William Mackie against Mercedes Benz Group Aktiengesellschaft and others (Court of Session)

Factual and Procedural Background

This opinion concerns group proceedings initiated by the Plaintiff against multiple corporate Defendants associated with the design, manufacture, importation, distribution, and financing of certain diesel engine vehicles. The Plaintiff alleges that prohibited defeat devices, as defined under Articles 3.10 and 5.2 of EU Regulation 715/2007, were installed in diesel engines of specified vehicles, which reduced the effectiveness of nitrogen oxide ("NOx") emissions control systems under normal driving conditions. The Plaintiff claims that regulatory approvals were obtained without disclosing these devices, thereby fraudulently certifying compliance with emissions legislation and causing loss to the group members. The Defendants deny the presence of prohibited defeat devices and contest the claims.

The Plaintiff seeks orders for document recovery and witness identification to improve the statement of the case. The Defendants partially oppose these requests. The court convened a preliminary hearing and directed a full argument on the matters.

Legal Issues Presented

1. Whether the court should grant orders for the production of specified documents under Rules of the Court of Session (RCS) 26A.21(2)(b)(iv) and (v) or alternatively by commission and diligence.
2. Whether the court should order disclosure of the identities of witnesses pursuant to RCS 26A.21(2)(b)(iv) to assist the Plaintiff in developing the case.
3. How to balance the competing interests of efficient litigation, proportionality, confidentiality, data protection rights under GDPR, and rights under Article 8 of the European Convention on Human Rights in relation to witness identity disclosure and document recovery.

Arguments of the Parties

Plaintiff's Arguments

• The Plaintiff bears the onus to prove the deployment of defeat devices and seeks to compel production of documents and witness identities necessary to establish this.
• Requests for documents closely align with those granted in analogous litigation and are essential for specifying the case.
• Documents sought relate to Certificates of Conformity, emissions control system designs, type-approval applications, regulatory investigations, recalls, software updates, and decisions by competition authorities.
• Witness identities are necessary to identify those responsible for emissions system design, testing, certification, regulatory correspondence, and software changes.
• Any interference with privacy rights under Article 8 ECHR is either not engaged or justified as proportionate and necessary for the litigation.
• GDPR provisions do not prevent disclosure where required by court order or legal proceedings.

Defendants' Arguments

• The application for witness disclosure was made with insufficient notice, causing difficulty in response.
• Document recovery requests are overly broad, not sufficiently targeted, and would require production of an unmanageable volume of commercially sensitive documents.
• Rules 26A.21(2)(b)(iv) and (v) are not intended to replace the commission and diligence procedure and should be interpreted narrowly and in line with existing principles.
• Many document requests lack proper basis in the pleadings and amount to fishing exercises.
• Disclosure of witness identities is excessively broad, vague, and would potentially require identifying a large number of individuals over many years and departments, including third parties no longer employed.
• Requests for identities of employees subject to penal orders in Germany raise serious legal and privacy concerns, including German constitutional and labour law and judicial comity.
• Article 8 ECHR and GDPR rights of employees must be considered; disclosure must be necessary, proportionate, and justified.
• The Plaintiff’s requests exceed what is required for further specification and efficient litigation and risk being disproportionate and impractical.

Table of Precedents Cited

Court's Reasoning and Analysis

The court conducted a detailed analysis of the Plaintiff's requests for document recovery and witness identity disclosure within the framework of the Rules of the Court of Session (RCS) Chapter 26A governing group proceedings. The court noted the broad powers conferred by RCS26A.21(2)(b)(iv) and (v) for early and efficient disclosure at the preliminary hearing stage, emphasizing that these powers are distinct from, but do not exclude, traditional commission and diligence procedures.

In relation to document recovery, the court found that the Plaintiff's requests in paragraphs 1 to 5 of the list were sufficiently connected to the matters in dispute and were not opposed at the hearing. The court acknowledged the Defendants' concerns regarding confidentiality and volume but noted that procedures exist to manage these issues, such as the appointment of commissioners and confidential envelope procedures. The court ordered the Defendants to produce the requested documents subject to minor amendments and to provide rolling updates on progress.

The court refused the requests for documents in paragraphs 6 and 7 concerning European and Korean competition authority decisions, finding these to be collateral to the Plaintiff's pleaded case and not likely to materially assist in the proceedings. Similarly, the request for documents related to the Amsterdam District Court order was refused on grounds of judicial comity and the principle that document recovery is governed by the lex fori.

Regarding witness identity disclosure, the court emphasized that the power to order disclosure is to be exercised with a view to the efficient and fair progress of the litigation, balancing relevance, necessity, proportionality, and privacy rights under GDPR and Article 8 ECHR. The court rejected the Defendants' narrow interpretation of the rule and recognized the evolving cooperative nature of modern litigation.

The court found that while the identities sought relate to individuals involved in complex and multi-layered processes within large corporate entities, the requests were imprecise, overly broad, and posed significant practical difficulties. The phrase "ultimately responsible" was deemed too vague to form a workable order. Some requests lacked clear basis in the pleadings or were likely to emerge from document production, rendering separate witness orders unnecessary.

The court also held that the request for identities of employees subject to penal orders in Germany could not be granted due to foreign legal restrictions and principles of judicial comity.

On privacy rights, the court concluded that the mere disclosure of names and contact details to the Plaintiff does not engage Article 8 ECHR to a degree warranting refusal, and any interference would be lawful, necessary, and proportionate. GDPR provisions do not prevent disclosure where required by court order. However, data privacy expectations remain a relevant factor in the balancing exercise.

Ultimately, the court granted document recovery orders for paragraphs 1 to 5 and refused all other document requests and the witness identity disclosure application as currently framed, emphasizing the need for specificity, proportionality, and practical feasibility in such orders.

Holding and Implications

The court's final decision is as follows:

The court grants the Plaintiff's application for document recovery in terms of RCS 26A.21(2)(b)(v) for paragraphs 1 to 5 of the document list, subject to minor modifications.

The court refuses the Plaintiff's application for document recovery in respect of paragraphs 6 to 8 and refuses the application for disclosure of witness identities as currently formulated.

The implications of this ruling are that the Plaintiff will gain access to key documentary evidence early in the proceedings, facilitating case development and efficient litigation. However, the court declined to order broad or vague witness disclosures and refused access to documents unrelated to the pleaded case or barred by principles of judicial comity. No new legal precedent was established; rather, the decision applies established principles of proportionality, relevance, and procedural fairness within the framework of group proceedings.