U.S. District Judge Charles Breyer, Northern District of California

Enough already.

That was the message from U.S. District Judge Charles Breyer on Friday during a status conference for the U.S. Securities & Exchange Commission’s suit against Volkswagen in connection with the diesel emissions cheating scandal.

The San Francisco-based judge took it upon himself to stay all discovery and directed to the parties “to sit down and see if you can work it out because whatever you work out today will be less expensive to everybody than what you would work out in the future.”

Breyer declined to let lawyers from either side speak much beyond introducing themselves—Dan Hayes and Jake Schmidt on behalf of the SEC, and Robert Giuffra and Suhana Han of Sullivan & Cromwell on behalf of the VW defendants. 

“I’m not going to invite any comment. I don’t even want to hear any comment,” Breyer said, according to a transcript of the proceedings.

The SEC sued VW earlier this year, alleging that the company (which is primarily listed on the Frankfurt Stock Exchange) sold “billions of dollars of corporate bonds and other securities in the United States … without disclosing that its ‘clean diesel’ cars used defeat devices to conceal substantial emissions problems.”

VW counters that the bonds were bought exclusively by giant, sophisticated investors, and that all payments of interest and principal were made in full and on time. But the SEC says that the bonds were riskier than the investors were led to believe, so they should have gotten a higher interest rate. 

It’s heartbreaking, I know. Try not to cry yourself to sleep tonight.

The timing of the suit earned Breyer’s ire because VW already settled with everybody and their mother in 2016. At a status conference in May, the judge compared the SEC to a “carrion hawk that simply descends when everything is all over and sees what it can get from the defendant.”

On Friday, he broadly hinted that even if the SEC were to win, it wouldn’t be worth its while.

“We are talking about the allocation of significant resources in order to litigate an issue of liability which under these—this set of laws, Volkswagen says they have not run afoul of, okay,” Breyer said, noting that there would likely be extensive discovery, including witnesses in Germany, where VW is based.

And for what? 

“[I]f the court were to conclude that there is some liability here—after an extensive motion practice and discovery practice—the court then would be obligated to assess penalties, I assume. That is what follows after liability, penalties and a lot of things go into it,” he said.

To assess a fine, he reminded the lawyers, the court considers a number of factors, including “Whether the penalty should be reduced to account for other sanctions that the defendant faces or has paid whether criminal or civil. So if that’s a correct statement of the law—and I have no reason to believe it is not a correct statement of the law …”

Giuffra chimed in. “Your honor, we think it definitely is.”

Breyer continued, “Volkswagen has paid approximately $22 billion or some sum around that.”

“I think it is actually over 25 at this point,” Giuffra told the court.

“Okay, 25. I’m not going to quibble over 3 billion,” Breyer said.

The point is, he continued, “whatever penalty—Tier One, Tier Two, Tier Three or Tier Twenty—whatever it is, on the one side of the ledger will be fact that they have paid 23, 24, $25 billion. … So that’s where I see the case evolving if the SEC is correct in their allegations that there is liability.”

In other words, don’t expect much in the way of recovery.

Still, the two sides may have a hard time finding middle ground. The SEC wants disgorgement, prejudgment interest, civil penalties, permanent injunctions and an officer and director bar.

But VW in court papers frames the suit as “a case of a government agency belatedly piling on.” It says the complaint lacks merit, denies making any misstatements or omissions in connection with the bond offerings, and points out that the company has already surrendered any alleged ill-gotten gains many times over—paying an average of $40,000 per offending vehicle, “dwarfing any conceivable profit.”

Still, Giuffra in an interview said his client is ready to talk. “As we’ve shown in the past four years, VW is always open to settling cases on fair terms.”