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Could Volkswagen's In-House Lawyers Be Prosecuted?

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By Casey C. Sullivan, Esq. on January 17, 2017 2:56 PM

Volkswagen has agreed to plead guilty to criminal charges and settle the federal investigation into its "clean diesel" emissions fraud -- for $4.3 billion in civil and criminal penalties. That comes on top of the nearly $15 billion the company has agreed to pay to consumers, making VW's emissions scandal perhaps the most costly corporate scandal ever.

But that's hardly the end of things for VW. Last week, six executives were charged with wire fraud, conspiracy, and violations of the Clean Air Act -- and more prosecutions could be coming, implicating even the company's in-house attorneys.

The Mysterious "Attorney A"

While the investigation into VW's use of "defeat devices" to evade emissions tests on its diesel vehicles hasn't resulted in charges against the highest ranking leaders in the company, it has drawn attention to at least one VW attorney. As Corporate Counsel noted, the statement of facts attached to last Wednesday's plea agreement implicates one, so-far-unidentified VW lawyer, called "Attorney A."

Attorney A was "the in-house attorney principally responsible for providing legal advice in connection with VW AG's response to U.S. emissions issues." As such, the attorney was part of discussions surrounding a litigation hold on documents.

The attorney told VW employees that a litigation hold would soon apply to certain documents, statements which employees "understood to mean that they should delete documents prior to the hold being issued."

Employees then deleted thousands of documents.

Poor Communication or Obstruction of Justice?

What exactly did Attorney A say to employees that caused them to start rapidly hitting delete? Were VW workers actually instructed to destroy documents, even implicitly? The document doesn't say.

It's possible that any destruction of documents was simply a result of poor communication, rather than obstruction. As Ariel Neuman, of the boutique litigation firm Bird Marella, writes on his blog:

The best case interpretation of the facts in the plea agreement is that the attorney did not clearly and accurately define the employees' obligations and the potential ramifications of destroying evidence, and the employees misinterpreted the warnings of a coming litigation hold. The attorney presumably did not explain that deleting documents relevant to a criminal investigation is a separate offense.

But that's just one interpretation.

With one executive under arrest and six criminal indictments announced the same day as the settlement, the VW case is an important reminder of the DOJ's relatively new focus on prosecuting individual wrongdoers when companies break the law, a policy enshrined in the 2015 Yates Memo.

So far, those indictments have reached engine developers, quality management supervisors, an engineering manager, and an environmental compliance manager -- but no in-house attorneys.

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