Justice Department barred from sharing VW documents: judge

By David Shepardson

WASHINGTON (Reuters) - A federal magistrate judge blocked the U.S. Justice Department from sharing with a German law firm 25 million pages of records disclosed by Volkswagen AG in the government's diesel emissions investigation.

The order, issued late on Friday by U.S. Magistrate Judge Jacqueline Corley in California, is a win for the world's largest automaker, which faces 1,600 securities suits in Germany in connection with its diesel emissions scandal. The company turned over the documents as part of prosecutors' probe of its installing software to hide excess emissions.

The suits collectively seek nearly 8.6 billion euros ($10.3 billion) from Volkswagen, according to a court filing.

The Justice Department sued VW in Germany in September 2016 over losses in federal government employees' retirement accounts and retained German law firm GSK Stockmann to represent the U.S. government. It seeks to recover 30.8 million euros ($37 million), as well as interest and legal fees.

Lawyers for Volkswagen objected to the Justice Department's planned transfer of the documents and said if it were successful, all 1,600 plaintiffs would have access to them.

VW noted some Volkswagen submissions in Germany became public in the German press days after they were filed. "It is likely that at least some of these documents would also be leaked to the press," VW lawyer Thomas Liebscher wrote in an affidavit.

Judge Corley said that a protective order between Volkswagen and the government bars the sharing of the documents with the Justice Department's German law firm. Corley said GSK Stockmann cannot use the documents obtained by the department "to end-run around German discovery rules."

The Justice Department did not immediately respond to a request for comment.

Volkswagen has agreed to spend as much as $25 billion in the United States to resolve claims from owners and regulators over polluting diesel vehicles and has offered to buy back about 500,000 vehicles.

The German automaker in September 2015 admitted using sophisticated secret software in its cars to cheat exhaust emissions tests and in March pleaded guilty in a U.S. court to three felonies in connection with the scandal.

In June, U.S. District Judge Charles Breyer allowed some claims to proceed by investors who sued Volkswagen in a California court over its diesel emissions scandal.

Breyer ruled that Volkswagen and then-Chief Executive Officer Martin Winterkorn intentionally or recklessly understated VW's financial liabilities since May 2014. But he dismissed claims for financial statements issued before then.

(Reporting by David Shepardson; Editing by Dan Grebler)