent effect. You didn't invest in the right way in the low-emissions technology that you promised, so guess what? You're going to invest in everybody else's.
ABG: In the automotive industry, this is one of the biggest scandals, and fines, and customer buybacks that has happened in quite a while. Coming at it from a consumer perspective and looking at the history of the US versus companies, how does this fit and how does it feel to work on something this big? Or is it sort of a normal-sized issue in the realm outside of just the automotive space?
EC: This is big any way you look at it, and it's unique. It's not that the number of vehicles is the largest number of vehicles. It isn't. There were many more vehicles involved in the General Motors ignition switch scandal and litigation, but that's a more typical recall. It's a switch, the mechanical part can be removed and replaced with a non-defective one, and the auto industry knows how to do those recalls. It's big, it's expensive, but it's in the known realm.
"This is big anyway you look at it."
It's not the number of vehicles here, but it's the environmental violation, which is new. This is not something that the EPA or CARB have really done before, certainly not on this scale. I don't think that Volkswagen was expecting the laws on the books, it's there to be enforced, it wasn't a surprise, it shouldn't have been a surprise that this was a huge violation of the Clean Air Act. But I think what's new is agencies that feel empowered and are on a mission and themselves actually enforce something, not with a few million dollars in fines, but with billions of dollars in punishment and also in insistence that the real problem, the actual problem, be cleaned up.
To me, this is more akin to working on another type of environmental disaster. I worked on the Deep Water Horizon litigation, I worked on the Exxon Valdez litigation, and to me this feels more like those. Again, it's a real-world problem, there's a catastrophe, whether it's a dramatic one that everybody sees on the news, or an invisible one, and it has to be addressed. The challenge there is to try to use the legal processes that we have, the laws that we have, the remedies that we have, to not only have mass amounts of money change hands, but something that the law does in two dimensions, and it has an impact, but to actually fix the problem.
That's the part that excites me the most, is the most mundane piece of that, I guess, which is that we're going to go out and fix these cars or get them out of service, get them off the road, so that the problem that the consumers thought they were solving by buying this car can actually be solved.
ABG: There are so many pieces to this, as you've mentioned – customers, the different agencies – EPA and CARB – and the automaker, probably more we don't know about. On a day-to-day basis, what are some of the tasks that you and your office have to handle? Are you hearing from customers then relaying information? What are the some of the nuts and bolts of this process at this point, and also that got us to the settlement in the first place?
EC: It's interesting that you ask that, but when I talk about the litigations, I talk about it as a case or a lawsuit, actually it's a consolidation of hundreds of lawsuits that were brought last fall in the wake of the scandal and had to be coordinated through the federal court system. There's an elaborate procedure that takes cases filed in different places, coordinates them, centralizes them by sending them all to one federal judge. One judge, one court, one place. That judge has to organize the case so that it can be managed. On the plaintiff side, the plaintiff's world is not a world of big law firms. Everybody is a small practitioner in a small firm on the plaintiff side because we all work on contingency or court-awarded fees. We have to be coordinated so that we can work together. We brought a bunch of different suits for our different clients, now the court has to organize us.
"Actually, it's a consolidation of hundreds of lawsuits."
These days, how courts do that is they will appoint a lead counsel, or what's often called a plaintiff steering committee, we have both in this case, from the lawyers on the case. Lawyers apply for that position. They know that it means they'll have to work for everyone, not just their own clients. They know that it means they'll have to finance the litigation because the out-of-pocket costs are huge in these cases, and the plaintiffs don't pay those costs and they don't pay lawyers' fees.
ABG: How much are we talking about right now?
EC: I can't put a specific dollar sign on that because it's confidential, but of course the out-of-pocket costs on our side are in the millions of dollars. Easy. And many, many, many thousands of hours.
The judge organizes the lawyers and then the lawyer the judge appoints has to do just that. I'm lead counsel. There are 21 lawyers on the plaintiff steering committee. I run the plaintiff steering committee, assign duties, pay the bills, raise money to pay the bills, coordinate the activities of all the lawyers, was involved in the settlement negotiations, obviously. I picked a team of lawyers to work with me to do that. This is litigation by committee and this is litigation, that under the court's directive, has had to move at warp speed for very compelling reasons, which is to get out there and reduce the environmental harm and reduce the problem.
The challenge has been, it's a real-world case, a lot of people, thousands of people are actually named in these lawsuits. We have 475,000 2.0-liter cars. Many of those people got personally interested in the litigation, filed their own suits, so I work with their lawyers, I work with them. My typical day, I'm in California but I work on east coast time because, of course, the federal agencies do. We get up early east coast time, I work with the EPA, the DOJ, the FTC, later in the day with CARB, I report in to the court, I spend a lot of time corresponding and talking to class members because we got the settlement approval process out there now and people have questions. I've set up task forces and groups of lawyers and paralegals and staffers to answer class member questions, to work with consumers who have questions or problems. We've looked at millions of documents produced by Volkswagen and starting to be produced by Bosch. Obviously, many of those are in German so we do the translations.
The type of work ranges from the sublime, which would be high-level settlement negotiations, to the day-to-day; analyzing documents, looking at e-mails. We had to develop a strategy to try the case on an expedited basis because we didn't know until it happened whether we'd be able to negotiate a settlement in course.
ABG: You hear about how in negotiations you always start with the craziest, highest number you can get, even though you settle for something in the middle. This number, the $14.7 billion, is still a huge number. As you were setting up the settlement, as you were negotiating all of the lawyers and the plaintiff steering committee, how do you feel this $14.7 billion settlement fits in with what your original goal was? Does it meet it, exceed it? Do you wish you had gotten more?
EC: It meets our goal. And without getting into the details of settlement negotiation or settlement strategy, which the court has repeatedly told us is confidential, for obvious reasons – the way we approach this generally, this is not the type of settlement where it's just all about trying to hit the highest number. Although as it turns out, we did hit the highest number that there's ever been for an auto case or a consumer class action of any kind. And certainly the government hit the highest number there's ever been for environmental recovery.
"The government hit the highest number there's ever been for environmental recovery."
This transcript has been lightly edited for clarity.