VW Loses Legal Bid to Keep Diesel Scandal Report Under Wraps

(Bloomberg) -- Volkswagen AG lost a suit at Germany’s top court seeking to ban Munich prosecutors from using a report they seized from Jones Day, the U.S. law firm the carmaker hired to investigate the roots of its diesel-emissions scandal.

The Federal Constitutional Court in Karlsruhe ruled that under German law the attorney-client privilege, which protects the work of a lawyer for a client, only bans prosecutors from seizing documents if the lawyer is working for a suspect in a criminal case.

As the Munich probe targets VW’s Audi unit and not VW, the seizure was legitimate, the court said. It also said that VW couldn’t object to the raids because Jones Day’s premises weren’t its own.

Munich prosecutors raided the headquarters and main sites of VW’s Audi premium-car division in March 2017, three hours before the biggest profit contributing brand of the group began its annual earnings press conference attended by media from across the globe. A court in the Bavarian capital later rejected VW’s bid to block prosecutors from accessing the report that was seized in the wake of the search at the Jones Day office.

The company “welcomes the fact that the Federal Constitutional Court decision has now provided clarity with regard to the outstanding legal issues, even though the court did not share Volkswagen AG’s understanding of the law,” it said in an emailed statement. “The companies of the Volkswagen group will continue to cooperate with the federal authorities, giving due consideration to the decision of the Federal Constitutional Court,” VW said.

Jones Day had also filed its own separate complaint against the raid and the seizure that the top judges also rejected. The firm can’t invoke rights under Germany’s constitution as it is incorporated under U.S. law, the court said.

VW hired Jones Day right after revealing in September 2015 that as many as 11 million diesel cars worldwide were rigged to cheat on emissions tests. The law firm was assigned to conduct an independent probe into the roots of the biggest scandal in the manufacturer’s history, review documents and determine who was responsible for the misconduct. Jones Day has reported the findings to the U.S. Department of Justice and VW’s supervisory board. The information was the basis for a settlement VW reached with U.S. authorities last year.

The cases are: BVerfG, 2 BvR 1287/17, 2 BvR 1405/17 and 2 BvR 1583/17.

--With assistance from Elisabeth Behrmann and Christopher Elser.

To contact the reporters on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net;Christoph Rauwald in Frankfurt at crauwald@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Peter Chapman, Andrew Noël

©2018 Bloomberg L.P.