You will recall that two years ago Volkswagen got in $14.7 billion worth of class action trouble for rigging software in its diesel cars to fake compliance with U.S. emission standards. The

We now learn that Volkswagen didn’t act alone.

Something rotten in Stuttgart

The German weekly news magazine Der Spiegel revealed over the weekend that, starting in 2006, Volkswagen teamed up with its Teutonic rivals BMW and Mercedes-Benz (Daimler) to avoid competing for customers.

Der Spiegel points particularly to the car makers’ savings of 80 Euros ($93) a vehicle from an agreement to limit the size of tanks holding the juice (mostly urea) allowing the emissions system to neutralize the nasty nitrogen oxide (NOx) that diesel engines emit. As a result, the cars had too little urea to knock out all the NOx. And that in turn made the software cheat necessary in order to obscure the vehicles’ failure to meet NOx emissions standards.

As Forbes wryly points out, when “you make 10 million cars a year, those 80 Euros quickly turn into real money.”

Ratting out the competish

Der Spiegel reports (with thanks to Google translator) that the cartel started decades ago:

The agreements of German car manufacturers are likely to form one of the largest cartel cases in German industrial history. They began in the 1990s and were extended to more and more subjects, probably because offenses against competition law in the [early] days were regarded as rather harmless rule violations, comparable to wrong parking.

The cartel came to light when Volkswagen turned itself in a few weeks ago. The company, which also owns Audi and Porsche, had turned over documents to Germany’s Federal Cartel Office in connection with an investigation of the steel industry. Der Spiegel notes:

Volkswagen itself then searched through all the documents that could be in this context and made them available to the cartel guards in Brussels and Bonn. This was by no means due to insight or remorse. The company wanted to take advantage of its last chance to get as far out of the matter as possible – by betraying everything and whistling the old partners.

(I guess “cartel guards” refers to antitrust enforcers and “whistling the old partners” means blowing the whistle on them.)

But the Mercedes-Benz folks also clamored to confess. Noting that which one begged for mercy first will determine which of them gets more lenient treatment, Der Spiegel concludes that in “this case, Daimler and Volkswagen are now competing with each other.”


What happens next

In the coming days, we will likely see a deluge of cases against Audi, BMW, Mercedes-Benz, Porsche, and Volkswagen.

They will at first mainly consist of putative class actions by individual owners of diesel cars and light trucks. Those cases will principally seek damages under state antitrust, consumer protection, contract, and unjust enrichment laws, but they may also request injunctive relief under federal antitrust law. Indirect purchasers like them do not have standing to,sue for damages under the federal Sherman Act.

Actions by dealers and other direct purchasers of Audi, BMW, Mercedes-Benz, Porsche, and Volkswagen vehicles will proceed under section 1 of the Sherman Act. These cases typically have the most value but take longer to develop and organize. Dealers have ongoing relationships with the manufacturers and tend to take a more circumspect approach to joining in litigation.

A big question will concern in which venue the dozens of cases from around the country will end up. That decision will fall to the Judicial Panel on Mulidistrict Litigation. Within several months, it will rule on which U.S. district court and which district judge to send the actions for pretrial proceedings.

The Panel chose Judge Charles Breyer in San Francisco for the fraud cases against Volkswagen. It may select him as well for the antitrust cases.

But the antitrust claims will have a broader scope. They won’t involve only the cheating on emissions. Per Der Spiegel, it will deal with a long-standing cartel that met hundreds of times and engaged in a variety of anticompetitive conduct.

The difference in focus and scope may prompt the Panel to transfer the cases to another district.

Candidates will likely include the Northern District of Georgia, U.S. headquarters of Mercedes-Benz and Porsche; the District of New Jersey, the U.S. Home of BMW; and the Eastern District of Virginia, where Volkswagen and Audi hang their American corporate hats.

Email this postShare this post on LinkedIn
Photo of Barry Barnett Barry Barnett

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck…

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck Redden).

Barnett is a Fellow in the American College of Trial Lawyers, and Lawdragon has named him one of the top 500 lawyers in the United States three years in a row. Best Lawyers in America has honored him as “Lawyer of the Year” for Bet-the-Company Litigation (2019 and 2017) and Patent Litigation (2020) in Houston. Based in Texas and New York, Barnett has tried complex business disputes across the United States.

Barnett’s background, training, and experience make him indispensable to his clients. The small-town son of a Texas roughneck and grandson of a Texas sharecropper, Barnett “developed an unusual common sense about people, their motivations, and their dilemmas,” according to former client Michael Lewis.

Barnett has been historically recognized for his effectiveness and judgment. His peers chose him, for example, to the American College of Trial Lawyers and American Law Institute. His decades of trial and appellate work representing both plaintiffs and defendants have made him a master strategist and nimble tactician in complex disputes.

Barnett focuses on enforcement of antitrust laws, the “Magna Carta of free enterprise,” in Supreme Court Justice Thurgood Marshall’s memorable phrase. “Barry is one of the nation’s outstanding antitrust lawyers,” according to Joseph Goldberg, a member of the Private Antitrust Enforcement Hall of Fame. Named among Texas’s top ten antitrust lawyers of 2023, Business Today calls Barnett a “trailblazer” among the “distinguished legal minds” who “dedicate their skill and expertise to the maintenance of healthy competition in various sectors” of the Lone Star State’s booming economy. Barnett is also adept in energy and intellectual property matters and has battled for clients against a Who’s Who list of corporate behemoths, including Abbott Labs, Alcoa, Apple, AT&T, BlackBerry, Broadcom, Comcast, Dow, JPMorgan Chase, Samsung, and Visa.

Barnett commands a courtroom with calm and credibility and “is the perfect lawyer for bet the company litigation,” said Scott Regan, General Counsel of former client Whiting Petroleum. His performance before the Supreme Court in Comcast Corp. v. Behrend prompted the Court to withdraw the question on which it had granted review. The judge in a trial involving mobile phone technology called Barnett “one of the best” and that his opening statement the finest he had ever seen. Another trial judge told Barnett minutes after a jury returned a favorable verdict against the county’s biggest employer that he was one of the two best trial lawyers he’d ever come across—adding that the other one was dead.

A versatile trial lawyer, Barnett knows how to handle a case all the way from strategic pre-suit planning to affirmance on appeal. He’s tried cases to verdict and then briefed and argued them when they went before appellate courts, including the Second, Third, Fifth, and Tenth Circuits, the Supreme Court of Louisiana, and (in the case of Comcast Corp. v. Behrend) the Supreme Court of the United States.

Barnett is a sought-after public speaker, often serving on panels and talking about topics like the trials of antitrust class actions and techniques for streamlining complex litigation. He also comments on trends in commercial litigation and the implications of major rulings for outlets such as NPR, Reuters, Law360, Corporate Counsel, and The Dallas Morning News. He’s even appeared in a Frontline program about underfunding of state pensions, authored chapters on “Fee Arrangements” and “Techniques for Expediting and Streamlining Litigation” (the latter with Steve Susman) in the ABA’s definitive treatise on Business and Commercial Litigation in Federal Courts, 5th, and commented on How Antitrust Enforcers Might Think Like Plaintiffs’ Lawyers.

Clients and other hard graders have praised Barnett for his courtroom skills and legal acumen.

A client in a $100 million oil and gas case, which Barnett’s team won at trial and held on appeal, said Barnett and his team “presented a rare combination of strong legal intellect, common sense about right and wrong, and credibility in the courtroom.” David McCombs at Haynes and Boone said Barnett “has a natural presence that goes over well with juries and judges.”

Even former adversaries give Barnett high marks. Lead opposing counsel in a decade-long antitrust slugfest said “Barry is a highly skilled advocate. He understands what really matters in telling a narrative and does so in a very compelling manner.”

Barnett relishes opportunities to collaborate with all kinds of people. At the Center for American and International Law (CAIL), founded by a former prosecutor at Nuremberg in 1947 and headquartered in the Dallas area, he has served on the Executive Committee, co-chaired the committee that produced CAIL’s first-ever strategic plan, supported CAIL’s Institute for Law Enforcement Administration and other development efforts, and proposed formation of a new Institute for Social Justice Law. CAIL’s former President David Beck said “Barry is extremely bright” and is “very well prepared in every lawsuit or professional task he undertakes.”

Barnett is also a Trustee of the New-York Historical Society, a Sterling Fellow at Yale, a member of the Yale University Art Gallery’s Governing Board, a winner of the Class Award for his work on behalf of his college class, and a proud contributor to the Yellow Ribbon Program at Harvard Law. Barnett’s pro bono work includes leading the trial team representing people who are at greatest risk of severe illness and death as a result of being exposed to the novel coronavirus SARS-CoV-2 while being detained in the Dallas County jail—work for which he received the NGAN Legal Advocacy Fund RBG Award.

At Susman Godfrey, Barnett has served on the firm’s Executive Committee, Employment Committee, and ad hoc committees on partner compensation, succession of leadership, and revision of the firm’s partnership agreement. He also twice chaired the Practice Development Committee.

Barnett understands that clients face many pressures. Managing the stress is important, especially in matters that take years to resolve. He encourages clients to call him whenever they have a question or concern and to keep the inevitable ups and downs in perspective. He wants them to know that he will do his level best to help them achieve their goals. He also strives to foster trust and to make working with him a pleasure.

Cyrus “Skip” Marter, the General Counsel of Bonanza Creek in Denver and a former Susman Godfrey partner and client, said Barnett is “excellent about communicating with clients in a full and honest manner” and can “negotiate for his clients from a position of strength, because he is not afraid to take a case through a full trial on the merits.” Stacey Doré, the President of Hunt Utility Services and a former client, said that Barnett is “an excellent trial lawyer and the person you want to hire for your bet-the-company cases. He is client focused, responsive, and uniquely savvy about trial and settlement strategy.” A New York colleague said, “Barry is a joy to work with as co-counsel. He tackles complex procedural and factual hurdles capably, efficiently, and without drama.”

Barnett’s wide-ranging experience and calm, down-to-earth approach enable him to connect with clients, judges, jurors, witnesses, and even opposing counsel. He grew up in Nacogdoches, Texas. He co-captained his high school varsity football team as an All-East Texas middle linebacker while also serving as the Editor of Key Club’s Texas-Oklahoma District, won the Best Typist award, took the History Team to glory, and sang in the East Texas All Region Choir. As Dan Kelly of client Vistra Corp. put it, Barnett is “a great person to be around.”

Barnett is steady and loyal. He has practiced at Susman Godfrey his entire career. He and his wife Nancy live in Dallas and enjoy spending time in Houston and New York. Their daughter works for H-E-B in Houston, and their son is a Haynes and Boone transactions lawyer in Dallas.

As a member of Ivy League championship football teams in his junior and senior years at Yale and a parent of two Yalies, Barnett has no trouble choosing sides for “The Game” in November. And he knows how important fighting all the way to the end is. On his last play from scrimmage, in the waning minutes of The Game on Nov. 22, 1980, he recovered a Crimson fumble.

Yale won, 14-0.