Volkswagen

Volkswagen wins court ruling over trial location

Volkswagen AG, Europe's largest automaker, won a federal appeals court ruling that limits where it can be sued over allegations of defective parts, a decision that may also curb patent lawsuits in an east Texas town.

The U.S. Court of Appeals in New Orleans said the trial judge erred in rejecting Volkswagen's argument that a product - liability case over a 2005 Dallas car crash should be heard in that city. The automaker said it wanted to avoid a trial in Marshall, Texas, over a lawsuit in which the relatives of a 7-year-old girl blamed a defective seat for her death.

The case has been closely watched by companies and patent lawyers who argue Marshall has become a hub of litigation because patent owners win in a majority of cases there. In the Volkswagen case, as in many patent suits, the judge rejected a transfer bid because the party that filed the suit got to choose the location.

The appellate court, in a 10-7 opinion issued Oct. 10, said the decision by U.S. District Judge T. John Ward in Marshall was based on “extraordinary errors'' in interpreting the law. While the plaintiff's choice “should be respected,'' the appeals court said, the case should be transferred if the other court “is clearly more convenient.''

The New Orleans appeals court, the Fifth U.S. Circuit, has jurisdiction over federal district courts in Texas, Louisiana and Mississippi. The entire court heard the case because there have been conflicting rulings on the issue among the circuit's judges.

(Published by Bloomberg- October 14, 2008)