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C L A S S A C T I O N R E P O R T E R
Thursday, January 16, 2014, Vol. 16, No. 11
Headlines
163RD STREET IMPROVEMENT: Sued Over Alleged Racial Discrimination
935 8TH AVENUE: Class Seeks to Recover Unpaid Overtime Wages
ADVANCE STORES: Removed "Brammer" Suit to S.D. West Virginia
AIC LTD: Gowling Discusses Supreme Court Class Action Ruling
AYKEN INC: Accused of Not Paying Minimum and Overtime Wages
BAXTER INT'L: Initiates Voluntary Recall of CLINIMIX Products
BARCLAYS BANK: Manipulates FX Rates and FX Market, Suit Claims
BERNARD L. MADOFF: Settlement Agreements Reached With JPMorgan
BERNARD L. MADOFF: Class Action Co-Lead Counsel Laud Settlement
CANADA: Veterans' Class Action to Move Forward in Mid-2014
CANADA: Farmers Appeal Wheat Board Class Action Ruling
CANNERY CASINO: "Yanchak" Suit Seeks to Recover Unpaid Overtime
COLEMAN CABLE: Being Sold Too Cheaply to Southwire, Class Claims
COMCAR INDUSTRIES: Accused of Not Paying Overtime Compensation
CORDISH COS: Principals Expect to Begin Settlement Talks
DAVITA HEALTHCARE: Granuflo, NaturaLyte Class Action Ongoing
DIGNITY HEALTH: Judge Denies Motion to Dismiss Class Action
DYNIA & ASSOCIATES: Accused of Violating Fair Debt Collection Act
EVANSTON NORTHWESTERN: Jones Day Discusses Class Action Ruling
FACEBOOK INC: Faces Class Action Over E-mail Privacy Violation
GARY M. FELDMAN: Accused of Illegal Debt Collection Practices
HORIZON HEALTH: Patients Likely Exposed to Unsterilized Forceps
INDALEX INC: Kaplin Stewart Discusses Ruling on Insurance Coverage
KINROSS GOLD: Stikeman Elliott Discusses Class Action Ruling
L'OREAL USA: McGuireWoods Discusses Class Action Settlement Ruling
MEADOWS CASINO: Former Casino Dealer Files Overtime Class Action
NATIONAL FOOTBALL: "Demarie" Suit Removed to E.D. Pennsylvania
NEW ENGLAND COMPOUNDING: Jan. 15 Meningitis Claims Bar Date Set
NOVARTIS AG: Sells Excedrin Migraine at Higher Price, Suit Says
OUTBACK STEAKHOUSE: Wolf Rifkin Shapiro Files Amended Complaint
PFIZER INC: Lipitor Plaintiffs May Face Statute of Limitations
PLYMOUTH: 100+ People Died From Asbestos Exposure
PROVIDENCE HEALTH: Judge Approves Autism Class Action
REDBOX AUTOMATED: Hartford Says It Has No Duty to Defend Suit
SENSA PRODUCTS: To Settle FTC's Deceptive Ad Charges for $26.5MM
SHELL RAPID: Suit Seeks to Recover Unpaid Minimum and OT Wages
SIRIUS XM: Being Sold for Too Little to Liberty Media, Suit Says
SKECHERS USA: Faces "Arns" Suit for Misrepresenting Shape-Ups
STAR SCIENTIFIC: Judge Set to Hear Shareholder Suit
STRYKER CORP: Appeals Court Reverses Dismissal of Pain Pump Suit
TAKEDA PHARMACEUTICAL: Delays Competition for ACTOS, Suit Claims
TAKEDA PHARMACEUTICAL: Faces "Crosby" Suit Over ACTOS Tablets
TALBOTS INC: Judge Approves $237,500 Plaintiffs' Class Counsel Fee
TARGET CORP: Removes "Due Fratelli" Class Suit to N.D. Illinois
TARGET CORP: Beasley Allen Files Second Data Breach Class Action
TARGET CORP: Data Breach Suits May Be Consolidated as MDL
TREX CO: Class Action Settlement Gets Final Court Approval
TURQUOISE HILL: Faces Investor Class Action in New York
TYSON FOODS: Recalls 34,000 Pounds of Chicken Products
UNITED FURNITURE: Stikeman Elliot Discusses Class Action Ruling
UTAH: Class Action Closed Over Illegal Use of Plaintiffs' Names
WAL-MART STORES: Judge Sends Class Action Back to Pa. State Court
WALTPETERICH RESTAURANT: Faces "Garcia" Suit Over Unpaid Overtime
WARNER MUSIC: Submits Royalty Rate Class Action Settlement
WETHERSFIELD HIGH SCHOOL: Closes Gymnasium Over Asbestos
WHOLE BODY RESEARCH: Removed "Hoffman" Fraud Suit to New Jersey
* Faulty Bicycles, Tables Among Recently Recalled Products
* FTC Imposes Hefty Fines on Four Diet-Supplement Makers
* High-Chair-Related Injuries Up 22% Between 2003 & 2010
* Law360 Cites Class Actions to Watch for in 2014
* Proposed Law to Radically Overhaul Medical Malpractice System
* Wage-and-Hour Suits Up 10% in 2013, Seyfarth Lawyer Says
*********
163RD STREET IMPROVEMENT: Sued Over Alleged Racial Discrimination
-----------------------------------------------------------------
Margarita Muniz and Nadena Flores, individually and on behalf of
others similarly situated v. 163rd Street Improvement Council,
Inc., ADP Totalsource, Inc., ADP Totalsource I, Inc., and
Cassandra Perry, Case No. 1:13-cv-09251-ALC (S.D.N.Y.,
December 31, 2013) alleges that the Defendants fail to pay their
employees proper wage for each hour they worked and pay overtime
compensation required by federal and state laws to those who
worked in excess of 40 hours per week.
The Plaintiffs also challenge the Defendants' practice of racial,
pregnancy and national origin discrimination and retaliation in
the terms of the Plaintiffs' employment, in violation of the New
York State Human Rights Law.
163rd Street Improvement Council, Inc., is a New York domestic
not-for-profit corporation headquartered in Bronx, New York. ADP
Totalsource, Inc., and ADP Totalsource I, Inc., are foreign
business corporations organized in Florida but authorized to do
business in New York. Cassandra Perry had authority to hire and
fire the Plaintiffs, set their rates of pay, set their work
schedules and maintain employment records.
The Plaintiffs are represented by:
Liane Fisher, Esq.
Michael Taubenfeld, Esq.
SERRINS FISHER LLP
233 Broadway, Suite 2340
New York, NY 10279
Telephone: (212) 571-0700
Facsimile: (212) 233-3801
E-mail: liane@serrinsfisher.com
michael@serrinsfisher.com
935 8TH AVENUE: Class Seeks to Recover Unpaid Overtime Wages
------------------------------------------------------------
Hugo Grande, on behalf of himself and others similarly situated v.
935 8th Avenue Bakery Corp. d/b/a Bread Factory Cafe, Nikolaos
Glenois, James Nicozisis, Nick Tetenes, and John Does #1-10,
jointly and severally, Case No. 1:13-cv-09241-PKC (S.D.N.Y.,
December 31, 2013) seeks to recover unpaid overtime wages, spread-
of-hours premiums and statutory penalties for notice-and-
recordkeeping violations for the Plaintiff and his similarly
situated co-workers.
935 8th Avenue Bakery Corp., d/b/a Bread Factory Cafe, is a New
York domestic business corporation. Bread Factory is a busy and
popular restaurant located in the Hell's Kitchen neighborhood of
Manhattan and is open 24 hours per day, seven days per week. The
Individual Defendants and the Doe Defendants are shareholders of
Bread Factory.
The Plaintiff is represented by:
Eugene Gerald Eisner, Esq.
EISNER & ASSOCIATES, P.C.
113 University Place
New York, NY 10003
Telephone: (212) 473-8700
Facsimile: (212) 473-8705
E-mail: gene@eisnermirer.com
ADVANCE STORES: Removed "Brammer" Suit to S.D. West Virginia
------------------------------------------------------------
The purported class action lawsuit styled Brammer v. Advance
Stores Company, Inc., Case No. 13-C-130, was removed from the
Circuit Court of Lincoln County to the United States District
Court for the Southern District of West Virginia (Charleston).
The District Court Clerk assigned Case No. 2:13-cv-33955 to the
proceeding.
The Plaintiff is represented by:
Jonathan R. Marshall, Esq.
Rodney Arthur Smith, Esq.
BAILEY & GLASSER
209 Capitol Street
Charleston, WV 25301-1386
Telephone: (304) 345-6555
Facsimile: (304) 342-1110
E-mail: jmarshall@baileyglasser.com
rsmith@baileyglasser.com
The Defendant is represented by:
Ancil G. Ramey, Esq.
Hannah C. Ramey, Esq.
STEPTOE & JOHNSON
P. O. Box 2195
Huntington, WV 25722-2195
Telephone: (304) 526-8133
Facsimile: (304) 526-8133
E-mail: Ancil.Ramey@steptoe-johnson.com
AIC LTD: Gowling Discusses Supreme Court Class Action Ruling
------------------------------------------------------------
Scott Kugler, Esq. -- scott.kugler@gowlings.com -- Erin Farrell,
Esq. -- erin.farrell@gowlings.com -- and Josh Hane, Esq. at
Gowling Lafleur Henderson LLP report that in dismissing an appeal
from the decision of the Ontario Court of Appeal in AIC v. Fischer
on December 12, 2013, the Supreme Court of Canada revisited the
preferable procedure aspect of the certification test for class
proceedings. The decision focused on access to justice, and
states that courts must consider both the costs and the benefits
of a class action as compared to an alternative procedure in
deciding which is preferable. This requires the court to consider
whether a class action or an alternative process would be best
suited to offer (i) a fair process to resolve the plaintiffs'
claims, and (ii) access to a just and effective remedy if the
claims are successful.
Case History
The action was commenced by investors who claimed to have suffered
losses as a result of "market timing" activities that allegedly
occurred in certain mutual funds. The defendants were the mutual
fund managers who were alleged to have allowed market timing to
occur.
The Ontario Securities Commission commenced regulatory proceedings
against the defendant mutual fund managers ten years ago. The
regulatory proceedings were settled and the mutual fund managers
paid millions of dollars in restitution to affected investors,
including the plaintiffs.
The plaintiffs led evidence at the certification motion that the
amounts received pursuant to the regulatory settlements did not
fully compensate them for their losses and they argued that they
should be entitled to pursue further recovery through the courts.
The defendants took the position that the plaintiffs had been
adequately compensated through the regulatory process and did not
require a class action to obtain access to justice.
Preferable Procedure Analysis
The Supreme Court's analysis focused on section 5(1)(d) of the
Ontario Class Proceedings Act, which requires the court to
determine whether a class proceeding is the preferable procedure
for the resolution of the common issues.
The Court confirmed that the preferable procedure analysis
requires the court to compare the class action against other
methods of resolving the claim and that this analysis must be
considered through the lens of the three principal goals of class
actions: behavior modification, judicial economy and access to
justice. The Supreme Court noted, however, that the focus should
remain on preferability as the plaintiff does not need to prove
that the class action will actually achieve all three of the goals
of class actions.
Access to justice was held to have two interconnected dimensions:
(i) process, which is concerned with whether plaintiffs "have
access to a fair process to resolve their claims"; and (ii)
substance, which is concerned with whether plaintiffs "will
receive a just and effective remedy for their claims if
established".
As the Supreme Court noted in Hollick v. Toronto (City) 2001 SCC
68 and reiterated in this case, a class action will serve the goal
of access to justice if: "(1) there are access to justice concerns
that a class action could address; and (2) these concerns remain
even when alternative avenues of redress are considered." A
five-question framework for analysis of these issues was created
by the Supreme Court:
1. What are the barriers to access to justice?
There are various barriers to access to justice, the most common
of which is economic. However, the Supreme Court recognized that
there are also psychological and social barriers to access to
justice including ignorance of the availability of substantive
legal rights, ignorance of the fact that damages have occurred,
limited language skills, age, frail emotional or physical state,
fear of reprisal by the defendant, or alienation from the legal
system as a result of negative experiences with it.
2. What is the potential of the class proceeding to address the
barriers?
This part of the analysis considers the relative ability of the
class action, as compared to any other alternative mechanism, to
address the barriers to access to justice that are present in the
case at issue. While a class action will provide access to the
courts for plaintiffs, the Supreme Court was careful to note that
this only guaranteed a fair process, but not necessarily
substantive results, which is an important dimension of access to
justice.
3. What are the alternatives to the class proceedings?
Unlike the US class action process, the process in Canada allows
the court to consider procedures both within the court system
(e.g. individual actions, joinder, test cases, consolidation) and
outside the court system.
4. To what extent do the alternatives address the relevant
barriers to access to justice?
Once the alternatives to a class action have been identified, they
must be assessed to determine the extent to which they address the
barriers to access to justice that exist in the case. The Supreme
Court noted that while the court process is not necessarily the
"gold standard for fair and effective dispute resolution",
alternatives must provide suitable procedural rights.
5. How do the proceedings compare?
This is the stage of the analysis where the court must determine
whether the class action is the "preferable procedure to address
the specific procedural and substantive access to justice
concerns" in the case. This should also involve, to the extent
possible, a consideration of both the costs and the benefits of
the class action as compared to the alternative procedure.
Evidentiary Standard
The Supreme Court held that the five questions set out above "must
be addressed within the confines of the certification process; the
court cannot engage in a detailed assessment of the merits or
likely outcome of the class action or any alternatives to it". It
also confirmed that the applicable evidentiary standard is "some
basis in fact" and that the court will not be required to resolve
conflicting facts and evidence as the certification stage.
While the Supreme Court did not define what "some basis in fact"
means, it did cite the decision of the Ontario Court of Appeal in
McCracken v. Canadian National Railway Co., 2012 ONCA 445 that
"the use of the word "some" conveys the meaning that the
evidentiary record need not be exhaustive, and certainly not a
record upon which the merits will be argued".
The Supreme Court also took the opportunity to emphasize that the
evidentiary burden on the plaintiffs should not lead to a "more
fulsome assessment of contested facts going to the merits of the
case". The Supreme Court cited with approval from Cloud v. Canada
(Attorney General) 73 OR (3d) 401 (C.A.) in which the Ontario
Court of Appeal held that the some basis in fact standard "does
not entail any assessment of the merits at the certification
stage".
Burden of Proof
The plaintiff has the burden of proof to demonstrate that a class
action satisfies the preferable procedure criterion for
certification. The plaintiff must prove that a class action is
preferable to all other litigation alternatives. However, the
defendant has the evidentiary burden of proof with respect to non-
litigation alternatives.
Outcome
The Supreme Court held that a class action made it economically
possible for the plaintiffs to advance very small claims and that
there was no realistic litigation alternative. The regulatory
proceedings had provided a substantive remedy for the plaintiffs
but it could not be concluded within the framework of a
certification motion whether investors had been properly
compensated by the regulatory settlement. This was due, in part,
to the fact that the methodology used to calculate the amounts
payable in the regulatory proceedings was confidential and there
had been no investor participation in the regulatory settlement
process. Consequently, in upholding the decision of the Ontario
Court of Appeal the Supreme Court held that access to justice
would be best served by a class action.
Conclusion
This decision sets out a very detailed framework for the analysis
of access to justice issues within the preferable procedure
analysis. It also reinforces the "some basis in fact" evidentiary
standard. Most importantly, while this decision does not
necessarily preclude successful opposition to certification based
on settled regulatory proceedings, given the typically
confidential nature of settlement negotiations in regulatory
proceedings and the lack of investor participation, it is unlikely
that regulatory settlements will stand in the way of certification
unless it is clear that the settlement payment in the regulatory
proceeding properly compensated investors.
AYKEN INC: Accused of Not Paying Minimum and Overtime Wages
-----------------------------------------------------------
Miguel Angel Coronel Martinez and Jessica Camarda, on behalf of
themselves, FLSA Collective Plaintiffs, and the Class v. Ayken,
Inc. d/b/a Ayhan's Fish Kebab; Ayhan's Shish-Kebab of Baldwin,
Inc. d/b/a Ayhan's Mediterranean Restaurant; Shish Kebab Snack
Bar, Inc. d/b/a Ayhan's Mediterranean Restaurant; Ayhan's Shish-
Kebab International Corp. d/b/a Ayhan's Mediterranean Restaurant;
Great Neck Ask, Inc. d/b/a Ayhan's Mediterranean Restaurant;
Cyprus Grill, LLC d/b/a Ayhan's Mediterranean Restaurant; 293
Mediterranean Market Corp. d/b/a Ayhan's Mediterranean Marketplace
and Cafe; Ayhan's Shish-Kebab Restaurants Of Rockville Centre,
Inc. d/b/a Ayhan's Pita Express; Ayhan's Shish-Kebab Express,
Inc., d/b/a Ayhan's Pita Express; and Ayhan Hassan, Case No. 2:13-
cv-07411-LDW-AKT (E.D.N.Y., December 31, 2013) alleges that
pursuant to the Fair Labor Standards Act, the Plaintiffs are
entitled to recover from the Defendants:
(1) unpaid minimum wages;
(2) unpaid overtime;
(3) liquidated damages;
(4) compensation for tips illegally retained by management
and Defendants' illegal tip-pooling scheme; and
(5) attorneys' fees and costs.
Ayken, Inc. is a New York corporation headquartered in Port
Washington, New York. The Defendants operate a restaurant
enterprise using the common trade name "Ayhan's."
The Plaintiffs are represented by:
C.K. Lee, Esq.
Anne Seelig, Esq.
LEE LITIGATION GROUP, PLLC
30 East 39th Street, 2nd Floor
New York, NY 10016
Telephone: (212) 465-1124
Facsimile: (212) 465-1181
E-mail: cklee@leelitigation.com
anne@leelitigation.com
BAXTER INT'L: Initiates Voluntary Recall of CLINIMIX Products
-------------------------------------------------------------
Pharmaceutical Business Review reports that Baxter International
announced it has initiated a voluntary recall in the United States
of two lots of CLINIMIX and one lot of CLINIMIX E Injection
parenteral nutrition products to the user level due to complaints
of particulate matter found in the products. If infused,
particulate matter may result in blockages of blood vessels, which
can result in stroke, heart attack, or damage to other organs such
as the kidney or liver.
There is also the possibility of allergic reactions, local
irritation, and inflammation in tissues and organs. There have
been no reported adverse events associated with this issue to
date, and the root cause of this voluntary recall has been
identified and resolved.
CLINIMIX (Amino Acid in Dextrose) Injection and CLINIMIX E (Amino
Acid with Electrolytes in Dextrose with Calcium) Injections are
premixed sterile intravenous (IV) parenteral nutrition products
that come in multi-chambered containers and are used as a caloric
component and as a protein source in a parenteral nutrition
program.
The affected product codes are 2B7729 (lot P287045, exp 06/14),
2B7717 (lot P275883, exp 10/13) and 2B7709 (lot P285122, exp
05/14). Affected products were distributed to healthcare centers
and distributors in the United Sates.
Baxter has notified customers, who are being directed not to use
product from the recalled lots. Customers should locate and
remove all affected product from their facility. The affected
lots were distributed to customers between May 2012 and October
2013. Unaffected lot numbers can continue to be used according to
the instructions for use.
Affected product should be returned to Baxter for credit by
contacting Baxter Healthcare Center for Service at 1-888-229-0001,
Monday through Friday, between the hours of 7:00 a.m. and 6:00
p.m., Central Time. Unaffected lots of product are available for
replacement.
Consumers with questions regarding this recall can call Baxter at
1-800-422-9837, Monday through Friday, between the hours of 8:00
a.m. and 5:00 p.m. Central Time, or e-mail Baxter at
onebaxter@baxter.com
Consumers should contact their physician or healthcare provider if
they have experienced any problems that may be related to using
this drug product.
Adverse reactions or quality problems experienced with the use of
this product may be reported to the FDA's MedWatch Adverse Event
Reporting program either online, by regular mail or by fax.
* Online: www.fda.gov/medwatch/report.htm
* Regular Mail: use postage-paid, pre-addressed Form FDA 3500
available at: www.fda.gov/MedWatch/getforms.htm
Mail to address on the pre-addressed form.
* Fax: 1-800-FDA-0178
This recall is being conducted with the knowledge of the U.S. Food
and Drug Administration.
According to the CLINIMIX and CLINIMIX E product labeling,
parenteral drug products should be inspected visually for
particulate matter and discoloration whenever solution and
container permit. The use of a final filter is recommended during
administration of all parenteral solutions where possible.
BARCLAYS BANK: Manipulates FX Rates and FX Market, Suit Claims
--------------------------------------------------------------
Prudent Forex Fund I LLC and Prudent Capital Management, LLC, on
behalf of themselves and all others similarly situated v. Barclays
Bank Plc, et al., Case No. 1:13-cv-09237-UA (S.D.N.Y.,
December 31, 2013) arises from the Defendants' alleged unlawful
combination, agreement and conspiracy to fix and restrain trade
in, and the intentional manipulation of, the foreign currency
exchange market through the manipulation of the WM/Reuters FX
rates during the period of at least January 1, 2003, through the
present, in violations of the Sherman Antitrust Act.
Barclays Bank PLC is a United Kingdom public limited company
headquartered in London, England. Barclays Capital Inc., a wholly
owned subsidiary of Barclays Bank PLC, engages in investment
banking, wealth management and investment management services.
The Plaintiffs are represented by:
Geoffrey Milbank Horn, Esq.
Raymond P. Girnys, Esq.
Vincent Briganti, Esq.
LOWEY DANNENBERG COHEN & HART, P.C.
White Plains Plaza
One North Broadway, Suite 509
White Plains, NY 10601
Telephone: (914) 997-0500
Facsimile: (914) 997-0035
E-mail: ghorn@lowey.com
rgirnys@lowey.com
vbriganti@lowey.com
Defendant Deutsche Bank AG is represented by:
Joseph Serino, Jr., Esq.
Eric Foster Leon, Esq.
KIRKLAND & ELLIS LLP (NYC)
601 Lexington Avenue
New York, NY 10022
Telephone: (212) 446-4913
Facsimile: (212) 446-6460
E-mail: jserino@kirkland.com
eleon@kirkland.com
BERNARD L. MADOFF: Settlement Agreements Reached With JPMorgan
--------------------------------------------------------------
Irving H. Picard, Securities Investor Protection Act (SIPA)
Trustee for the liquidation of Bernard L. Madoff Investment
Securities LLC, on Jan. 7 filed two motions with the United States
Bankruptcy Court for the Southern District of New York seeking
approval of recovery agreements totaling approximately $543
million for the benefit of BLMIS customers.
The motions seek court approval to settle the avoidance claims
asserted by the SIPA Trustee against JPMorgan for $325 million, as
well as common law claims brought separately by the SIPA Trustee
and in a class action lawsuit, which mirrored the claims developed
by the SIPA Trustee's legal team, for $218 million. The SIPA
Trustee's original complaint was filed in December 2010.
Of the $325 million that JPMC will pay to the SIPA Trustee, $50
million will be given to the joint liquidators of the Fairfield
Sentry Funds for distribution to the indirect investors in the
Fairfield Sentry Funds, as part of the cooperative agreement
reached in May 2011 to share a percentage of certain future
recoveries.
"I am extremely proud of both the legal and investigative work
conducted by David Sheehan, the legal team at BakerHostetler and
our other advisors in uncovering and documenting the facts about
JPMorgan's relationship with Madoff," said Mr. Picard.
Concurrently, the United States Attorney's Office for the Southern
District of New York announced a deferred prosecution agreement
with JPMorgan relating to Madoff, resulting in a $1.7 billion
civil forfeiture payment.
"I want to thank the Securities Investor Protection Corporation
for providing the financial support that allowed us to perform the
extensive investigations and legal work needed to unravel Madoff's
fraud and develop our compelling claims," said Mr. Picard. "Most
importantly, [Tues]day's settlement is a great step toward making
a distribution in 2014."
The JPMorgan settlement monies for the BLMIS Customer Fund and the
Class Settlement Fund will become available once final,
unappealable court orders are reached for each of the settlements.
Distributions from the respective settlements will be made as soon
as practicable.
SIPA Trustee's Bankruptcy Avoidance Claims
JPMorgan paid $325 million to settle the SIPA Trustee's avoidance
claims as part of the compromise settlement. JPMorgan approached
the SIPA Trustee several months ago seeking a negotiated
resolution.
David J. Sheehan, Chief Counsel to the SIPA Trustee, said, "As
always, we must weigh the uncertainty, costs and risks of
litigation versus the benefits of settlement. This compromise
with JPMorgan allows us to sidestep those pitfalls while
recovering additional, significant monies for the BLMIS Customer
Fund, which will flow as quickly as possible to BLMIS customers
with allowed claims."
This settlement brings the SIPA Trustee's recoveries to date to
approximately $9.783 billion for the BLMIS Customer Fund, or 55.9
percent of the estimated $17.5 billion in principal that was lost
in the Ponzi scheme by BLMIS customers who filed claims.
The Class Settlement Agreement
In addition, JPMorgan has agreed to pay $218 million to settle
common law claims brought by the SIPA Trustee and in a related
class action lawsuit. These common law claims were developed by
the SIPA Trustee and set forth in his complaint against JPMorgan
in December 2010. The class action complaint alleged similar
claims. The settlement of the common law claims was jointly
entered into by the SIPA Trustee and the class action
representatives, Paul Shapiro and Stephen and Leyla Hill, who
filed two related common law class actions against JPMorgan, which
were later consolidated.
If approved by the District Court, the settlement class will
consist of BLMIS customers who had capital directly invested with
BLMIS and had net losses, regardless of whether they filed a claim
in the SIPA proceeding.
Court rulings denying the SIPA Trustee's standing to bring common
law causes of action led to the filing of the class action.
Mr. Sheehan noted that the SIPA Trustee appealed to the United
States Supreme Court on his right to bring common law claims
against major financial institutions on October 8, 2013. As part
of the settlement, the SIPA Trustee agreed to withdraw the
petition in the JPMorgan case. Regardless of the outcome of that
appeal, he said, the SIPA Trustee's bankruptcy claims of
approximately $3.5 billion remain outstanding against HSBC, UBS
and Unicredit. Absent additional settlements, those cases will
advance through the judicial process.
Mr. Sheehan noted that, as part of the agreement, AlixPartners LLP
will be appointed Claims Administrator for the Class Settlement
Fund. AlixPartners serves as the SIPA Trustee's claims agent in
the SIPA liquidation of BLMIS and has access to all updated
information on allowed claims and prior distributions made by the
SIPA Trustee. Mr. Sheehan also noted that the SIPA Trustee will
make his documentation of customers with allowed claims available
to facilitate distribution of the Class Settlement Fund and to
vastly reduce potential administrative costs. The Bankruptcy
Court hearing for approval of the settlement motions is scheduled
for February 4, 2014 at 10:00 a.m.
In addition to Mr. Sheehan, the SIPA Trustee acknowledges the
contributions of the Baker Hostetler attorneys who worked on the
matter: Deborah Renner, Oren Warshavsky, Keith Murphy, Seanna
Brown, and Sarah Truong.
Further information on the ongoing Madoff Recovery Initiative and
a copy of the SIPA Trustee's motions can be found on the SIPA
Trustee's website -- http://www.madofftrustee.com
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
orchestrated the largest Ponzi scheme in history, with losses
topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A.
Stanton of the U.S. District Court for the Southern District of
New York granted the application of the Securities Investor
Protection Corporation for a decree adjudicating that the
customers of BLMIS are in need of the protection afforded by the
Securities Investor Protection Act of 1970. The District Court's
Protective Order (i) appointed Irving H. Picard, Esq., as trustee
for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP
as his counsel, and (iii) removed the SIPA Liquidation proceeding
to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789)
(Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims
agent.
On April 13, 2009, former BLMIS clients filed an involuntary
Chapter 7 bankruptcy petition against Bernard Madoff (Bankr.
S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The
petitioning creditors -- Blumenthal & Associates Florida General
Partnership, Martin Rappaport Charitable Remainder Unitrust,
Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert
US$64 million in claims against Mr. Madoff based on the balances
contained in the last statements they got from BLMIS.
BERNARD L. MADOFF: Class Action Co-Lead Counsel Laud Settlement
---------------------------------------------------------------
Co-Lead Counsel for the Class of BLMIS/Madoff customers have
announced a settlement of all potential claims against JPMorgan
Chase Bank, N.A. and its parents, subsidiaries and affiliates.
The proposed Class Action Settlement will be contemporaneously
presented by motions for approval to both United States District
Court Judge McMahon and to Bankruptcy Court Judge Lifland.
The settlement of this Class Action is one part of a multi-part
resolution of Madoff-related litigation against JPMorgan involving
simultaneous, separately negotiated settlements, which include the
Class Action Settlement in the amount of $218 million, the SIPA
Trustee's Avoidance Action settlement in the amount of $325
million, and a resolution with the U.S. Attorney's Office for the
Southern District of New York that includes a civil forfeiture in
the amount of $1.7 billion. The payments by JPMorgan in
connection with these agreements will total $2.243 billion and
will benefit victims of Madoff's Ponzi scheme.
Co-Lead Counsel for the customers, Andrew Entwistle of Entwistle &
Cappucci LLP and Reed Kathrein of Hagens Berman, were especially
pleased with the settlement. Attorney Entwistle observed that:
"It is particularly appropriate that shortly after the 5th
anniversary of Madoff's arrest these settlements with JPMorgan
will result in such substantial recoveries for Madoff victims."
Entwistle also observed that, "In negotiating the Class Action
Settlement, Class Counsel's singular goal was to maximize the
recoveries of customer-victims of Madoff's fraud. In our view,
this goal has been achieved in spectacular fashion."
Attorney Kathrein observed: "This settlement reflects the
cooperative efforts of our team and the Trustee and represents a
favorable and economically sound resolution to what would
otherwise have been a costly and protracted legal battle."
If you wish to discuss this action or have any questions
concerning this press release, or your rights or interests with
respect to this matter, please contact: Andrew J. Entwistle, Esq.
(aentwistle@entwistle-law.com) of Entwistle & Cappucci LLP, 280
Park Avenue, 26th Floor West, New York, NY 10017, Telephone: (212)
894-7200; or Reed Kathrein, Esq. (reed@hbsslaw.com), 715 Hearst
Ave., Berkeley California 94710, Telephone (510) 725-3000.
More information about the case can be found at
http://www.entwistle-law.com/resources/index
The filed case number is 11-cv-7866 (VM) (U.S. Dist. Ct.,
S.D.N.Y.).
About Entwistle & Cappucci LLP
Entwistle & Cappucci -- http://www.entwistle-law.com-- is a
national law firm providing service to major public corporations,
a number of the nation's largest public pension funds,
governmental entities, leading institutional investors, domestic
and foreign financial services companies, emerging business
enterprises and individual entrepreneurs.
About Hagens Berman Sobol Shapiro LLP
Seattle-based Hagens Berman Sobol Shapiro LLP --
http://www.hbsslaw.com-- is a plaintiff-focused law firm with
offices in nine cities across the United States. Founded in 1993,
the firm represents plaintiffs in class actions and multi-state,
large-scale litigation that seek to protect the rights of
athletes, investors, consumers, workers, whistleblowers and
others.
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
orchestrated the largest Ponzi scheme in history, with losses
topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A.
Stanton of the U.S. District Court for the Southern District of
New York granted the application of the Securities Investor
Protection Corporation for a decree adjudicating that the
customers of BLMIS are in need of the protection afforded by the
Securities Investor Protection Act of 1970. The District Court's
Protective Order (i) appointed Irving H. Picard, Esq., as trustee
for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP
as his counsel, and (iii) removed the SIPA Liquidation proceeding
to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789)
(Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims
agent.
On April 13, 2009, former BLMIS clients filed an involuntary
Chapter 7 bankruptcy petition against Bernard Madoff (Bankr.
S.D.N.Y. 09-11893).
CANADA: Veterans' Class Action to Move Forward in Mid-2014
----------------------------------------------------------
Jean Sorense, writing for Canadian Lawyer, reports that the extent
to which a federal government promise or social covenant to
veterans to care for them and their families in the event of death
or injury binds successive governments will be tested in a class
action suit hoping to move forward for court certification in
mid-2014.
The case is being taken forward by a Vancouver team of Miller
Thomson LLP led by partner Donald Sorochan --
dsorochan@millerthomson.com -- who is representing six veterans
with injuries sustained while serving Canada but feel they have
not been fairly cared for. Mr. Sorochan said the court challenge
is unique. "It has never been argued that social covenant has
constitutional importance."
The cases hinges upon the New Veterans Charter of 2006 issued to
deal with Afghanistan veterans and sets out what services and
compensation returning injured veterans can receive. Payments are
lump-sum with a cap of $250,000. The charter replaces previous
Pension Act benefits, which were long-term and monthly. Mr.
Sorochan maintains the federal government provides a lesser
standard of care to veterans under the NVC than those given to
other service men and women under the Pension Act. Mr. Sorochan's
team is arguing the federal government does not have the right to
limit that level of care and compensation.
The problem facing veterans under the NVC was brought to his
attention when a neighbor asked for help after his son
Gavin Flett, a reservist, had been deployed to Afghanistan where
he sustained severe leg injuries while felling a tree. He has had
surgeries on the smashed legs and ongoing medical problems. The
federal government's NVC, which provides lump sum payments, paid
out $13,500 based upon a rate established for various injuries and
income loss.
Mr. Sorochan said he is not against lump-sum payments if they are
adequate to meet the individual's long-term needs for physical or
psychological support when an injury has occurred. Nor, is he
advocating suing for battlefield decisions.
"I am not advocating the negligence of a battlefield decision," he
said, but "if a person is injured through service to his or her
country" then there should be fair compensation. Mr. Sorochan
said a social covenant was made to military personnel during the
First World War by Prime Minister Robert Borden in 1917.
"It is about promises that Borden made, mostly to men in those
days and prior to Vimy Ridge, that if you fight for your country
and you are injured, we will care for you and for your family if
you fell," said Mr. Sorochan. "That social covenant was not made
just at one time but was repeated and also in veteran legislation
from the First World War until this new charter. All of a sudden
that disappears.''
The federal government had earlier attempted to get the action
dismissed but in Scott v. Canada (Attorney General), released
Sept. 6, 2013, the justice described the action as "about promises
the Canadian government made to men and women injured while in
service to their country and whether it is obliged to fulfill
those promises." The court permitted the action to continue on
the basis of the social covenant and the honour of the Crown
pleadings as well as claims for breach of fiduciary duty and
claims under the Charter. In the September ruling, the federal
government acknowledged the NVC did not provide the same coverage
that was provided under the Pension Act.
CANADA: Farmers Appeal Wheat Board Class Action Ruling
------------------------------------------------------
The Southwest Booster reports that Stewart Wells, chairperson of
The Friends of the Canadian Wheat Board announced that farmer
litigants, with the full support of the group, have filed an
appeal of a Nov. 29, 2013 Federal Court ruling by Madam Justice
Tremblay-Lamer.
Mr. Wells said "We believe Justice Tremblay-Lamer made errors of
fact in her judgment and our supporters feel that it is imperative
that we continue with our legal efforts to recover the C$17
billion dollars of value and assets farmers put into the Wheat
Board."
Mr. Wells went on to point out "It was 50 years ago this past
month the Canadian Wheat Board, in consultation with its farmer
advisory committee moved into a downtown Winnipeg office building
bought and paid for with farmers' money, and no amount of legal
sophistry or rationalization can change the fact farmers are owed
compensation for what amounts to an unprecedented theft of private
resources by Ottawa."
Mr. Wells concluded by saying "Farmers know who built and paid for
Canadian Wheat Board assets and farmers have a legitimate
expectation of compensation from the federal government."
Nathan Macklin, one of the farmer plaintiffs from Alberta said "if
Ottawa did this to a multinational corporation they would be
forced by NAFTA and our other trade obligations to provide
compensation. Allowing this essentially makes farmers, and all
Canadians, second class citizens in our own country."
Anders Bruun, legal counsel for the Friends of the Canadian Wheat
Board, stated "this appeal moves forward the legal action on the
seizure of the Wheat Board's assets and reputation from farmers by
the Federal government and shows the resolve of my clients to keep
fighting against the expropriation without compensation that the
government has visited on farmers."
CANNERY CASINO: "Yanchak" Suit Seeks to Recover Unpaid Overtime
---------------------------------------------------------------
Michael C. Yanchak, individually and on behalf of others similarly
situated v. Cannery Casino Resorts, LLC and Washington Trotting
Association, Inc., Case No. 2:13-cv-01831-MRH (W.D. Pa.,
December 31, 2013) seeks to recover unpaid wages, overtime premium
and liquidated damages.
The Plaintiff is represented by:
Maureen Davidson-Welling, Esq.
STEMBER COHN & DAVIDSON-WELLING, LLC
429 Forbes Avenue
1616 Allegheny Building
Pittsburgh, PA 15219
Telephone: (412) 338-1445
Facsimile: (412) 338-1446
E-mail: mdavidsonwelling@stembercohn.com
COLEMAN CABLE: Being Sold Too Cheaply to Southwire, Class Claims
----------------------------------------------------------------
A lawsuit was initiated in the Delaware Chancery Court alleging
that the Company is being sold too cheaply to Coleman Cable, Inc.
Southwire and Coleman announced on January 6, 2014, that Cubs
Acquisition Corporation, a wholly owned subsidiary of Southwire
("Purchaser"), has commenced the previously announced tender offer
for all of the outstanding shares of common stock of Coleman at a
price of $26.25 per share, net to the seller in cash, without
interest, less any applicable withholding taxes.
Coleman Cable, Inc. is a leading manufacturer and innovator of
electrical and electronic wire and cable products for residential
and commercial construction, industrial, OEM, and consumer
applications, with operations in the United States, Honduras, and
Canada.
A leader in technology and innovation, Southwire Company is one of
North America's largest wire and cable producers. Southwire and
its subsidiaries manufacture building wire and cable, metal-clad
cable, cord products (including Tappan(TM) sound, security, and
communication cables through Tappan Wire & Cable Inc.), utility
cable products, industrial power cable, OEM wire products, SCR(R)
copper and aluminum rod, and continuous casting technology.
Following the first announcement of the Proposed Transaction,
several law firms announced that they are investigating the
transaction. Among them are:
Joshua M. Lifshitz, Esq.
LIFSHITZ LAW FIRM
Telephone: (516) 493-9780
Facsimile: (516) 280-7376
E-mail: jml@jlclasslaw.com
- and -
Juan E. Monteverde, Esq.
FARUQI & FARUQI, LLP
369 Lexington Avenue, 10th Floor
New York, NY 10017
Telephone: (212) 983-9330
E-mail: jmonteverde@faruqilaw.com
- and -
Richard A. Maniskas, Esq.
RYAN & MANISKAS, LLP
995 Old Eagle School Rd., Suite 311
Wayne, PA 19087
Telephone: (484) 588-5516
E-mail: rmaniskas@rmclasslaw.com
- and -
Willie Briscoe, Esq.
THE BRISCOE LAW FIRM, PLLC
8150 North Central Expressway, Suite 1575
Dallas, TX 75206
Telephone: (214) 239-4568
Facsimile: (281) 254-7789
E-mail: WBriscoe@TheBriscoeLawFirm.com
- and -
Zach Groover, Esq.
POWERS TAYLOR LLP
8150 North Central Expy., Suite 1575
Dallas, TX 75206
Telephone: (877) 728-9607
E-mail: shareholder@powerstaylor.com
- and -
Ofer Ganot, Esq.
POMERANTZ GROSSMAN HUFFORD DAHLSTROM & GROSS LLP
600 Third Avenue
New York, NY 10016
Telephone: (212) 661-1100
Facsimile: (212) 661-8665
E-mail: oganot@pomlaw.com
COMCAR INDUSTRIES: Accused of Not Paying Overtime Compensation
--------------------------------------------------------------
Jeannette Liciaga, on behalf of herself and those similarly
situated v. Comcar Industries, Inc., a Florida Profit Corporation,
Case No. 8:13-cv-03275-JDW-EAJ (M.D. Fla., December 31, 2013)
alleges that the Plaintiffs worked for the Defendant in excess of
40 hours within a work week but was not paid at a rate of one and
one-half times her regular rate for all hours worked in excess of
40 hours in a work week.
Comcar Industries, Inc., is a Florida Profit Corporation
headquartered in Polk County, Florida.
The Plaintiff is represented by:
Richard Bernard Celler, Esq.
MORGAN & MORGAN, PA
600 N Pine Island Rd., Suite 400
Plantation, FL 33324
Telephone: (954) 318-0268
Facsimile: (954) 333-3515
E-mail: richard@floridaovertimelawyer.com
CORDISH COS: Principals Expect to Begin Settlement Talks
--------------------------------------------------------
James Briggs, writing for Baltimore Business Journal, reports that
Cordish Cos. principals are expected to begin settlement talks
with six former employees of bars that were part of a mid-2000s
Cordish project in Louisville, Ky.
The former workers, who are part of a class-action lawsuit making
its way through U.S. District Court in Louisville, allege they
were required to perform unpaid work for three bars included in
the Baltimore-based developer's 4th Street Live development.
Cordish does not own the bars, two of which have closed. But
several company executives, including Reed Cordish, Blake Cordish,
Jonathan Cordish and his wife, Melissa, and a trust in the name of
Joseph S. Weinberg, have ownership stakes in the bars, according
to WDRB-TV in Louisville.
The parties were set to attend a settlement conference Jan. 8,
according to WDRB, but it is routine and no immediate resolution
is expected.
DAVITA HEALTHCARE: Granuflo, NaturaLyte Class Action Ongoing
------------------------------------------------------------
Gordon Gibb, writing for LawyersandSettlements.com, reports that f
for the GranuFlo and NaturaLyte patient, there's a much narrower
focus -- the simple act of undergoing kidney dialysis, which is
undertaken thousands of times throughout the world each day
without complication, suddenly, and without apparent explanation,
turns ugly and results in GranuFlo cardiac arrest, or even
GranuFlo sudden death. For the affected patients and their
families, the various moving parts are not the issue. What
matters to them is that it simply shouldn't have happened at all.
DaVita Healthcare Clinics is one of two players in the GranuFlo
and NaturaLyte portfolio. The other is Fresenius Medical Care,
the manufacturer of the two dialysis products and a competitor
with DaVita in the dialysis market. Both operate scores of
dialysis clinics and are competing for market share.
DaVita is also the target of a GranuFlo class-action lawsuit for
its role in allegedly putting dialysis patients at risk with
regard to alkali dosing errors inherent with GranuFlo and
NaturaLyte. DaVita, it should be noted, was also the subject of a
federal investigation with regard to an alleged doctor kickback
scheme -- and the firm has also faced allegations of wage
improprieties involving its employees.
But Fresenius Medical Care (Fresenius, FMC) is also the target of
various GranuFlo and NaturaLyte side effects lawsuits. And for
both firms -- as it appears to be the case with any pharmaceutical
company or medical device manufacturer -- the exposure to legal
action is simply the cost of doing business.
GranuFlo and NaturaLyte are two products manufactured by Fresenius
-- but also used by competitors such as DaVita -- that are
inherent with the dialysis process. GranuFlo comes in powdered
form, while NaturaLyte is a liquid. Both products are used to
remove toxins from the bloodstream during dialysis, and mixing of
the products is integral to the establishment of optimum levels of
bicarbonate in the bloodstream: bicarbonate that is too high poses
a risk for NaturaLyte side effects or even GranuFlo sudden death.
In November 2011, Fresenius issued a strongly worded memo to
doctors and healthcare practitioners in its Fresenius-branded
dialysis clinics, informing their people of an internal study
evaluating 941 patients in 667 Fresenius dialysis centers having
suffered cardiopulmonary arrest during or following dialysis
treatment. The study determined that these patients were six to
eight times more likely to suffer heart attacks and GranuFlo
sudden death if they had elevated bicarbonate levels.
The suggestion was that there was an issue with the labeling of
GranuFlo and NaturaLyte -- an observation backed up by an e-mailed
statement to the Boston Business Journal by Kent Jarrell, a
spokesperson for Fresenius who noted that a subsequent FDA recall
of GranuFlo and NaturaLyte involved the labels only, and not the
products themselves.
"The FDA has not suggested any change in the production
formulation or asked that the products be returned by clinics to
FMC," Mr. Jarrell wrote in an e-mailed statement to the Boston
Business Journal. "We believe these lawsuits based on GranuFlo
and NaturaLyte are without merit and we will defend them
vigorously."
The two new GranuFlo cardiac arrest lawsuits to which Jarrell is
referring were filed December 16 in federal court in
Massachusetts, and are among more than 300 lawsuits Fresenius is
facing over the issue.
DaVita healthcare clinics are also facing their share of lawsuits.
But the backstory that also impacts DaVita is what Fresenius is
alleged not to have done -- and that is to have shared the
internal memo with non-Fresenius clinics employing the use of
GranuFlo and NaturaLyte. Fresenius defended its decision, at the
time, noting that the study results were still preliminary.
However, the US Food and Drug Administration (FDA) thought the
issue was serious enough to mandate a Class 1 recall (of the
labels, according to Jarrell) once the internal memo, issued in
November 2011, was leaked to the FDA in March 2012.
Plaintiffs claim that Fresenius knew or should have known about
the potential for alkali dosing errors and elevated levels of
bicarbonate. Ditto for DaVita -- although what liability
Fresenius will face given the alleged failure to widely distribute
its concerns over GranuFlo and NaturaLyte to non-Fresenius centers
such as DaVita, remains to be seen.
The two most recent lawsuits against Fresenius Medical Care were
consolidated, along with at least 145 others, and assigned to US
District Court Judge Douglas Woodlock in a NaturaLyte class-action
lawsuit.
That, together with the GranuFlo class-action lawsuit, will remain
the focus of much attention in 2014.
DIGNITY HEALTH: Judge Denies Motion to Dismiss Class Action
-----------------------------------------------------------
Kathy Robertson, writing for Sacramento Business Journal, reports
that a federal judge has denied a motion to dismiss a class action
filed on behalf of 60,000 employees at Dignity Health that alleges
the health system is underfunding its pension plans by $1.2
billion.
The lawsuit was filed in U.S. District Court in San Francisco on
April 1. It alleges the company falsely claims its pension plans
are exempt from federal rules because they are "church plans" that
fall under looser guidelines.
Judge Thelton Henderson didn't buy it. In a ruling Dec. 12, he
ruled that a church plan must be established by a church or "an
association of churches." The ruling allows the case to proceed
in court. Parent company to local Mercy hospitals, the health
system has more than 7,000 employees in the Sacramento region.
Dignity doesn't contend it is a church, but argues its pension
plan is exempt from Employee Retirement Income Security Act
(ERISA) funding requirements because it is maintained by a
tax-exempt entity controlled by or associated with a church or
association of churches.
"We believe we have complied with the law, including the
applicable IRS requirements for our retirement plans," officials
at the San Francisco-based health system said in a statement
regarding the court ruling.
Because Dignity is not a church or an association of churches,
doesn't claim it is, and doesn't have legal authority to establish
its own church plan, the health system is not exempt from ERISA
rules, Judge Thelton concluded.
Formerly called Catholic Healthcare West, the health system
changed its name to Dignity Health two years ago to reflect a new
strategy for growth that would allow partnerships with non-
Catholic hospitals with shared values but fewer restrictions over
reproductive health care and other services.
DYNIA & ASSOCIATES: Accused of Violating Fair Debt Collection Act
-----------------------------------------------------------------
Igor Davidov, on behalf of himself of himself and all others
similarly situated v. Dynia & Associates, LLC, an Illinois Limited
Liability Company; Alfred S. Dynia, Individually and in his
Official Capacity on behalf of Dynia & Associates, LLC; Anthony
Crews, Individually and in his Official Capacity on behalf of
Dynia & Associates, LLC; Greg Neely, Individually and in his
Official Capacity on behalf of Dynia & Associates, LLC; Michael
Prowicz, Individually and in his Official Capacity on behalf of
Dynia & Associates, LLC; Terrence Fogarty, Individually and in his
Official Capacity on behalf of Dynia & Associates, LLC; Ahmad
Merritt Individually and in his Official Capacity on behalf of
Dynia & Assiciates, LLC; Crown Asset Management, LLC, a Georgia
Limited Liability Company; and John and Jane Does Numbers 1
through 25, Case No. 1:13-cv-07410-MKB-MDG (E.D.N.Y., December 31,
2013) alleges violations of the Fair Debt Collection Practices
Act.
The Plaintiff is represented by:
Abraham Kleinman, Esq.
KLEINMAN, LLC
626 RXR Plaza
Uniondale, NY 11556-0626
Telephone: (516) 522-2621
Facsimile: (888) 522-1692
E-mail: akleinman@kleinmanllc.com
EVANSTON NORTHWESTERN: Jones Day Discusses Class Action Ruling
--------------------------------------------------------------
Toby G. Singer, Esq. -- tgsinger@jonesday.com -- Paula W. Render,
Esq. -- prender@jonesday.com -- Michael A. Gleason, Esq., and
Roberto C. Castillo, Esq., at Jones Day report that on December
10, 2013, the U.S. District Court for the Northern District of
Illinois granted class certification to customers claiming that
the merger of two Chicago-area hospital groups, Evanston
Northwestern Healthcare Corp. (ENH) and Highland Park Hospital,
resulted in higher prices for patients. Class action litigation
in merger cases is not common, because the remedy for a
prospective merger challenge is an injunction, not damages.
Because this case is a challenge to a completed transaction, where
plaintiffs can allege actual injury not just prospective harm, it
could result in a significant monetary recovery for plaintiffs.
This is the first private antitrust class action in a hospital
merger case.
The class action stems from ENH's acquisition of rival Highland
Park Hospital in 2000, forming a new hospital system. In 2004,
the FTC filed a complaint alleging that the merger had lessened
competition for general acute care hospital services in the
geographic "triangle" formed by the three hospitals in the new
system. The FTC's decision to challenge the merger came after a
string of losses by federal and state antitrust authorities in
hospital merger cases from the mid-1990s through 2001. In an
effort to reverse this trend, the FTC embarked on a retrospective
analysis of consummated hospital mergers to evaluate whether these
mergers had generated anticompetitive effects. The FTC's study
resulted in its challenge of the ENH transaction.
After a trial in 2005, an FTC administrative law judge (ALJ) held
that the transaction had substantially lessened competition, as
evidenced by dramatic post-merger price increases. The ALJ
ordered a full divestiture of Highland Park from ENH. The
Commission affirmed the ALJ's decision on the merits, but instead
of ordering a divestiture, it required that the parties establish
separate, independent teams to negotiate prices with health plans.
As the Commission acknowledged, the remedy was unusual, because
the antitrust agencies typically require a divestiture to restore
competition lost as a result of a merger. The Commission reasoned
that in the ENH case a divestiture would be costly because the
hospitals had functioned as a merged entity for over seven years.
In re Evanston Northwestern Healthcare Corp., Dkt. No. 9315 (May
17, 2005).
Just days after the FTC issued its opinion on the merits, private
plaintiffs filed a federal antitrust class action on behalf of all
patients and other direct purchasers of healthcare services in the
area served by ENH. The complaint alleged that the class members
paid inflated prices for healthcare services at ENH hospitals
because ENH had raised the rates it charged health plans above
competitive levels. The complaint alleged antitrust violations
under Section 2 of the Sherman Act, as well as Section 7 of the
Clayton Act, and sought treble damages and injunctive relief from
ENH. Berkowitz v. Evanston Northwestern Healthcare Corp., No.
1:2007cv04523 (N.D. Ill. Aug. 10, 2007). The plaintiffs moved to
certify a class of "all end-payors who purchased inpatient and
outpatient healthcare services directly from" the new system.
Such a class could include individuals, self-insured patients, and
health plans, though health plans have not yet decided whether to
join the class.
Previously, the court had denied class certification because it
found that the plaintiffs could not show uniform price increases
for all services and all plaintiffs. The plaintiffs appealed to
the Seventh Circuit, which held that the class action rules do not
require a showing of uniform price increases, just use of common
evidence and a common methodology to show harm.
Back at the district court, the lone remaining issue was whether a
class action is superior to other methods to resolve the case, a
prerequisite to class certification. ENH argued that health plans
and self-insured subscribers were bound by arbitration provisions
in its contracts with health plans. The court found this argument
unconvincing because it was unclear the arbitration clauses
covered antitrust claims, the health plans had not yet decided to
join the class, and because the health plans likely numbered just
"a fraction" of the proposed class. The court noted that it could
revisit class certification if it turns out that a "significant
percentage" of health plans and self-funded subscribers must
arbitrate their claims.
This is an important case. This is the first private antitrust
class action in a hospital merger case. In pre-consummation
merger challenges, the only available remedy is prospective
injunctive relief to halt a transaction. As a result, such cases
do not often attract class action plaintiffs, because no
quantifiable harm has occurred prior to closing. But in this
case, the FTC's finding of actual harm from artificially high
prices could lead to a substantial monetary recovery. Since the
hospitals have operated as a merged entity for over 13 years (with
combined contracting teams for seven), the consequence of losing
the class action -- an award of treble damages -- is far more
severe than the FTC's 2007 remedy. The certification of the class
at this point in time illustrates how private antitrust litigation
may follow a merged entity for years after enforcement agencies
have allowed the merger to take place. This case also is
consistent with a growing number of private antitrust cases
brought against hospitals. The possibility of significant
monetary recovery in health care antitrust matters is likely to
attract more attention from plaintiffs' attorneys in the future.
FACEBOOK INC: Faces Class Action Over E-mail Privacy Violation
--------------------------------------------------------------
Beth Winegarner and Juan Carlos Rodriguez, writing for Law360,
report that Facebook Inc. was hit with a proposed class action in
California federal court on Dec. 30 accusing the social media
titan of violating users' privacy by mining the content of their
private messages and using the information to create targeted
advertisements.
In the latest privacy suit against free communications services --
which have also gone after Google Inc. and Yahoo Inc. -- Facebook
users Matthew Campbell and Michael Hurley claim the company
misleads subscribers about the privacy of their messages.
Instead, the company looks through users' private messages for
URLs and other information it can use to create targeted ads and
boost its ad revenue, the complaint said.
"All of [Facebook's] representations reflect the promise that only
the sender and the recipient or recipients will be privy to the
private message's content, to the exclusion of any other party,
including Facebook," the complaint said.
In its terms of service, Facebook offers users detailed
information about how to adjust the privacy settings for both
public and private messages, but those disclosures leave out the
fact that the company looks through users' emails to one another.
It scans for links to outside sites, particularly ones that
contain a Facebook "like" button, and studies have found that
Facebook then counts the link toward two "likes," the complaint
said. In other instances, it's looking for evidence that users
are discussing criminal activity, it said.
Although the practice is allegedly hidden from users, it's shared
with developers working for Facebook and third-party sites that
interface directly with the social media giant. Misleading users
allows the company to further profit from its data mining
practices, the complaint said.
"Representing to users that the content of Facebook messages is
'private' creates an especially profitable opportunity for
Facebook, because users who believe they are communicating on a
service free from surveillance are likely to reveal facts about
themselves that they would not reveal had they known the content
was being monitored. Thus, Facebook has positioned itself to
acquire pieces of the users' profiles that are likely unavailable
to other data aggregators," it said.
Messrs. Campbell and Hurley seek to represent a nationwide class
of United States residents and Facebook users who sent or received
private messages on the social media site, and whose messages
contained the URL of a third-party Web page, the complaint said.
They accuse Facebook of violating the Electronic Communications
Privacy Act, the California Invasion of Privacy Act and the
California Unfair Competition Law, and are seeking declaratory and
injunctive relief, as well as restitution and statutory damages,
the complaint said.
"We believe the allegations are without merit and we will defend
ourselves vigorously," a representative for Facebook told Law360
on Jan. 2.
In multidistrict litigation, Gmail users have accused Google of
scanning their private emails and using the information in them to
create targeted ads. Yahoo faces a similar proposed class action
filed in California federal court in October.
Messrs. Campbell and Hurley are represented by Michael W. Sobol,
Melissa Gardner, Rachel Geman and Nicholas Diamond of Lieff
Cabraser Heimann & Bernstein LLP and by Allen Carney --
acarney@cbplaw.com -- Hank Bates -- hbates@cbplaw.com -- and David
Slade -- dslade@cbplaw.com -- of Carney Bates & Pulliam PLLC.
Counsel information for Facebook was not immediately available.
The case is Campbell v. Facebook Inc., case number 4:13-cv-05996,
in the U.S. District Court for the Northern District of
California.
GARY M. FELDMAN: Accused of Illegal Debt Collection Practices
-------------------------------------------------------------
Annmarie Avila, an individual; on behalf of herself and all others
similarly situated v. Law Office of Gary M. Feldman, Esq., an
unknown fictitious entity; Gary M. Feldman, Individually and in
his Official Capacity; Crown Asset Management, LLC, a Georgia
Limited Liability Company; and John and Jane Does Numbers 1
through 25, Case No. 2:13-cv-07407-LDW-GRB (E.D.N.Y., December 31,
2013) alleges violations of the Fair Debt Collection Practices
Act.
The Plaintiff is represented by:
Abraham Kleinman, Esq.
KLEINMAN, LLC
626 RXR Plaza
Uniondale, NY 11556-0626
Telephone: (516) 522-2621
Facsimile: (888) 522-1692
E-mail: akleinman@kleinmanllc.com
HORIZON HEALTH: Patients Likely Exposed to Unsterilized Forceps
---------------------------------------------------------------
Alison Auld, writing for The Canadian Press, reports that
officials at New Brunswick's largest health authority deliberated
for three months whether to inform the public about unsterilized
biopsy forceps before finally releasing the information and
advising patients to get tested for hepatitis and HIV last year.
Documents recently released under access-to-information laws
outline how staff with the Horizon Health Network spent weeks
trying to assess the risk to patients who may have been exposed to
forceps that were not appropriately sterilized at the Miramichi
Regional Hospital for 14 years.
Emails between the health authority's administrators indicate
there was uncertainty and conflicting opinions about whether to
notify patients that forceps used in colposcopies were not being
steam sterilized as recommended.
In one email, the network's chief of medical staff seeks the
opinion of an infectious disease specialist in Ontario, asking if
she could assess the potential exposure to pathogens. The email
from Dr. Thomas Barry explains that staff discovered on May 24
that forceps used in cervical biopsies were being disinfected with
a solution. Improper sterilization raises the possibility of
exposure to hepatitis B, hepatitis C and HIV.
"We have not disclosed yet and our policy is disclosure,"
Dr. Barry wrote in an email dated June 8 to Dr. Allison McGeer, a
microbiologist at Mount Sinai Hospital in Toronto.
"If provided with adequate info re process as well as contacts,
would you help us with a risk assessment opinion. . . . There is
some urgency as we want to disclose."
A few days later, Horizon CEO John McGarry asked the authority's
vice-president of clinical services whether Dr. McGeer might not
see the need to inform the public.
"Do you think there is any chance she might find our processes,
and actual practices (time and effort) sufficient enough to avoid
disclosure? We will need to be convinced that the best solution is
not to simply disclose with all the assurance (sic) she has stated
that risk is minuscule," he wrote.
The health authority's policy encourages informing patients during
an event in which no harm has occurred but the potential for harm
exists. Disclosure is left to "clinical and professional judgment
and is determined on a case by case base," according to the
policy.
Geri Geldart, Horizon's vice-president of clinical services, says
the process of determining the risk, identifying patients,
deciding what tests should be done and what information should be
provided to patients is complex.
"It was a complicated situation to review and it took time to even
track back what happened and how long it had been going on," she
said in an interview.
"I'm comfortable with the time it took. It would have been good
if we could have done it sooner, but if we had done it sooner I'm
not sure we could have answered people's questions."
Apology
Dr. Gordon Dow, an infectious disease consultant from the Moncton
Hospital, did not feel patient notification was warranted in the
days soon after the discovery because the risk of infection was
low, according to a briefing note also obtained through access-to-
information.
In the end, it was decided the information should be released
publicly.
In a news conference on Aug. 28, Mr. McGarry apologized for the
error and described how the unsterilized forceps were used from
1999 to 2013. He urged nearly 2,500 patients to get tested for
hepatitis B, hepatitis C and HIV if they had undergone a
colposcopy, a procedure used to examine the cervix, vagina and
vulva to detect cervical cancer. He also stressed that the risk
of infection was extremely low, even without sterilization.
The health authority is facing a proposed class-action lawsuit
over the matter, with the claimant alleging negligence and breach
of contract. Alta Christine Little is also seeking damages for
failing to inform patients in a timely manner of their possible
exposure to disease.
Ms. Geldart said she couldn't comment on the legal matter.
Rights of patients
Theresa Fillatre, senior policy adviser with the Canadian Patient
Safety Institute, couldn't speak to the New Brunswick case but
says it can take time to determine if there was a breakdown in the
hospital's system and how many people may have been affected.
"It is a right of the patient to know what has happened to them,"
she said, adding that three months seemed a reasonable time frame.
"You don't want to create fear in the public if there's no need
for fear, but at the same time you have to figure out when
disclosure is justified."
The health officials appear to have reviewed similar cases, like
one in Toronto in 2003 in which 900 men were told to get pathogen
testing after prostate-biopsy equipment was not cleaned properly.
The case was reviewed in the New England Journal of Medicine,
which concluded that "disclosure should be the norm, even when the
probability of harm is extremely low."
INDALEX INC: Kaplin Stewart Discusses Ruling on Insurance Coverage
------------------------------------------------------------------
Josh Quinter, Esq. -- jquinter@kaplaw.com -- at Kaplin Stewart of
Kaplin Stewart Meloff Reiter & Stein, P.C. reports that in a
published opinion on December 3, 2013, the Pennsylvania Superior
Court held that the gist of the action doctrine does not
necessarily preclude coverage under a commercial general liability
policy in Pennsylvania.
In Indalex, Inc. v. National Union Fire Insurance, Indalex sued
National Fire to compel insurance coverage for claims being made
against it in multiple out-of-state lawsuits. The underlying
claims against Indalex were for the defective design and
manufacture of certain windows and doors used in construction. It
was claimed in the underlying lawsuits that these defective
products caused water leakage that resulted in, among other
things, cracked walls and mold damage. Those claims were framed
as strict products liability, negligence, breach of warranty, and
breach of contract claims.
After the trial court granted National Fire summary judgment, the
Superior Court reversed on the grounds that a defense was owed as
the complaints were plead. The analysis centered in part on the
Supreme Court's holding in Kvaerner Metals Division of Kvaerner
U.S., Inc. v. Commercial Union Insurance Co. In that case, the
Supreme Court held that there was not coverage for defective work
under a commercial general liability policy because the defective
work did not constitute an "occurrence" under the policy. That
conclusion was based in part on the fact that the underlying
claims in Kvaerner were contractually based.
In Indalex, the theories of liability were instead based largely
in tort. Rather than arguing that they did not get the benefit of
the bargain in the underlying actions, the Plaintiffs framed their
complaints as a products liability and negligence claims. While
Indalex argued that these claims were covered under its policy,
National Union maintained that the gist of the action doctrine
prevented Indalex from recasting the Plaintiffs' claims as covered
tort claims when they were really contract claims.
While the trial court sided with National Union, the Superior
Court agreed with Indalex. In looking at the underlying
complaints, the Superior Court concluded that the "gravamen" of
the allegations sounded in tort. Central to this conclusion was
the fact that the windows and doors were "off-the-shelf" products
that failed and allegedly caused property damage and personal
injury. The issue was a defective product, not bad workmanship in
the Superior Court's eyes. Since the claims were framed as tort
claims, there was a sufficient foundation for coverage under the
policy unless or until the tort claims were deemed invalid.
This decision represents one of the first cracks in the armor that
is Kvaerner. If it stands -- which seems likely at this point --
it represents a possible work around to obtain coverage in certain
types of construction cases where it was previously presumed to be
impossible.
KINROSS GOLD: Stikeman Elliott Discusses Class Action Ruling
------------------------------------------------------------
Ingrid A. Minott, Esq. -- iminott@stikeman.com -- at Stikeman
Elliott LLP reports that on November 5, 2013, Justice Perell
released his decision in Bayens v. Kinross Gold Corp. denying
leave to commence a statutory misrepresentation claim under Part
XXIII.1 of the Ontario Securities Act (the "OSA") and holding that
as a result of the failure to obtain leave for their statutory
claim, the plaintiffs' putative class proceeding could not satisfy
the criteria for certification of a class action, including with
respect to the common law claim for negligent misrepresentation.
Background
In Bayens, several Trustees of the Musicians' Pension Fund of
Canada ("Musicians") commenced a secondary market
misrepresentation claim against Kinross Gold Corporation, a
Canadian international mining company, and several current and
former officers and directors of Kinross. The proposed class
action was brought on behalf of purchasers of Kinross shares from
May 3, 2011 to January 16, 2011 and related to Kinross' purchase,
in September 2010, of Red Back Mining Inc., which owned the
Tasiast mine in Mauritania and the Chirano mine in Ghana. The
plaintiffs asserted three core allegations of misrepresentation
pertaining to Kinross' acquisition of the mines: first, in
May 2011 Kinross should have reported a write down of its goodwill
associated with the two mines because Kinross' failure to achieve
certain expectations regarding the Tasiast mine within six to
eleven months of Kinross' purchase of Red Back Mining Inc. was a
triggering event for a write down (the "Goodwill
Misrepresentation"); second, certain Kinross disclosures were
misleading because they implied that the presence of lower grade
ore in certain areas of the Tasiast mine was a new discovery (the
"Low-Grade Ore Misrepresentation"); and third, Kinross
misrepresented that the expansion project for the Tasiast mine
remained on schedule (the "On-Schedule Misrepresentation").
A similar class action commenced against Kinross in the United
States was partially dismissed. The US District Court for the
Southern District of New York permitted the plaintiffs' claim that
Kinross had misrepresented the schedule for the Tasiast expansion
project to proceed. Notably, Justice Perell found that the result
in the US class action played a role in shaping Musicians' case on
the leave motion.
The Leave Motion
Section 138.8(1) of the OSA permits the court to grant leave to
commence a secondary market claim, where the court is satisfied
that (a) the action is being brought in good faith; and (b) there
is a reasonable possibility that the action will be resolved at
trial in favor of the plaintiff. As Kinross did not challenge
whether Musicians had satisfied the good faith requirement,
Justice Perell was only required to resolve the issue of whether
there was a reasonable possibility that the action would be
resolved at trial in favor of Musicians for any or all of its
three core allegations of misrepresentation.
As a preliminary matter, Justice Perell confirmed that the test of
a "reasonable possibility of success at trial" imposes a low
evidentiary threshold. However, low threshold notwithstanding,
the leave test is a genuine screening mechanism that sets a higher
evidentiary standard than the "some basis in fact" standard
applied to certification motions. Accordingly, in determining
whether there is a reasonable possibility of success at trial,
Justice Perell clarified that the court may assess and weigh
evidence; albeit in a limited way that does not impose an onerous
burden on the plaintiff.
Turning to the issue of whether or not there is a reasonable
possibility that Musicians' action would succeed at trial, Justice
Perell noted that the action was launched by Musicians with
nothing more than "speculation" and "suspicion." With respect to
the Goodwill Misrepresentation claim, Justice Perell held that
Musicians' case for a triggering event for a good will impairment
based on what Kinross knew or ought to have known had no
possibility of success. In particular, there was no evidentiary
basis to support an argument that because of what Kinross knew
about its drilling results in 2011, Kinross should have changed
its expectations for new discoveries at the Tasiast mine from high
hopes to disappointment and accordingly written down the Tasiast
mine's goodwill. In finding that the Goodwill Misrepresentation
claim had no reasonable possibility of success, Justice Perell
rejected the evidence of Musicians' accounting expert on the basis
that the expert witness made "three mutually exclusive mechanical
and analytical errors," each of which caused Musicians' argument
that there was a triggering event in 2011 requiring a write down
of goodwill for the Tasiast mine to implode.
Justice Perell also rejected the Low-Grade Ore Misrepresentation
claim which was based on the allegation that certain public
disclosures made by Kinross in 2011 that confirmed the presence of
lower grade ore in the West Branch zone of the Tasiast mine were
misleading because the disclosures implied that the presence of
lower grade ore was a new and recent discovery, whereas Kinross
was aware of the existence of the low grade ore at the time of its
acquisition of Red Back Mining Inc. Justice Perell held that the
misrepresentation claim had no chance of success at trial because
Kinross' statement confirming the presence of lower grade ore did
not imply a new and recent discovery as Musicians contended. To
the contrary, as found by Justice Perell, the alleged
misrepresentation meant exactly the opposite of what Musicians
asserted; it conveyed the meaning that no new low grade ore had
been discovered but the existing low grade ore was being
reassessed for its economic value.
Regarding Musicians' On-Schedule Misrepresentation claim, Justice
Perell found that the claim had not been pled in Musicians'
Amended Statement of Claim and appeared to have been advanced at
the leave motion because of the US plaintiffs' success in pleading
a similar claim against Kinross. Justice Perell held that it
would be "procedurally improper and unfair to permit Musicians to
advance the claim for the leave motion."
As Musicians could not establish a reasonable possibility of
success at trial on any of its core misrepresentation claims,
Justice Perell denied leave under section 138.8 of the OSA.
The Certification Motion
In the decision, Justice Perell provided his views on the
necessity of the court restructuring its approach to the normal
certification criteria for a class action in the case of a Part
XXIII.1 claim. From Justice Perell's perspective, if leave to
commence a Part XXIII.1 claim is granted, "the court should
certify a class action for both the statutory and the common law
negligent misrepresentation claim" subject to the provisio that
the reliance element of the common law misrepresentation claim
must be proved at individual issues trials. His Honour noted that
it is appropriate to certify the common law negligent
misrepresentation claim as well as the statutory claim because, by
satisfying the stricter merits based leave test, the plaintiff
will have also satisfied the less onerous certification test.
However, if leave is not granted, neither the statutory claim nor
the common law claim can be certified but the plaintiff may
proceed with an individual common law claim for negligent
misrepresentation.
Applying this approach to Musicians' motion for certification,
Justice Perell held that because he refused to grant leave to
commence the statutory claim, Musicians' certification motion
should be dismissed. Had he granted leave for the secondary
market claim, Justice Perell would have certified a class action
for both the statutory claim and the common law negligent
misrepresentation claim because, by successfully obtaining leave,
Musicians would have satisfied the first four of the five criteria
for certification and would likely have been in a position to
satisfy the fifth criterion.
L'OREAL USA: McGuireWoods Discusses Class Action Settlement Ruling
------------------------------------------------------------------
Andrew J. Trask, Esq. -- atrask@mcguirewoods.com -- at
McGuireWoods LLP reports that in the wake of Comcast Corp. v.
Behrend, a number of different courts have weighed in on the
question of whether variations in damages should preclude
certification of a litigation class. Last month, however, the
District of the District of Columbia issued an opinion which
implied that variations in damages might preclude the
certification of a settlement class.
The case is Richardson v. L'Oreal USA, Inc., 2013 U.S. Dist. LEXIS
158599 (D.D.C. Nov. 6, 2013). And it's another Center for Class
Action Fairness case.
Richardson alleged that L'Oreal falsely marketed certain hair care
products as "available only at fine salons and spas" even though
they were also available at big-box retailers like Kmart.
L'Oreal and the plaintiffs sought to settle the case for
injunctive relief -- L'Oreal would change its labeling -- even
though the class members would also be extinguishing any class
claims for monetary relief. L'Oreal's logic for doing so is clear:
it got a broad release. The plaintiffs' logic was less so: they
argued that the variations in damages were too great to allow
certification under Rule 23(b)(3), so injunctive relief was all
they could get.
The CCAF objected, making three substantive arguments:
(1) the plaintiffs lacked standing to seek injunctive relief
(after all, they weren't in danger of being misled again);
(2) individualized damages issues would predominate, particularly
between retail and mass-market purchasers; and
(3) the class was not cohesive enough to justify Rule 23(b)(2)
certification.
The court did not accept the standing argument, though it conceded
that its "power . . . seems undeniable," it found that "public
policy requires plaintiffs to have standing here." It was
troubled, however, by the predominance and cohesiveness problems
presented by the class. (The plaintiffs tried to argue against a
predominance analysis since they did not seek damages, but the
court ruled that if they extinguished damages claims, then absent
class members deserved Rule 23(b)(3) notice and opt-out
protections.) And it was particularly troubled by the
ramifications of settling a class action under Rule 23(b)(2) that
would also extinguish classwide damages claims as "too hard to
certify." As it wrote:
It is not hard to imagine adventurous or avaricious counsel taking
advantage of this novel settlement structure to the detriment of
absent class members. For example, imagine a putative consumer
class action where damages determinations would be relatively
complex or speculative on a nationwide basis, but perhaps not so
on a state-to-state basis. Calculating that a piece of a state-
wide class would not be very rewarding to pursue, the hypothetical
plaintiffs build a record showing that a broad nationwide class
seeking damages could never be certified. Then, plaintiffs seek
to file a suit for injunctive relief only and seek to settle with
the defendant. Because releasing all damages claims in a (b)(2)
settlement class would almost certainly be improper, the defendant
agrees that plaintiffs need not release individual damages claims-
-the value of which is trivial, as in many consumer class actions.
But plaintiffs agree to release class-wide damages claims, under
the auspices of an impossible-to-certify nationwide class.
Plaintiffs get attorney's fees, defendant gets a near-bulletproof
release, and class members get . . . an injunction.
In the end, stripping the procedural right to bring a damages
class action from absent class members without their knowledge or
consent -- and effectively precluding their damages claims -- is
not proper.
The court also held that the intra-class conflict between those
who bought at salons and those who bought at Kmart meant the class
was not cohesive enough for Rule 23(b)(2) certification.
While the court also conducted a Rule 23(e) analysis (which the
settlement also flunked), it is the Rule 23 analysis that is most
helpful for defense attorneys going forward: variations in damages
continue to matter. Sometimes they preclude certification simply
because they are so complex themselves. But sometimes -- like
here -- they point out larger problems in a proposed class.
MEADOWS CASINO: Former Casino Dealer Files Overtime Class Action
----------------------------------------------------------------
Brian Bowling, writing for Pittsburgh Tribune-Review, reports that
The Meadows Casino & Racetrack requires its dealers to work before
and after their shifts but doesn't pay them regular or overtime
pay for the work, a former dealer claims in a proposed federal
class-action lawsuit filed on Dec. 31.
Michael C. Yanchak, age and address unavailable, says that the
casino owes him between a half hour to an hour of regular pay and
overtime for every week he worked between July 2010 and July 2013.
His hourly wage increased from $7.25 per hour to $7.70 per hour
over the three years, the lawsuit says.
Mr. Yanchak is suing on behalf of more than 350 current and former
dealers, the lawsuit says. The casino employs more than 350
dealers and 50 floor supervisors, the lawsuit says.
A spokesman for The Meadows declined comment.
NATIONAL FOOTBALL: "Demarie" Suit Removed to E.D. Pennsylvania
--------------------------------------------------------------
The purported class action lawsuit titled Demarie, et al. v.
National Football League, et al., Case No. 13-06603-MLCF-KWR, was
transferred from the U.S. District Court for the Eastern District
of Louisiana (New Orleans) to the United States District Court for
the Eastern District of Pennsylvania (Philadelphia). The District
Court Clerk assigned Case No. 2:13-cv-07659-AB to the proceeding.
The complaint alleges personal injury claims.
The Plaintiffs are represented by:
James R. Dugan, II, Esq.
Chad Joseph Primeaux, Esq.
David Baylis Franco, Esq.
Douglas R. Plymale, Esq.
THE DUGAN LAW FIRM, APLC
One Canal Place, Suite 1000
365 Canal Street
New Orleans, LA 70130
Telephone: (504) 648-0180
E-mail: jdugan@dugan-lawfirm.com
dfranco@dugan-lawfirm.com
drplymale@plymalelawfirm.com
- and -
Norman F. Hodgins, III, Esq.
ALLAN BERGER & ASSOCIATES, PLC
4173 Canal St.
New Orleans, LA 70119
Telephone: (504) 486-9481
NEW ENGLAND COMPOUNDING: Jan. 15 Meningitis Claims Bar Date Set
---------------------------------------------------------------
Hagens Berman Sobol Shapiro, lead counsel for victims with cases
on file in federal court who developed fungal meningitis after
exposure to allegedly tainted injections manufactured by New
England Compounding Center (NECC), on Jan. 7 reminded victims that
the deadline to submit a proof of claim against NECC with the
bankruptcy court is Jan. 15, 2014.
The firm warns individuals who were exposed to injections
manufactured by NECC, and their attorneys, that failure to ensure
that the claims agent receives both a proof of claim and a PITWD
addendum before the deadline may result in those claims being
forever barred by the court. Completed forms should be submitted
to claims agent Donlin Recano, not filed with the bankruptcy
court.
"As this critical deadline approaches, we are alerting victims as
well as their attorneys that to preserve their legal rights, the
time to act is now," said Thomas Sobol, lead counsel of the
Plaintiffs' Steering Committee. "Failure to submit a claim by
January 15 could cause the court to forever bar claims against
NECC or other wrongdoers who may be liable for damages resulting
from the meningitis outbreak."
The 2012 outbreak of fungal meningitis infections was the worst
such outbreak in U.S. history. The CDC ultimately recorded 64
deaths and 751 cases of fungal meningitis in 20 states, linked to
allegedly tainted injections manufactured and distributed by NECC.
Following the outbreak, hundreds of lawsuits were filed, alleging
that NECC and affiliated companies ignored the most basic safety
procedures in its facilities, resulting in the tainted injections.
The company filed for bankruptcy in December of 2012.
Copies of the proof of claim form, the PITWD addendum form, the
Bar Date Notice, and the Bar Date Order are available at
http://www.drcdrx.com/necpcc/ProofOfClaim
More information is available at
http://www.drcdrx.com/necpcc/index
About Hagens Berman
Seattle-based Hagens Berman Sobol Shapiro LLP --
http://www.hbsslaw.com-- represents consumers, whistleblowers,
investors, workers and others in complex and class-action
litigation.
About New England Compounding Pharmacy
New England Compounding Pharmacy Inc., filed a Chapter 11 petition
(Bankr. D. Mass. Case No. 12-19882) in Boston on Dec. 21, 2012,
after a meningitis outbreak linked to an injectable steroid,
methylprednisolone acetate ("MPA"), manufactured by NECC, killed
39 people and sickened 656 in 19 states, though no illnesses have
been reported in Massachusetts. The Debtor owns and operates the
New England Compounding Center is located in Framingham, Mass. In
October 2012, the company recalled all its products, not just
those associated with the outbreak.
Paul D. Moore, Esq., at Duane Morris LLP, in Boston, has been
appointed as Chapter 11 Trustee of NECC. He is represented by:
Jeffrey D. Sternklar, Esq.
DUANE MORRIS LLP
Suite 2400
100 High Street
Boston, MA 02110-1724
Tel: 857-488-4216
Fax: 857-401-3034
E-mail: JDSternklar@duanemorris.com
An Official Committee of Unsecured Creditors appointed in the case
has been represented by:
BROWN RUDNICK LLP
William R. Baldiga, Esq.
Rebecca L. Fordon, Esq.
Jessica L. Conte, Esq.
One Financial Center
Boston, MA 02111
Tel: (617) 856-8200
E-mail: wbaldiga@brownrudnick.com
rfordon@brownrudnick.com
- and -
David J. Molton, Esq.
Seven Times Square
New York, NY 10036
Tel: (212) 209-4800
E-mail: dmolton@brownrudnick.com
NOVARTIS AG: Sells Excedrin Migraine at Higher Price, Suit Says
---------------------------------------------------------------
Kerri Yingst, on behalf of herself and all other similarly
situated individuals v. Novartis AG, Novartis Corporation, and,
Novartis Consumer Health, Inc., Case No. 2:13-cv-07919-DMC-JBC
(D.N.J., December 31, 2013) arises out of Novartis' sale of
Excedrin Migraine at a higher price than the pharmacologically
identical product Excedrin Extra Strength.
The Defendants' conduct has harmed consumers, including the
Plaintiff and a class of similarly situated individuals, who paid
more for Excedrin Migraine than they would have paid for Excedrin
Extra Strength, Ms. Yingst contends.
Novartis AG, the parent company of the Novartis group of entities,
is a multinational pharmaceutical company headquartered in Basel,
Switzerland. Novartis Corporation is a New York corporation
headquartered in East Hanover, New Jersey. Novartis Corporation
is the U.S. arm of Novartis AG and oversees research and
development, manufacturing, sales, and marketing of pharmaceutical
products, including Excedrin Migraine and Excedrin Extra Strength.
Novartis Consumer Health, Inc. is a Delaware corporation
headquartered in Parsippany, New Jersey. Novartis Consumer
Health, Inc. engages in research and development, manufacturing,
sales, and marketing of over-the-counter pharmaceutical products,
including Excedrin Migraine and Excedrin Extra Strength.
The Plaintiff is represented by:
Todd D. Muhlstock, Esq.
BAKER SANDERS LLC
100 Garden City Plaza, Suite 500
Garden City, NY 11530
Telephone: (516) 741-4799
Facsimile: (516) 741-3777
E-mail: TDMecf@BakerSanders.com
TMuhlstock@BakerSanders.com
- and -
Eric Gibbs, Esq.
GIRARD GIBBS LLP
601 California Street, 14th Floor
San Francisco, CA 94108
Telephone: (415) 981-4800
Facsimile: (415) 981-4846
E-mail: ehg@GirardGibbs.com
OUTBACK STEAKHOUSE: Wolf Rifkin Shapiro Files Amended Complaint
---------------------------------------------------------------
Wolf Rifkin Shapiro Schulman & Rabkin disclosed that alleging that
Outback Steakhouse and its parent companies failed to pay hourly
employees their lawfully earned wages, attorneys for the
Plaintiffs in Cardoza et al. v. Bloomin' Brands et al. filed an
amended Fair Labor Standards Act complaint in the U.S. District
Court, District of Nevada on December 24, 2013.
The amended action seeks to recapture pay, plus appropriate
damages, for all Plaintiffs and the many thousands of similarly
situated employees in the FLSA collective action and various
state-law class actions as a result of Defendants' failure to pay
wages for off-the-clock work required by Outback.
"This lawsuit seeks to vindicate the simple proposition that
employees should be paid for their work," said Don Springmeyer --
dspringmeyer@wrslawyers.com -- the Wolf Rifkin Shapiro Schulman &
Rabkin attorney who filed the suit. "Outback Steakhouses run on
the labor of tens of thousands of minimum-wage employees, and it
is outrageous that a multi-billion-dollar corporation further
squeezes those hard working people out of their lawfully-earned
wages."
The suit claims that Outback failed to pay for all hours worked by
its employees, failed to pay federal and state minimum wages, and
failed to pay appropriate overtime wages for time worked above
forty hours per week.
Named Plaintiffs are current and/or former Outback Steakhouse
employees from around the country, including Nevada, New York,
Florida, Kansas, Maryland, North Carolina, Ohio, Virginia and
Illinois. More than 125 current and former Outback employees
already have filed their consents-to-sue in the Nevada federal
court case.
Bloomin' Brands Inc., the parent company of Outback Steakhouse,
had gross receipts of more than $3 billion dollars last year.
Bloomin' CEO Elizabeth Smith was rewarded with a $20 million bonus
in 2013, and according to company filings she maintains stock
options worth another $50 million.
For more information on the case or for media inquiries, please
visit http://www.outbacklawsuit.com
For wage and hour complaints by employees against Outback
Steakhouse, call 1-866-738-5811.
About WRSS&R
Comprised of a team of over 40 attorneys, WRSS&R --
http://www.wrslawyers.com/-- specializes in all areas of law.
Offering top quality legal expertise at a reasonable cost, WRSS&R
has garnered a national reputation as a leading law firm. Their
offices are located in Los Angeles, Las Vegas, and Reno, Nev.
For media inquiries or to arrange an interview, please contact
Travis Culver at 323-937-1951 or travis@tylerbarnettpr.com
PFIZER INC: Lipitor Plaintiffs May Face Statute of Limitations
--------------------------------------------------------------
Cliff Rieders of Rieders, Travis, Humphrey, Harris Waters &
Waffenschmidt reports that many female patients and potential
plaintiffs who took the cholesterol-lowering drug Lipitor
(atorvastatin) and subsequently developed Type 2 diabetes could be
facing a deadline, or statute of limitations on their ability to
pursue a product liability case against Pfizer for failure to
provide adequate warnings about the potential side effects of
Lipitor.
Pfizer is currently facing a growing number of Lipitor diabetes
claimed filed by women in state and federal courts, all involving
allegations that otherwise healthy women with BMI under 30
developed diabetes after using the medication to lower their
cholesterol.
However, all lawsuits are subject to a statute of limitations, or
deadline, for which a claim can be filed in court. For example,
many states, such as Pennsylvania, have a two year statute of
limitations after an individual discovers or could have discovered
a link between a prescription medication and an injury.
For cases where women were diagnosed with diabetes more than two
years ago, Pfizer may seek to argue that the statute of
limitations for their claims began to run in February 2012 when
warnings were added to the Lipitor warning label for the first
time informing users about the potential impact the medication may
have on blood sugar levels. Thus, the statute of limitations of
two years would expire in February 2014. However, plaintiffs are
likely to argue that Pfizer's warning was inadequate to trigger
the statute of limitations. However, this issue is likely to
result in many new Lipitor complaint filings in the next several
weeks so that plaintiffs can ensure that a subsequent
interpretation of the Lipitor warning and statute of limitations
does not result in their claims being time barred.
PLYMOUTH: 100+ People Died From Asbestos Exposure
-------------------------------------------------
Graeme Demianyk, writing for Plymouth Herald, reports that more
than 100 people from the Plymouth area have died in the last five
years from asbestos exposure, figures have revealed.
Legislation is currently going through Parliament to provide a
compensation package for sufferers of the fatal lung disease
mesothelioma, which is caused by inhaling asbestos.
The number of sufferers is particularly high in cities such as
Plymouth because of asbestos-related activities in the past at
Devonport Dockyard.
An exposure of as little as one or two months can result in the
onset of mesothelioma between 15 and 60 years later.
Figures placed in the House of Commons library show mesothelioma
was the underlying cause of 2,139 deaths last year.
Some 396 deaths were recorded in Devon and Cornwall, with around
120 in the four constituencies covering Plymouth, between 2008 and
2012.
There were 34 mesothelioma-related deaths in Plymouth Sutton and
Devonport, 31 in South West Devon, 28 in Plymouth Moor View and 27
in South East Cornwall.
The Tiverton and Honiton and Torridge and West Devon
constituencies both recorded 27 deaths.
Other parts of the country with large dockyards witnessed a high
number of deaths, including Barrow-in-Furness in Cumbria, where 60
deaths were recorded over the period.
The legislation is designed to compensate victims of mesothelioma
who have been unable to trace the employer who exposed them to the
deadly asbestos dust.
Alison Seabeck, Labour MP for Plymouth Moor View, has welcomed
news of the GBP350 million deal, but warned the level of
compensation is set far lower than that attainable when a claimant
can trace their insurer. She also has concerns that the decision
to set a cut-off date two years from the launch of Labour's
consultation in 2010 has denied compensatory justice to the more
than 700 people who have died in this time.
She said: "It is a ghastly disease and there are many families in
Plymouth we are trying to help.
"It has been decades trying to get some justice for those affected
who have not been able to trace the insurers of the companies they
worked for."
"There is progress, but there is more to do to secure justice for
sufferers and their families."
Asbestos was used in shipbuilding, construction and the automotive
industry. Carpenters, joiners, plumbers and heating engineers are
at particular risk. Asbestos was in widespread use before being
banned completely in 1999.
Victims and their families have, up to now, been able to claim
damages under two pieces of legislation but the sums paid have not
generally exceeded GBP20,000.
Under the proposed new fund, which must receive parliamentary
approval, claimants will be entitled to 75 per cent of the average
settlement paid out in civil actions relating to mesothelioma,
expected to be about GBP115,000. Claimants will have to
demonstrate that they were negligently exposed to asbestos at work
and are unable to claim compensation because they cannot track
down a liable employer or insurer.
It will be paid for by a levy on insurance companies which provide
employers' liability and is expected to cost the insurance
industry GBP300million over the next ten years while helping more
than 300 sufferers a year.
But campaigners say the scheme does not go far enough in
compensating victims, and thousands who suffer from other asbestos
related diseases, such as asbestosis and pleural thickening, will
not receive anything.
PROVIDENCE HEALTH: Judge Approves Autism Class Action
-----------------------------------------------------
Christopher David Gray, writing for The Lund Report, reports that
Federal District Judge Michael H. Simon has approved the class-
action status for autism advocates in their legal fight against
Providence Health Plan over coverage of applied behavior analysis.
"The Court finds that Plaintiffs and all putative class members
subscribe to Providence's group plan. The group plan contains an
identical provision -- the Developmental Disability Exclusion --
that Providence concedes will continue to be applied to requests
for ABA therapy going forward unless enjoined by this Court,"
Simon wrote.
"All putative class members, therefore, have an interest in
receiving an answer to the question of whether the Developmental
Disability Exclusion is legal."
The decision came on Christmas Eve, much like Santa Claus, for
advocates of applied behavior analysis for autism, and it will
allow their attorney to represent hundreds of children who have
insurance through the Catholic health provider Providence, not
just the two named in the lawsuit.
"[Simon] appeared to go item by item in the requirements of
getting a class certified and found we had met every requirement,"
said Keith Dubanevich, the lead attorney for the plaintiffs.
The two sides debated their positions on whether the case should
be limited to the individuals named in the suit or a larger class
of people in early December.
Mr. Dubanevich told The Lund Report that his legal team is only
seeking injunctive relief, not monetary damages for the denied
coverage. If the plaintiffs win there case, Providence would
either have to pay for the treatment or find another rationale for
excluding applied behavior analysis from its menu of coverage
options. It would no longer be able to count applied behavior
analysis treatment for autism spectrum disorder as an uncovered
developmental disability and refuse to pay for the therapy.
The class-action allows the court decision to apply to anyone
covered by a federally regulated insurance plan, as well as the
two children named in the case.
Providence Health Plan is the only insurer in Oregon to try this
tactic to get out of paying for applied behavior analysis, but a
Providence defeat could deter other insurance companies from
asserting the same denial. A victory by Providence likewise could
encourage other insurers to follow suit and deny care on the same
grounds.
A spokesman for Providence declined to comment on the lawsuit, but
noted that Providence Health Plan covers a large number of autism
treatments, just not applied behavior analysis.
"Providence Health Plan currently provides coverage for a range of
autism spectrum disorder treatments, including individual
psychotherapy; speech, language and communication therapy;
augmentative communication; extended EEG [electroencephalography]
monitoring; and group and/or family therapy," wrote Providence
spokesman Gary Walker, in an email to The Lund Report.
Applied behavior analysis is a wide spectrum of treatments rooted
in behavioral psychology that work to change problematic behaviors
in autistic youth and help children learn to relate to other
people. If started before a child enters school, the therapy can
be very intensive and works on reversing much of the disability.
With older kids or adults, the therapy techniques focus primarily
on eliminating the worst behaviors.
Mr. Walker said that Providence would begin covering ABA a year
earlier than the law requires. With that the case, it's somewhat
puzzling that Providence has chosen to wage a court battle rather
than agree to pay for the desired treatment. Fewer than 10
families with Providence Health Plan have attempted to seek ABA
treatment for their children. In two earlier cases, Providence
lost appeals when an independent physician opined that the
treatment was not experimental.
Mr. Dubanevich said that both sides would submit motions to the
court in January and he expected a court hearing before
Judge Simon on the merits of the case this spring, barring a
settlement.
REDBOX AUTOMATED: Hartford Says It Has No Duty to Defend Suit
-------------------------------------------------------------
Hartford Insurance claims in Federal Court that it has no duty to
defend Redbox in a class action accusing it of failing to make its
rental boxes accessible to the deaf, according to Courthouse News
Service.
The Plaintiffs are represented by:
Michael John Duffy, Esq.
TRESSLER LLP
233 South Wacker Drive, 22nd Floor
Chicago, IL 60606-6308
Telephone: (312) 627-4000
E-mail: mduffy@tresslerllp.com
The case is Hartford Fire Insurance Company, et al. v. Redbox
Automated Retail, LLC, Case No. 1:14-cv-00063, in the United
States District Court for the Northern District of Illinois.
SENSA PRODUCTS: To Settle FTC's Deceptive Ad Charges for $26.5MM
----------------------------------------------------------------
The Federal Trade Commission on Jan. 7 announced a law enforcement
initiative stopping national marketers that used deceptive
advertising claims to peddle fad weight-loss products, from food
additives and skin cream to dietary supplements.
Sensa print advertisement showing fit female torso and product
being poured onto salad. "Need to lose 30 pounds? Try Sensa free.
Get a gym body without going to the gym. Clinically proven."
"Operation Failed Resolution" is part of the FTC's ongoing effort
to stop misleading claims for products promoting easy weight loss
and slimmer bodies. The marketers of Sensa, who exhorted
consumers to "sprinkle, eat, and lose weight" -- will pay $26.5
million to settle Federal Trade Commission charges that they
deceived consumers with unfounded weight-loss claims and
misleading endorsements. The FTC will make these funds available
for refunds to consumers who bought Sensa.
The agency also announced charges against the marketers of two
other products that made unfounded promises:
L'Occitane, which claimed that its skin cream would slim
users' bodies but had no science to back up that claim, and
HCG Diet Direct, which marketed an unproven human hormone that
has been touted by hucksters for more than half a century as a
weight-loss treatment.
And it announced a partial settlement in a fourth case, LeanSpa,
LLC, an operation that allegedly deceptively promoted acai berry
and "colon cleanse" weight-loss supplements through fake news
websites.
"Resolutions to lose weight are easy to make but hard to keep,"
said Jessica Rich, Director of the FTC's Bureau of Consumer
Protection. "And the chances of being successful just by
sprinkling something on your food, rubbing cream on your thighs,
or using a supplement are slim to none. The science just isn't
there."
In total, the weight-loss marketers will pay approximately $34
million for consumer redress. In addition to the $26.5 million to
be paid by Sensa, L'Occitane, Inc. will pay $450,000, and the
LeanSpa settling defendants will surrender assets totalling an
estimated $7.3 million. The judgment against the HCG Diet Direct
defendants is suspended due to their inability to pay.
Refund administration for consumer redress takes time, and the FTC
is in the process of determining how best to provide redress in
each case. When information becomes available regarding consumer
refunds in these cases, it can be found here.
Sensa Products, LLC
The FTC charged that California-based Sensa Products, LLC, its
parent, and two individuals deceptively advertised that the
powdered food additive Sensa enhances food's smell and taste,
making users feel full faster, so they eat less and lose weight,
without dieting, and without changing their exercise regime. The
defendants did not have competent and reliable scientific evidence
to support these claims, according to the FTC's complaint.
The defendants typically charge $59 plus shipping and handling for
a one-month supply of Sensa. They provide the powder in twelve
flavors, and have marketed it through radio and print
advertisements, retail chains such as Costco and GNC, a
promotional book, television ads and infomercials, Home Shopping
Network, ShopNBC, telemarketing, and the Internet. U.S. sales of
Sensa between 2008 and 2012 totaled more than $364 million,
according to the complaint.
In addition to Sensa Products, LLC, the FTC's complaint names
parent company Sensa, Inc., Sensa Inc. former CEO Adam Goldenberg,
and Sensa creator and endorser and Sensa Products part-owner Dr.
Alan Hirsch with deceptive advertising for making unsubstantiated
claims about Sensa.
The FTC also charged that the defendants failed to disclose the
fact that some consumers were compensated for their endorsements
of Sensa. In some instances, compensation included payments of
$1,000 or $5,000, and trips to Los Angeles.
The agency also alleged that Dr. Hirsch -- who conducted two of
the studies cited in the ads and wrote a promotional book about
Sensa -- gave expert endorsements that were not supported by
scientific evidence, and provided the means for the other
defendants to deceive consumers. The defendants falsely cited Dr.
Hirsch's studies as clinical proof that consumers could lose
substantial weight without dieting or exercise. The defendants
also allegedly misrepresented their role in a third study.
Under the order, the defendants are barred from making weight-loss
claims about dietary supplements, foods, or drugs, unless they
have two adequate and well-controlled human clinical studies
supporting the claims; making any other health-related claim
unless it is supported by competent and reliable scientific tests,
analyses, research, or studies; and misrepresenting any scientific
evidence.
They also must disclose any material connections with the
endorsers of a product or program, as well as with anyone
conducting or participating in a study of the product or program.
Dr. Hirsch is also barred under the order from providing expert
endorsements unless he relies on both competent and reliable
scientific evidence and his own expertise. And he is barred from
providing to others studies, promotional materials, endorsements,
or other means for deceiving consumers.
The order imposes a $46.5 million judgment against the companies,
and requires them to pay $26.5 million, with the rest suspended
due to their inability to pay. If it is later determined that the
financial information the defendants gave the FTC was false, the
full amount of their judgment will become due.
L'Occitane, Inc.
Trim 1.3 inches in just 4 weeks."The Federal Trade Commission has
reached a settlement requiring L'Occitane, Inc. to stop making
deceptive claims that its Almond Beautiful Shape and Almond
Shaping Delight skin creams have body slimming capabilities and
are clinically proven. The online and in-store retailer of beauty
and cosmetic products -- which charged $48 for 7 ounces of Almond
Shaping Delight and $44 for 6.7 ounces of Almond Beautiful
Shape -- also has agreed to pay $450,000 for consumer redress as
part of the settlement.
L'Occitane launched an advertising campaign in 2012 claiming that
Almond Beautiful Shape could "trim 1.3 inches in just 4 weeks,"
and that it was a "cellulite fighter;" and that Almond Shaping
Delight has "clinically proven slimming effectiveness," and will
"visibly refine and reshape the silhouette, to resculpt and tone
the body contours." L'Occitane's ads also claimed that both
products could produce a "noticeably slimmer, firmer you . . . (in
just 4 weeks!)."
The proposed settlement bans the company from claiming that any
product applied to the skin causes substantial weight or fat loss
or a substantial reduction in body size; prohibits the company
from claiming that any drug or cosmetic causes weight or fat loss
or a reduction in body size, unless the claim is backed by two
adequate and well-controlled human clinical studies; requires that
any claim that a drug or cosmetic reduces or eliminates cellulite
or affects body fat or weight be backed by competent and reliable
scientific evidence; and prohibits the company from
misrepresenting the results of any test, study, or research, or
that the benefits of a product are scientifically proven.
HCG Diet Direct
Lose 40 pounds in 40 days "The Arizona-based company HCG Diet
Direct, and its director Clint Ethington, marketed liquid
homeopathic hCG drops by falsely promising they would cause
consumers to rapidly lose substantial weight. The defendants have
agreed to enter into a settlement with the Federal Trade
Commission that would bar such deceptive claims in the future.
The defendants sold HCG Diet Direct Drops, a diluted liquid form
of human chorionic gonadotropin -- a hormone produced by the human
placenta that has been falsely promoted for decades as a weight-
loss supplement.
In November 2011, HCG Diet Direct and 6 other companies received
warning letters issued jointly by FTC and FDA staff, advising that
their hCG products are mislabeled drugs under the FDA Act, and
warning that it is unlawful under the FTC Act to make weight-loss
claims that are not substantiated by competent and reliable
scientific evidence.
In advertisements on YouTube videos, through product packaging,
and in statements and testimonial videos posted on the company
website, the company claimed that consumers would rapidly lose
substantial amounts of weight (up to one pound a day) by placing a
highly diluted concentration of homeopathic HCG solution under
their tongues before meals and adhering to a very low calorie
diet. According to the FTC, the company and its director also
made several other false and unsupported claims, including that
the product was FDA approved, and failed to disclose that
endorsers appearing in some of its advertisements were
compensated, or were related to a company employee or officer.
The company charged approximately $35 for a 7-day supply or $200
for a 40-day supply of their HCG Diet Direct Drops, with sales
totaling more than $3 million -- mostly between January 1, 2009,
and late 2012.
The proposed settlement bars HCG Diet Direct and Ethington from
claiming or assisting others in claiming that any dietary
supplement, food, or drug causes weight loss, or that consumers
who use the product can expect the same results as endorsers --
unless the claim is non-misleading, and unless the defendants have
at least two adequate and well-controlled human clinical studies
to substantiate their advertising claims.
The order also bars the two defendants from making any other
health claims about any dietary supplement, food, or drug unless
they have competent and reliable scientific evidence;
misrepresenting the results of scientific research; representing
that a product is FDA-approved when it is not; and failing to
disclose that endorsers are related to company officials or that
they are being compensated for their testimonials, if that is the
case.
The order imposes a $3.2 million judgment, representing all sales
of HCG Diet Direct Drops, which is suspended based on the
defendants' inability to pay. If it is determined that the
financial information the defendants gave the FTC was untruthful,
the full amount of the judgment will become due.
LeanSpa, LLC
The FTC has reached a settlement requiring LeanSpa principal Boris
Mizhen and three companies he controls to surrender cash, real
estate and personal property totaling approximately $7 million.
Mizhen's wife, Angelina Strano -- charged as a relief defendant
who accepted money from the scheme but did not actively
participate in it -- will surrender nearly $300,000.
In December 2011, the FTC and the state of Connecticut shut down
Mizhen's operation, charging it with using fake news websites to
promote acai berry and "colon cleanse" weight-loss products,
making deceptive weight-loss claims, and telling consumers they
could receive free trials of the products by paying the nominal
cost of shipping and handling. The FTC alleges that many consumers
ended up paying $79.99 for the trial, and for recurring monthly
shipments of products that were hard to cancel.
The FTC charged the defendants with violating Sections 5 and 12 of
the FTC Act, the Electronic Funds Transfer Act, and Regulation E,
and the state of Connecticut alleged that the defendants violated
the Connecticut Unfair Trade Practices Act.
The proposed settlement bans the defendants from billing consumers
for products or services by automatically charging them on a
recurring basis unless they opt out. And it prohibits the
defendants from misrepresenting or failing to disclose facts about
the products that involve costs, charges, terms for refunds,
endorsements, and trial supplies. The order also prohibits the
defendants from falsely claiming that any product can cause rapid
and substantial weight loss without the need for dieting or
increased exercise.
The defendants also are required to have at least two human
clinical trials to support any weight loss claims they make about
the products they sell, and to have competent and reliable
scientific evidence for any other health claims. They are
prohibited from claiming that products are clinically proven when
they are not, and from violating the Electronic Funds Transfer
Act.
Litigation continues against defendants that acted as LeanSpa's
affiliate network, and two other relief defendants.
Consumers should carefully evaluate advertising claims for weight-
loss products. For more information, see the FTC's guidance for
consumers of products and services advertised for Weight Loss &
Fitness. The FTC also has new guidance for media outlets on
spotting false weight-loss claims in advertising.
The FTC is a member of the National Prevention Council, which
provides coordination and leadership at the federal level
regarding prevention, wellness, and health promotion practices.
This initiative advances the National Prevention Strategy's goal
of increasing the number of Americans who are healthy at every
stage of life.
The Commission votes authorizing the staff to file the complaints
and approving the proposed consent decrees for Sensa Products,
LLC; and HCG Diet Direct and Clint Ethington were both 4-0. The
FTC filed the complaint and proposed consent decree for Sensa in
the U.S. District Court for the District of Illinois on January 7,
2013, and for HCG Diet Direct in the U.S. District Court for the
District of Arizona on January 7, 2013. The proposed consent
decrees are subject to court approval.
The Commission vote approving the proposed consent decree for
Leanspa, LLC; NutraSlim, LLC, NutraSlim U.K., Ltd., Boris Mizhen,
and relief defendant Angelina Strano was 4-0. It is subject to
court approval. The FTC filed the proposed consent decree in the
U.S. District Court for the District of Connecticut on December
23, 2013.
NOTE: The Commission files a complaint when it has "reason to
believe" that the law has been or is being violated and it appears
to the Commission that a proceeding is in the public interest.
Consent decrees have the force of law when approved and signed by
the District Court judge.
The Commission vote to accept the consent agreement package
containing the proposed consent order for public comment in the
L'Occitane, Inc. case was 4-0. The FTC will publish a description
of the consent agreement package in the Federal Register shortly.
The agreement will be subject to public comment for 30 days,
starting January 7, 2014 and continuing through February 6, 2014,
after which the Commission will decide whether to make the
proposed consent order final. Interested parties can submit
written comments electronically or in paper form by following the
instructions in the "Invitation To Comment" part of the
"Supplementary Information" section. Comments in electronic form
should be submitted using the following Web link:
https://ftcpublic.commentworks.com/ftc/loccitaneconsent, and
following the instructions on the web-based form. Comments in
paper form should be mailed or delivered to: Federal Trade
Commission, Office of the Secretary, Room H-113 (Annex D), 600
Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is
requesting that any comment filed in paper form near the end of
the public comment period be sent by courier or overnight service,
if possible, because U.S. postal mail in the Washington area and
at the Commission is subject to delay due to heightened security
precautions.
NOTE: The Commission issues an administrative complaint when it
has "reason to believe" that the law has been or is being
violated, and it appears to the Commission that a proceeding is in
the public interest. When the Commission issues a consent order
on a final basis, it carries the force of law with respect to
future actions. Each violation of such an order may result in a
civil penalty of up to $16,000.
Commissioner Ohlhausen and Commissioner Wright have issued
separate statements pertaining to these matters, as well as to the
separate matter of GeneLink; Chairwoman Ramirez and Commissioner
Brill issued a joint statement pertaining to GeneLink.
The Federal Trade Commission works for consumers to prevent
fraudulent, deceptive, and unfair business practices and to
provide information to help spot, stop, and avoid them. To file a
complaint in English or Spanish, visit the FTC's online Complaint
Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters
complaints into Consumer Sentinel, a secure, online database
available to more than 2,000 civil and criminal law enforcement
agencies in the U.S. and abroad. The FTC's website provides free
information on a variety of consumer topics.
SHELL RAPID: Suit Seeks to Recover Unpaid Minimum and OT Wages
--------------------------------------------------------------
Joseph L. Rhea, Jr., and Chris Self, on behalf of themselves and
all others similarly situated v. Shell Rapid Lube, LLC, and Shane
Strickland, Individually, Case No. 3:13-cv-00315-SA-SAA (N.D.
Miss., December 31, 2013) arises under the Fair Labor Standards
Act and Mississippi law to recover unpaid back wages, minimum
wages, overtime wages, an additional equal amount of liquidated
damages, front pay, obtain declaratory relief, and reasonable
attorney's fees and costs.
Shell Rapid Lube, LLC is a domestic limited liability company that
has been administratively dissolved, but has continued to do
business. The owner of Shell Rapid Lube, LLC is Shane Strickland
and Shane Strickland is now doing business as Shell Rapid Lube,
headquartered in Holly Springs, Mississippi.
The Plaintiffs are represented by:
Robert L. Moore, Esq.
William C. Sessions, III, Esq.
HEATON AND MOORE, P.C.
100 North Main Building, Suite 3400
Memphis, TN 38103
Telephone: (901) 526-5975
E-mail: rmoore@heatonandmoore.com
SIRIUS XM: Being Sold for Too Little to Liberty Media, Suit Says
----------------------------------------------------------------
Glenn Freedman, individually and on behalf of all others similarly
situated v. Sirius XM Holdings Inc., Liberty Media Corporation,
James E. Meyer, Joan L. Amble, Anthony J. Bates, George W.
Bodenheimer, David J.A. Flowers, Eddy W. Hartenstein, James P.
Holden, Gregory B. Maffei, Evan D. Malone, James F. Mooney, Carl
E. Vogel, Vanessa A. Wittman and David Zaslav, Case No.
650038/2014 (N.Y. Sup. Ct., New York Cty., January 7, 2014)
challenges the proposed acquisition of the Company by its majority
stockholder, Liberty Media Corp.
In formulating the terms of the Proposed Transaction, LMCA,
through its representation on, and effective control and
domination of Sirius' Board of Directors, improperly used
confidential, non-public information provided to the Board by
Sirius management, the Plaintiff alleges. The Plaintiff adds that
in pursuing the Proposed Transaction, each of the Company's
directors and LMCA are required pursuant to their fiduciary duties
to pursue an acquisition that is fair in both process and price to
Sirius shareholders, and not breach their duties of loyalty, due
care, independence, good faith and fair dealing.
Sirius is a Delaware corporation headquartered in New York.
Sirius broadcasts music, sports, entertainment, comedy, talk,
news, traffic and weather channels in the United States on a
subscription fee basis through two proprietary satellite radio
systems. Subscribers can also receive certain of the Company's
music and other channels over the Internet, including through
applications for mobile devices.
LMCA is a Delaware corporation headquartered in Englewood,
Colorado. LMCA holds 53.4% of Sirius' outstanding common stock
and is a majority shareholder of Sirius. The Individual
Defendants are directors and officers of the Company.
The Plaintiff is represented by:
Nancy Kaboolian, Esq.
Karin E. Fisch, Esq.
Jeremy Nash, Esq.
ABBEY SPANIER, LLP
212 East 39th Street
New York, NY 10016
Telephone: (212) 889-3700
Facsimile: (212) 684-5191
E-mail: nkaboolian@abbeyspanier.com
kfisch@abbeyspanier.com
jnash@abbeyspanier.com
- and -
Emily C. Komlossy, Esq.
Ross A. Appel, Esq.
KOMLOSSY LAW, P.A.
2131 Hollywood Blvd., Suite 408
Hollywood, FL 33020
Telephone: (954) 842-2021
Facsimile: (954) 416-6223
E-mail: eck@komlossylaw.com
raa@komlossylaw.com
SKECHERS USA: Faces "Arns" Suit for Misrepresenting Shape-Ups
-------------------------------------------------------------
Tammy Arns as Guardian and next of friend of K.A., a Minor v.
Skechers, U.S.A., Inc., Skechers, U.S.A., Inc., II and Skechers
Fitness Group, Case No. 3:13-cv-01269-TBR (W.D. Ky., December 31,
2013) alleges that in addition to misrepresenting the efficacy and
health benefits of Skechers Shapeups, Skechers also made numerous
misrepresentations about the safety of Shape-ups, which served to
lull consumers into believing that these shoes were safe despite
their unbalanced appearance.
In fact, the Plaintiff contends, toning shoes provide no
additional health benefits than do regular athletic and walking
shoes.
Skechers U.S.A., Inc., and Skechers U.S.A., Inc. II, are Delaware
corporations headquartered in Manhattan Beach, California.
Skechers Fitness Group is a trademarked subsidiary of Skechers
U.S.A., Inc. II with its principle place of business in Manhattan
Beach, California. Skechers is a shoe company that manufactures
toning shoes, including Skechers Shape-ups and Tone-ups. These
shoes have a pronounced rocker bottom sole. Skechers markets and
promotes its toning shoes as footwear that will provide countless
health benefits including improved cardiac function and orthopedic
benefits.
The Plaintiff is represented by:
Richard W. Schulte, Esq.
WRIGHT & SCHULTE, LLC
812 E. National Road
Dayton, OH 45377
Telephone: (937) 435-7500
Facsimile: (937) 435-7511
E-mail: rschulte@legaldayton.com
STAR SCIENTIFIC: Judge Set to Hear Shareholder Suit
---------------------------------------------------
The Associated Press reports that a federal judge was set to hear
a motion to dismiss a lawsuit claiming Star Scientific misled
investors. A hearing was scheduled for Tuesday, Jan. 7, in U.S.
District Court in Richmond.
The shareholder suit alleges that the dietary supplement maker
trumped up claims for its anti-inflammatory supplement and made
false claims about the company's business. The suit also claims
Star Scientific delayed telling investors about a federal
investigation focused on transactions involving its securities.
The company has since said it doesn't expect to be prosecuted.
Star Scientific is asking that the suit be dismissed.
Authorities continue to investigate a gift scandal involving Gov.
Bob McDonnell and former Star Scientific CEO Jonnie Williams.
Federal regulators also issued a warning letter to Star Scientific
last month saying it is illegally marketing two products.
STRYKER CORP: Appeals Court Reverses Dismissal of Pain Pump Suit
----------------------------------------------------------------
Brad Perriello, writing for MassDevice, reports that a federal
appeals court reverses the dismissal of a product liability
lawsuit filed against Stryker Corp. over its pain pump.
Appeals court deals Stryker a blow in pain pump lawsuit
A federal appeals court reversed the dismissal of a product
liability lawsuit filed against Stryker over 1 of its pain pumps,
ruling that a lower court should have given the plaintiff a chance
to earn an exception to the statute of limitations.
Mark Milton sued Stryker in the U.S. District Court for Southern
Texas in 2011, 6 1/2 years after the Stryker pain pump was used
following shoulder surgery, according to court documents.
Although he complained to his surgeon of continued pain after the
procedure, he was told that such pain is normal.
"Though Milton alleges that he 'continued to have problems with
[his] shoulder' for years after the surgery, he did not seek
further medical attention until May 27, 2009, when Dr. Bryan
diagnosed him as having complete loss of articular cartilage in
the shoulder, consistent with glenohumeral chondrolysis.
Mr. Milton asserts that 'he had no idea that it was possible the
pain pump caused increased damage to his shoulder' until this
diagnosis in 2009, when Dr. Bryan told him that the condition was
linked to use of the pain pump," according to the documents.
The district court granted Stryker's bid to have the case tossed
because the lawsuit was filed outside of the 2-year statute of
limitations. Mr. Milton appealed to the U.S. Court of Appeals for
the 5th Circuit, arguing that the discovery rule -- which "defers
accrual of a cause of action until the plaintiff knew or,
exercising reasonable diligence, should have known of the facts
giving rise to the cause of action," according to the documents --
should set the statute of limitations at the point when he learned
of the chondrolysis.
TAKEDA PHARMACEUTICAL: Delays Competition for ACTOS, Suit Claims
----------------------------------------------------------------
United Food and Commercial Workers Local 1776 & Participating
Employers Health and Welfare Fund, Individually And On Behalf Of
All Others Similarly Situated v. Takeda Pharmaceutical Co., Ltd.,
Takeda America Holdings, Inc., Takeda Pharmaceuticals, U.S.A.,
Inc., Takeda Development Center Americas, Inc., Mylan, Inc., Mylan
Pharmaceuticals Inc., Actavis plc f/k/a Actavis, Inc., Watson
Laboratories, Inc., Ranbaxy Laboratories, Ltd., Ranbaxy, Inc.,
Ranbaxy Pharmaceuticals, Inc., Teva Pharmaceutical Industries,
Ltd., and Teva Pharmaceuticals USA, Inc., Case No. 1:13-cv-09244-
RA (S.D.N.Y., December 31, 2013) arises out of the Defendants'
alleged overarching anticompetitive scheme to allocate, and
unreasonably delay competition in, the market for pioglitazone
hydrochloride tablets, which Takeda sells under the brand name
ACTOS.
The Plaintiff is represented by:
Karen M. Leser-Grenon, Esq.
Kolin C. Tang, Esq.
SHEPHERD, FINKELMAN, MILLER & SHAH, LLC
875 Third Ave., Suite 800
New York, NY 10022
Telephone: (212) 419-0156
Facsimile: (866) 300-7367
E-mail: kleser@sfmslaw.com
ktang@sfmslaw.com
- and -
Natalie Finkelman Bennett, Esq.
James C. Shah, Esq.
Eric L. Young, Esq.
SHEPHERD, FINKELMAN, MILLER & SHAH, LLC
35 East Main Street
Media, PA 19063
Telephone: (610) 891-9880
Facsimile: (610) 891-9883
E-mail: nfinkelman@sfmslaw.com
jshah@sfmslaw.com
elyoung@sfmslaw.com
- and -
Steve D. Shadowen, Esq.
Matthew C. Weiner, Esq.
HILLIARD & SHADOWEN LLP
39 West Main Street
Mechanicsburg, PA 17055
Telephone: (855) 344-3298
E-mail: steve@hilliardshadowenlaw.com
matt@hilliardshadowenlaw.com
- and -
Elizabeth G. Arthur, Esq.
HILLIARD & SHADOWEN LLP
919 Congress Avenue, Suite 1325
Austin, TX 78701
Telephone: (512) 851-8991
E-mail: elizabeth@hilliardshadowenlaw.com
TAKEDA PHARMACEUTICAL: Faces "Crosby" Suit Over ACTOS Tablets
-------------------------------------------------------------
Crosby Tugs, LLC, Individually And On Behalf Of All Others
Similarly Situated v. Takeda Pharmaceutical Co. Ltd., Takeda
America Holdings, Inc., Takeda Pharmaceuticals, U.S.A., Inc.,
Takeda Development Center Americas, Inc., Mylan, Inc., Mylan
Pharmaceuticals Inc., Actavis plc f/k/a Actavis, Inc., Watson
Laboratories, Inc., Ranbaxy Laboratories, Ltd., Ranbaxy, Inc.,
Ranbaxy Pharmaceuticals, Inc., Teva Pharmaceutical Industries,
Ltd., and Teva Pharmaceuticals USA, Inc., Case No. 1:13-cv-09250-
UA (S.D.N.Y., December 31, 2013) arises out of the Defendants'
alleged overarching anticompetitive scheme to allocate, and
unreasonably delay competition in, the market for pioglitazone
hydrochloride tablets, which Takeda sells under the brand name
ACTOS.
The Plaintiff is represented by:
Karen M. Leser-Grenon, Esq.
Kolin C. Tang, Esq.
SHEPHERD, FINKELMAN, MILLER & SHAH, LLC
875 Third Ave., Suite 800
New York, NY 10022
Telephone: (212) 419-0156
Facsimile: (866) 300-7367
E-mail: kleser@sfmslaw.com
ktang@sfmslaw.com
- and -
Richard L. Coffman, Esq.
THE COFFMAN LAW FIRM
First Building
505 Orleans Street, Suite 505
Beaumont, TX 77701
Telephone: (409) 833-7700
Facsimile: (866) 835-8250
E-mail: rcoffman@coffmanlawfirm.com
- and -
Steve D. Shadowen, Esq.
Matthew C. Weiner, Esq.
HILLIARD & SHADOWEN LLP
39 West Main Street
Mechanicsburg, PA 17055
Telephone: (855) 344-3298
E-mail: steve@hilliardshadowenlaw.com
matt@hilliardshadowenlaw.com
- and -
Elizabeth G. Arthur, Esq.
HILLIARD & SHADOWEN LLP
919 Congress Avenue, Suite 1325
Austin, TX 78701
Telephone: (512) 851-8991
E-mail: elizabeth@hilliardshadowenlaw.com
TALBOTS INC: Judge Approves $237,500 Plaintiffs' Class Counsel Fee
------------------------------------------------------------------
Ronald Barusch, writing for The Wall Street Journal, reports that
earlier in December, Delaware Chancellor Leo E. Strine, Jr.
approved a $237,500 fee to plaintiffs' class counsel in a case
challenging the takeover of Talbots Inc., despite saying at the
hearing "The social utility of cases like this continuing to be
resolved in this way is dubious."
Chancellor Strine approved the settlement and the six figure legal
fee because he said it was not his place to reject a negotiated
settlement, and he indicated he wanted to respect the desire of
the defendants to get closure.
The Wall Street Journal noted that in the first three quarters of
2013, 98% of all deals valued over $500 million have drawn
lawsuits -- an average of six per deal. Mr. Barusch says almost
none of those cases will even go to trial. Those that the
defendants cannot get dismissed at an early stage will be settled,
frequently for nothing more than a bit of additional disclosure.
"This is what happened in the Talbots case. What did Chancellor
Strine think of the additional disclosure Talbots made to settle
the suit? 'I cannot get anywhere close to finding that these
things are a material disclosure,' he said," Mr. Barusch wrote.
As the plaintiffs' lawyer presented their settlement and request
for a fee, the lawyer argued that one of the "main things" the
plaintiffs got from the settlement was disclosure that one analyst
thought the potential value of Talbots was 33% above the price
Talbots was selling for.
Chancellor Strine asks, apparently somewhat incredulously, whether
that analyst's projection (which Chancellor Strine later
characterizes as the one bullish perspective where "the balance of
the information, to be honest, confirms the fairness of the
deal.") was already in the market. It was, the plaintiffs'
counsel acknowledged. And in fact disclosures rarely contain
projections prepared by analysts who are not involved in the deal.
According to Mr. Barusch, these kind of no-payment settlements are
good for almost but not quite everyone. The buyer and the company
it bought get off the hook and avoid the additional expense of
litigation, which would be much larger than the plaintiffs' legal
fees. The plaintiffs' lawyers get paid without doing a lot of
work that a full-blown trial would require. Before the memorandum
of understanding for the settlement was entered into in this case,
plaintiffs' counsel said it had put in about 500 hours; that gave
the lawyers about $475 per hour pre-settlement. And perhaps most
important of all, the directors and officers get a broad release
so no one can challenge the deal in the future even if evidence of
a real case were to emerge.
In fact the only people who don't seem to benefit are the
shareholders. Ultimately shareholders foot the bill and are bound
by the releases. Although the expenses of the litigation are
borne by the buyer, when a buyer prices a deal, it has to expect
paying these amounts when 98% of all deals are challenged by
lawsuits, according to the Journal. And in this deal, the
plaintiffs' lawyer indicated at the hearing that his side had
concluded that the price appeared to be adequate before the tender
offer closed so it's not clear what could possibly have been
accomplished by pursuing this case.
Chancellor Strine apparently thought the $237,500 fee he approved
was generous. He said "If it weren't clearly negotiated I could
have easily given 50,000, 75,000, 100,000 for this."
"I realize the Chancellor is in a tough spot here, not liking this
litigation but mindful of defendants' desire to settle it and move
on. Plus, I am sure he is concerned that if he gets really tough
on plaintiffs' lawyers junk settlements, they will take their
cases to other jurisdictions where the results could be even more
expensive for shareholders," Mr. Barusch said.
"But something has to give here. Perhaps if more such cases, even
negotiated settlements, were rejected outright, plaintiffs'
lawyers would be less likely to pursue worthless cases in the
first place. At the very least, no legal fees should be payable
unless there is tangible benefit to shareholders who suffered from
wrongful conduct."
TARGET CORP: Removes "Due Fratelli" Class Suit to N.D. Illinois
---------------------------------------------------------------
Target Corporation removed the purported class action lawsuit
styled Due Fratelli, Inc., Individually, and on behalf of all
others similarly situated v. Target Corporation, Case No. 13 CH
28094, from the Circuit Court of Cook County, Illinois, Chancery
Division, to the United States District Court for the Northern
District of Illinois. The District Court Clerk assigned Case No.
1:13-cv-09336 to the proceeding.
The action is a putative class action against Target on behalf of
Illinois persons and entities, who "paid monies to Target using a
debit or credit card at one of Target's retail stores in exchange
for goods or services between November 27, 2013 and December 15,
2013." The Plaintiff alleges that Target failed to safeguard
customers' personally identifiable information, which includes
names, credit and debit card numbers, card expiration dates, and
the three-digit security codes located on the backs of credit and
debit cards.
The Plaintiff is not represented by any law firm.
The Defendants are represented by:
Floyd A. Mandell, Esq.
Martin T. Tully, Esq.
Carolyn M. Passen, Esq.
Julia L. Kasper, Esq.
KATTEN MUCHIN ROSENMAN LLP
525 W. Monroe Street
Chicago, IL 60661-3693
Telephone: (312) 902-5200
Facsimile: (312) 902-1061
E-mail: floyd.mandell@kattenlaw.com
martin.tully@kattenlaw.com
carolyn.passen@kattenlaw.com
julia.kasper@kattenlaw.com
- and -
David F. McDowell, Esq.
Purvi G. Patel, Esq.
MORRISON & FOERSTER
707 Wilshire Boulevard, Suite 6000
Los Angeles, CA 90017-3543
Telephone: (213) 892-5200
Facsimile: (213) 892-5454
E-mail: dmcdowell@mofo.com
ppatel@mofo.com
- and -
Harold J. McElhinny, Esq.
Jack W. Londen, Esq.
MORRISON & FOERSTER LLP
425 Market Street
San Francisco, CA 94105-2482
Telephone: (415) 268-7000
Facsimile: (415) 268-7522
E-mail: hmcelhinny@mofo.com
jlonden@mofo.com
TARGET CORP: Beasley Allen Files Second Data Breach Class Action
----------------------------------------------------------------
The Montgomery Advertiser reports that Beasley, Allen, Crow,
Methvin, Portis & Miles, P.C., has filed a second class-action
lawsuit related to the major security breach at Target stores that
began on or around Nov. 27, just before "Black Friday," and
continued through at least Dec. 15, which allowed hackers access
to customers' credit and debit card information.
It is estimated that more than 40 million accounts were
compromised. The latest class-action lawsuit was filed Dec. 30 on
behalf of Alabama State Employees Credit Union on behalf of the
plaintiffs against defendant Target Corporation.
Beasley Allen lawyers Jere L. Beasley --
jere.beasley@beasleyallen.com -- W. Daniel "Dee" Miles, III --
dee.miles@beasleyallen.com -- Larry A. Golston --
larry.golston@beasleyallen.com -- and Andrew E. Brashier --
andrew.brashier@beasleyallen.com -- are representing the
plaintiffs.
The class-action lawsuit seeks compensation for financial losses
resulting from defrauded deposits of financial institution members
and customers, as well as costs associated with closing accounts,
reissuing new checks, debit cards and credit cards as a result of
Target's data breach.
"Because Target failed to maintain adequate computer data security
of customer credit and debit card information, it exposed millions
of people to the risk of fraud and identity theft, and violated
their privacy rights," said Mr. Beasley. "Target could have taken
steps to ensure the safety of its information technology systems.
Instead, people were left scrambling at the holiday season, unsure
of their financial security."
Target publicly announced Dec. 20, 2013, that it had been hit by a
wide-reaching security breach that compromised millions of card
holder accounts. The retailer reported the hackers had access to
credit and debit card holders' names, card numbers and the three-
digit security number on the card. On Dec. 27, 2013, Target
admitted that it had confirmed that encrypted personal
identification numbers (PINs) also were stolen.
The lawsuit was filed in the United States District Court, Middle
District of Alabama, Northern Division. Beasley Allen filed a
class-action lawsuit on Dec. 20 on behalf of consumers whose
information was compromised.
TARGET CORP: Data Breach Suits May Be Consolidated as MDL
---------------------------------------------------------
Steve Urbon, writing for SouthCoastToday.com, reports that
attorney Carlin J. Phillips bristled when asked whether attorneys
suing Target stores are going to be regarded as opportunistic
ambulance-chasers.
"I've heard this all the time," he said. "It's almost an ignorant
view of how it works."
Mr. Phillips, whose offices are in Dartmouth, is representing in
federal court in Boston a South Easton woman, Meghan Derba, who is
one of the estimated 40 million Target customers whose personal
credit and debit card data was stolen by unidentified evil
masterminds during the Christmas shopping season.
The data is now being sold on the black market for anywhere from
$20 to $100 per account, according to various sources. Target is
bringing in forensic computer experts, Congress is rumbling about
investigations, and federal district courts across the land are
seeing a flurry of class action lawsuits like this one.
They're accusing the fourth-largest retailer, with 36 stores in
Massachusetts, of negligence, negligent misrepresentation, and
breach of implied contract. At least three lawsuits have been
filed in Massachusetts alone, and the number only promises to get
larger.
To Mr. Phillips, the attorneys and plaintiffs are stepping into a
void created by a near complete lack of government oversight of
data handling. "You have to understand that in this particular
area there is no regulation of gathering data at such a rapid
pace. There's no one overseeing or regulating it," he said.
The damage being caused by the data breach is nearly impossible to
predict. Mr. Phillips said he thinks crime networks in foreign
countries are behind this and it's not likely they'll be caught.
That leaves Target to be the target of class action suits, which
likely will be consolidated and moved to a small number of states
as "multi-district litigation."
Class action suits in the past have sometimes been funneling money
only to the lawyers, with the harm done to consumers being
compensated by a cheesy discount coupon or a piddling amount of
cash. But in the past few years, Mr. Phillips said, the courts
have been much more vigilant about the settlements being
presented, much more skeptical about coupons. The courts, he
said, want meaningful restitution.
And with this one, people are likely to be demanding a lot more
than a store coupon or a small check. Look at his client, he
said. Ms. Derba, he said, has not had her identity stolen -- at
least not yet. But she, like millions of people, will have to
take the time and effort to obtain new cards while they police
their accounts, checking for fraudulent transactions for amounts
that might be too small to notice, $1.99 as an example.
Many will have their accounts cleaned out and they will bounce
checks, sometimes with a domino effect, then dealing with
overdraft penalties and damaged credit ratings.
"The folks whose data was stolen shouldn't have to incur out-of-
pocket expenses," Mr. Phillips said. But they will: bank charges
and credit monitoring services, possibly for many years, he said.
Speaking of many years, Mr. Phillips said that the federal courts
will take anywhere from 18 months to four years to resolve the
lawsuits. It's a cloud that will hang over Target for a long,
long time.
TREX CO: Class Action Settlement Gets Final Court Approval
----------------------------------------------------------
Trex Company, Inc., the world's largest manufacturer of high-
performance wood-alternative decking and railing products,
announced that on December 16, 2013, the U.S. District Court for
the Northern District of California granted final approval of a
settlement that resolves a nationwide class action lawsuit
alleging certain misrepresentations and defects in Trex's
first-generation composite products relating to mold growth and
color issues. The claim resolution process, the settlement
agreement and class notice are available on
http://www.trex.com/legal/2013classactionsettlement.aspx
"We are pleased to have a final resolution of this matter, with
terms we feel are fair to both Trex and our consumers"
Under the terms of the settlement, Trex will provide to qualified
claimants a one-time cash payment or the opportunity to receive
other relief, including a rebate certificate on its newer-
generation shelled products (Trex Transcend(R) and Trex
Enhance(R)). This relief is available for any qualified claimant
who purchased first-generation Trex composite product between
August 1, 2004 and August 27, 2013 having a certain level of mold
growth, color fading or color variation, and who meets certain
other requirements as set forth in the settlement agreement.
"We are pleased to have a final resolution of this matter, with
terms we feel are fair to both Trex and our consumers," said
Ronald W. Kaplan, chairman, president and CEO of Trex. "This
settlement allows Trex to focus its attention on delivering our
next generation of award-winning, high-performance outdoor living
products."
The cost to Trex under the settlement is capped at $8.25 million
plus $1.475 million in attorneys' fees to be paid to the
Plaintiffs' counsel.
About Trex Company
Trex Company -- http://www.trex.com-- is the world's largest
manufacturer of high performance wood-alternative decking and
railing, with more than 20 years of product experience. Stocked
in more than 6,000 retail locations worldwide, Trex outdoor living
products offer a wide range of style options with fewer ongoing
maintenance requirements than wood, as well as a truly
environmentally responsible choice.
TURQUOISE HILL: Faces Investor Class Action in New York
-------------------------------------------------------
The Canadian Press reports that a class action lawsuit that
accuses Turquoise Hill Resources of misleading investors over a
3 1/2-year period has been filed in a U.S. district court in New
York City. The law firm Levi and Korsinsky filed the case on
behalf of those who bought shares in the company between May 14,
2010 and Nov. 8, 2013. The case alleges that the mining company
made false and or misleading statements regarding its financial
performance and business prospects and overstated its revenue.
The allegations, filed in the U.S. District Court for the Southern
District of New York, have not been proven in court.
Turquoise Hill said in November it would restate its results for
the years ended Dec. 31, 2010, 2011, and 2012, as well as the
affected quarterly financial results following a decision by its
majority-owned subsidiary SouthGobi Resources to restate its
results. The SouthGobi restatement was due to a change in
determination of when revenue should be recognized according to
international accounting standards.
Turquoise Hill said on Dec. 31 it was aware of the complaint and
believed it was without merit. "We will vigorously defend against
the complaint," a company spokesman said in an email.
Another case was filed earlier in December by Robbins, Geller,
Rudman and Dowd that also accused Turquoise Hill of "materially
false and misleading statements" regarding its financial
performance.
Turquoise Hill is developing the Oyu Tolgoi copper mining complex
in Mongolia, including an open pit mine that began production this
year and an underground portion under development.
TYSON FOODS: Recalls 34,000 Pounds of Chicken Products
------------------------------------------------------
The Associated Press reports that Tyson Foods is recalling nearly
34,000 pounds of mechanically separated chicken products that may
be contaminated with a strain of salmonella.
The U.S. Department of Agriculture said on Jan. 10 in a news
release the product was not sold in retail stores. It was
produced on Oct. 11 and shipped nationwide for institutional use.
The chicken has been linked to illnesses in a Tennessee
correctional facility, where seven people got sick and two were
hospitalized.
Food containing Salmonella can cause salmonellosis, one of the
most common bacterial foodborne illnesses. The most common
symptoms are diarrhea, abdominal cramps and fever within 12 to 72
hours after eating the contaminated product.
The illness usually lasts 4 to 7 days. Most people recover
without treatment.
UNITED FURNITURE: Stikeman Elliot Discusses Class Action Ruling
---------------------------------------------------------------
Sinziana R. Hennig, Esq. -- shennig@stikeman.com -- at Stikeman
Elliott LLP reports that on November 8, 2013, the Supreme Court of
British Columbia refused to certify a class action in connection
with a "cashable voucher program" offered by United Furniture
Warehouse ("UFW") stores in 2003-2004.
The motions judge in Marshall v. United Furniture Warehouse
Limited Partnership held that the pleadings did not disclose
causes of action for breach of warranty or negligence, and found
that there was insufficient commonality or evidence to certify
common issues relating to negligent misrepresentation and breach
of the Business Practices and Consumer Protection Act ("BPCPA").
Background
Starting in March 2003, customers purchasing furniture from UFW
stores received vouchers for up to 100% of the value of the
furniture. The vouchers were issued by Consumers Trust (an
English entity unrelated to UFW) and could be redeemed for cash
within a one-week period three years after the purchase date.
In theory, customers who bought furniture from UFW could get a
large percentage -- in some cases, 100% -- of the purchase price
back as a cash payment three years later. In practice, the
voucher program relied on the expectation that many customers
would not remember or would not follow all the steps to cash in
their vouchers. A UFW brochure advertising the vouchers described
them as a "financial memory test or challenge" for consumers.
In March 2004, the UFW chain was sold to a new corporate entity.
The motions judge referred to the corporate defendant who
originally owned UFW as "Old UFW" and to the acquirors as "New
UFW". New UFW continued to offer the voucher program until
October 2004.
In 2005, Consumers Trust went bankrupt, leaving many customers
with vouchers that could no longer be redeemed. One of the
putative representative plaintiffs filed a proof of claim in the
Consumers Trust bankruptcy for $2,199.95, but received only
$18.00. New UFW circulated a notice regarding this bankruptcy to
customers. In 2006, as a "customer satisfaction measure," New UFW
offered in-store credit for customers who had been issued vouchers
either at Old UFW or New UFW stores. New UFW did not, however,
offer to redeem the vouchers for cash.
The plaintiffs commenced a proposed class action on behalf of all
persons who received cashable vouchers in connection with the
purchase of goods and services from Old UFW and New UFW. Their
key claim was that UFW had represented through in-store signage,
written brochures, advertisements, sales talk, and through the
text on the vouchers themselves, that UFW was responsible for
ensuring that the vouchers would be paid out in cash.
Certification Denied
Fisher J. found that the certification criteria set out in s. 4(1)
of the British Columbia Class Proceedings Act that there be an
identifiable class and a suitable representative plaintiff were
met. However, Her Honour found that some of the proposed causes
of action were improperly pleaded and that the proposed common
issues lacked either commonality or an evidentiary basis. Given
that the plaintiffs' claims raised few common issues Fisher J.
found that a class action was not the preferable procedure for the
resolution of the claims and denied certification.
Causes of Action
Fisher J. found that the claims in breach of contract or breach of
warranty, "successor" liability under the BPCPA, and negligence
were all certain to fail.
The plaintiffs argued that UFW had warranted that it was
responsible for redeeming the vouchers for cash. The voucher
text, however, stated that "Consumers Trust is exclusively
responsible for payment" and that the merchant had no such
responsibility. Fisher J. concluded that the claim really sounded
in negligent misrepresentation.
The plaintiffs also sought to hold New UFW liable under the BPCPA
for the alleged deceptive acts or practices of Old UFW, on the
basis that the definition of "supplier" under the BPCPA includes
the successor of a supplier. Fisher J. held that the definition
of a "supplier" in the BPCPA does not create general successor
liability. New UFW could only be liable under the Act for the
acts of Old UFW if it too had engaged or acquiesced in them.
Otherwise, each supplier was responsible for its own acts or
omissions.
In addition to pleading various negligent misrepresentations, the
plaintiffs had also pleaded a claim in simple negligence, alleging
failure to investigate the financial integrity of the voucher
program. This claim raised the issue of whether a retailer has a
duty of care to all potential customers to properly investigate
the financial strength of an entity with whom it contracts to
provide a sales promotion.
Fisher J. considered this claim an attempt to use tort law to
obtain a form of insurance or warranty from the defendants that
Consumers Trust would be able to pay out on the vouchers. Her
Honour held that it was plain and obvious that liability in
negligence for pure economic loss does not extend that far,
referring in particular to cases that held that tort claims for
economic loss are restricted to dangerous, not just defective,
goods.
Common Issues
The principal common issues proposed by the plaintiffs related to
whether the defendants had made negligent misrepresentations or
engaged in "deceptive acts or practices" as defined in the BPCPA.
Fisher J. noted that whether an act is capable of being deceptive
generally does not depend on the circumstances of the plaintiff
and does not require individual inquiry. Nonetheless, the
proposed issue lacked commonality because the plaintiffs alleged a
long list of deceptive acts and practices arising from different
sources and relating to different aspects of the voucher program
and that different customers had been exposed to at different
times.
Fisher J. also concluded that there was no common issue regarding
damages under the BPCPA. Each plaintiff would have to prove that
he or she incurred losses in reliance on a deceptive act or
practice. Reliance could not be inferred on a class-wide basis
given the variety of different alleged misrepresentations, and
individual factors such as whether each plaintiff was ready,
willing and able to present the voucher for redemption, and
whether he or she would have bought the goods anyway. Nor could
an aggregate damages award be made without proving each class
member's damage or loss.
The number and variety of alleged representations was also a
barrier to any common issue relating to breach of contract or
breach of warranty, since the existence of the contract or
warranty itself would depend on the written materials and ads seen
by each class member. It was held that the common issues relating
to negligent misrepresentation suffered from the same fatal flaw.
Conclusion
This case is another illustration of the general rule that class
actions based on a specific representation made to an entire class
have at times been certified, but claims based on a variety of
representations made to different persons at different times are
unlikely to raise common issues. The case also parallels the
recent decision of the Court of Appeal for Ontario in Arora v.
Whirlpool Canada LP in which it was held that there is no cause of
action in negligence for economic loss from an item that is
defective but not dangerous.
UTAH: Class Action Closed Over Illegal Use of Plaintiffs' Names
---------------------------------------------------------------
Brooke Adams, writing for The Salt Lake Tribune, reports that a
class-action lawsuit was closed on Jan. 2, hours after a Salt Lake
City attorney insisted he had the right to use the names of a
married lesbian couple without their permission in the complaint.
E. Craig Smay named Amy N. Fowler and Pidge Winburn as plaintiffs
in the complaint he filed Dec. 27 in U.S. District Court that
listed the state and The Church of Jesus Christ of Latter-day
Saints as defendants.
Fowler and Winburn were married Dec. 23, and the newlyweds were
featured in a front-page story in The Salt Lake Tribune days
later. Smay said on Jan. 2 that is where he got their names.
Neither Fowler nor Winburn has ever spoken with Smay, and neither
was aware he had listed them as plaintiffs in the lawsuit until a
Tribune reporter informed them. Fowler, an attorney, immediately
attempted to contact Smay by telephone and email to get their
names removed from the lawsuit, which they have no interest in
supporting.
Fowler was unable to reach Smay, and, on Dec. 31, the couple filed
a motion asking the court to dismiss the lawsuit. On Jan. 2,
Fowler also filed a complaint about Smay's action with the Utah
State Bar.
Smay told the Tribune on Jan. 2 that under federal court rules, he
did not need permission to list the pair as plaintiffs in a class-
action lawsuit. He also said he informed Fowler by email that he
didn't need her consent and claimed she "blabbed" to the press
about the lawsuit.
"I've explained it carefully," he said. "She can file until the
cows come home. She's wasting her time and she's wasting my
time."
But Fowler said she had not received any email from Smay and would
be "incredibly" surprised if he could legally use their names
without permission.
Apparently, she was right.
Fowler said a court clerk told her on Jan. 2 the case had been
closed. A summary of the case's status available online listed
its disposition as "dismissed" and "closed."
Three attorneys -- one a former federal judge -- say Smay was out
of line in filing the complaint in the first place.
"To name someone as a plaintiff without their permission is not
what the rules of procedure allow," said Paul Cassell, a
University of Utah law professor and former federal judge. "You
can file a class action, but the way that is done is you have
named plaintiffs whom you represent and have permission to
represent. You can't drag someone into a lawsuit without their
permission claiming to represent them."
Smay said he filed the class-action lawsuit because of the state's
ongoing efforts to stop gay marriages and eventually have them
invalidated.
"I filed it because I think that what the state, backed by the
church, is doing is wrong, which the Supreme Court has made clear
to them," said Smay, who said he is not LDS or gay. "How would
you feel if it were your marriage? You would feel very badly about
that. That's infliction of emotional distress that ought not to
be happening."
Smay said he believes U.S. District Court Judge Robert J. Shelby
got it right in his Dec. 20 decision that found Utah's ban on
same-sex marriage was unconstitutional. He filed an amicus brief
on Dec. 26 in support of Shelby's refusal to grant the state's
request for a stay of his ruling.
"The demand for a stay in this case is simply a cruel imposition
upon gay people," Smay wrote. "It should be promptly denied."
In addition to Shelby, the 10th U.S. Circuit Court of Appeals
refused three requests from the state for a stay. The state is
now asking the U.S. Supreme Court to put the ruling on hold.
Early on Jan. 2, Smay said he would remove Fowler's and Winburn's
names only when "we have someone else to substitute in."
"In the meantime, there is no requirement that we take her name
off," he said.
But like Cassell, attorney Paul Burke -- pburke@rqn.com -- said
Smay is wrong.
"A lawyer should not act on behalf of a person without having been
engaged by that person or authorized by a court" to represent him
or her, said Mr. Burke, who is general counsel at Ray Quinney &
Nebeker and handles professional ethics for the law firm. "He
can't just assume consent. He needs actual consent and authority
to act on their behalf."
WAL-MART STORES: Judge Sends Class Action Back to Pa. State Court
-----------------------------------------------------------------
Lance Duroni, Kelly Knaub and Ama Sarfo, writing for Law360,
report that a Pennsylvania federal judge on Dec. 30 shipped back
to state court a proposed class action accusing Wal-Mart Stores
Inc. of overcharging sales tax on coupon purchases, saying
principles of comity bar the district court from interfering with
the collection of state taxes.
In a 12-page opinion, U.S. District Judge Mark R. Hornak granted
lead plaintiff Brian Farneth's motion to remand the case and
denied Wal-Mart's competing motion to stay the suit, which the
retail giant had removed to federal court under the Class Action
Fairness Act.
Citing principles of comity enshrined in the Tax Injunction Act,
which prohibit the district courts from intervening in state tax
law matters when a state court could handle the issues quickly and
efficiently, Judge Hornak noted that the case involves the
interpretation of Pennsylvania tax regulations over which the
state has "wide regulatory latitude."
Moreover, the state law claims asserted in the complaint do not
implicate a federal right or a defense under federal law,
according to the opinion.
"Pennsylvania courts are simply better positioned than this court
to ascertain and then correct any violation of state tax
collection laws -- they are presumably more familiar with the
administration of Pennsylvania tax regulations and are wholly
unburdened by the TIA's limitations in fashioning proper and
complete remedies," Judge Hornak said. "Taken together, these
considerations counsel deference to the state adjudicative
processes."
Mr. Farneth sued Wal-Mart in July, claiming the store charged him
sales tax on a can of shaving gel he received for free while using
a buy-one, get-one-free coupon, in violation of state law.
The proposed class includes individuals who purchased items from
Pennsylvania Wal-Mart stores from June 2007 to the present, used
buy-one, get-one-free discounts, store coupons or manufacturer's
coupons, and were charged or paid sales tax on the original
purchase price.
In its defense, Wal-Mart cited a 2005 staff opinion letter from
the Pennsylvania Department of Revenue that allegedly advised the
retail giant that it is not allowed to deduct manufacturer's
coupons before calculating sales tax, effectively validating its
methods, according to court documents.
Wal-Mart also argued that the case should be stayed under the
primary jurisdiction doctrine until Pennsylvania tax authorities
hand down an administrative decision on the relevant tax
regulation.
But Judge Hornak found that this argument further supported
remanding the case, pointing out that Wal-Mart is backing a state
law remedy to the dispute through the administrative process. He
also noted that a state court just as easily could consider the
company's motion to stay the case.
"By the central tenet of its motion, Wal-Mart necessarily
demonstrates that it believes that Pennsylvania law and
proceedings supply an adequate (and most appropriate) remedy
available for the adjudication of the relevant claims and
defenses," Judge Hornak said.
Counsel for the parties could not be reached on Jan. 2 for
comment.
Mr. Farneth is represented by Frank G. Salpietro of Rothman Gordon
PC.
Wal-Mart is represented by Thomas L. Allen -- tallen@reedsmith.com
-- James L. Rockney -- jrockney@reedsmith.com -- and Zachary P.
Gelacek -- zgelacek@reedsmith.com -- of Reed Smith LLP.
The case is Brian Farneth v. Wal-Mart Stores Inc., case number
2:13-cv-01062, in the U.S. District Court for the Western District
of Pennsylvania.
WALTPETERICH RESTAURANT: Faces "Garcia" Suit Over Unpaid Overtime
-----------------------------------------------------------------
Samuel Garcia, on behalf of himself and all other employees
similarly situated who opt-in to this civil action v. Waltpeterich
Restaurant, Inc. and Shaun Clancy, Case No. 1:13-cv-09213-RA
(S.D.N.Y., December 31, 2013) is brought pursuant to the Fair
Labor Standards Act to remedy the Defendants' alleged failure to
pay wages and overtime compensation.
Waltpeterich Restaurant, Inc. is a New York domestic corporation
doing business as Foley's NY Pub & Restaurant. Shaun Clancy is an
employer and one of the principals at the Restaurant.
The Plaintiff is represented by:
David Bruce Rankin, Esq.
RANKIN & TAYLOR, PLLC
11 Park Place, Suite 914
New York, NY 10007
Telephone: (212) 226-4507
Facsimile: (212) 658-9480
E-mail: David@DRMTLaw.com
- and -
Scott A. Korenbaum, Esq.
11 Park Place, Suite 914
New York, NY 10007
Telephone: (212) 587-0018
Facsimile: (212) 658-9480
E-mail: s.korenbaum@comcast.net
WARNER MUSIC: Submits Royalty Rate Class Action Settlement
----------------------------------------------------------
Ed Christman, writing for Billboard, reports that The Warner Music
Group has submitted a settlement to the class action lawsuit filed
by artists who claimed they were entitled to be paid on a
licensing bases instead of a royalty bases for download and
mastertones.
The difference is basically whether they should be paid an artist
royalty rate that ranges from 6% to about 20%, depending on each
artist's rate, versus a licensing basis, which means splitting
revenues with the artist or paying 50% of net revenues.
WMG is offering artist who opt-in to the settlement a pool of
$11.5 million, which will include about $3 million in lawyer's
fees and expenses, to all U.S. artists who signed a recording
contract with one of its labels prior to Jan. 1, 2002. Thousands
of artists are eligible to participate in the settlement. In
making the settlement offer, WMG is not admitting any wrongdoing.
Moreover, the settlement allows the company to sidestep the issue
of whether downloads should be paid as a license.
The artists who named as plaintiffs in the settlement agreement
are: Kathy Sledge-Lightfoot, Gary Wright and Ronee Blakely.
"We are pleased to have resolved this matter and believe that this
is a fair settlement for all parties," a WMG spokesman said in a
statement.
In 2012, Sony Music Entertainment made a settlement in a similar
class action lawsuit, agreeing to pay $8 million to Sony artists.
The WMG settlement offer covers sales during the period of Jan. 1,
2009 through Dec. 31, 2012. According to the settlement, artists
who signed contracts prior to 2002 generated about $381 million in
U.S. download and ringtone sales during that period.
Consequently, each artist's settlement would be the pro-rated
share of that revenue. So if an artist download and mastertones
counted for $19 million in sales during that period, the artist's
settlement payment would be 5% of the $8.5 million pool.
Settlement payment can be applied against unrecouped balances,
however.
The time period for the settlement is based on the statute of
limitations and the fact that most recording contract includes
clauses on how far back audits can occur, according to people
familiar with the settlement.
Going forward beginning Jan. 1, 2013, artists will receive an
incremental 5% of royalties, capped at 14% with a floor of 10%.
That means artist who signed contracts in the early days of the
industry -- when 1% to 6% royalty payments were common -- would be
increased to the floor rate of 10% for downloads and mastertones.
Meanwhile, producers with royalty points will receive the same
incremental increase on a percentage basis. So an artist with a
10% rate would receive 14% rate on the wholesale revenue of a U.S.
download going forward, according to the settlement, while
producers receiving 3% would see their rate increase to 4.2%.
For foreign royalties, the rate increase would be 2.5%. But since
contracts typically call for artist to receive, in some countries,
90% of the U.S. rate, that means foreign downloads for an artist
receiving a 10% rate in the U.S. would receive 90% of 12.5%, which
equals 11.25% of wholesale.
While the settlement is now been agreed upon and submitted to the
court by both the plaintiff and the defendant, the court still
needs to grant preliminary approval. The class action suit was
filed in the San Francisco federal court, which is in the Northern
District of California, where Judge Richard Seeborg is presiding.
When the effective date, which is expected to be sometime in
January, is set, artist will have about four months to submit a
claim form. If artists opt-in, they forego their right to pursue
a lawsuit on whether they should be paid on a license-bases
instead of a royalty basis. Artists, of course, can choose not to
participate in the settlement and pursue any legal remedies at
their disposal in the dispute over whether downloads require
payments based on a licensed rate or royalty rate.
After the claims are put in, WMG will provide a report to the
class counsel on what amounts will be paid out to each participant
within six months, and then the class counsel and artist will have
90 days to object to any of WMG's calculations.
The law firms that brought forth the class action suit on behalf
of artists are Pearson, Simon & Warshaw, LLP; Hausfeld LLP; Kiesel
Law LLP; Lieff Cabraser Heimann & Bernstein, LLP; and Phillips,
Erlewine & Given, LLP. The lawfirm of Munger Tolles & Olson LLP
defended WMG in the suit.
WETHERSFIELD HIGH SCHOOL: Closes Gymnasium Over Asbestos
--------------------------------------------------------
Christopher Hoffman, writing for The Hartford Courant, reports
that school officials closed Wethersfield High School's main
gymnasium last week after workers unexpectedly discovered asbestos
in two smaller adjacent gyms.
The district immediately ordered air tests that revealed no threat
to human health, Superintendent of Schools Michael Emmett said on
Jan. 10.
"There's no danger to kids," he said.
As a precaution, the main gym will remain closed until the
asbestos can be removed over February vacation, Mr. Emmett said.
Students will receive health instruction in place of physical
education classes during that period, he said.
"Such is life when you're dealing with a renovation project,"
Mr. Emmett said. "These things come up. I would certainly
believe this is not the last surprise we'll have over the course
of this project."
The district is in the early stages of a three-year $75 million
renovation and reconstruction of Wethersfield High School.
Students are continuing to use the building during the work.
Asbestos in the gyms is the project's latest hazardous material
surprise. Earlier, officials found far more PCBs than expected,
significantly increasing clean up costs.
Mr. Emmett says he doesn't know at this point whether the new
discovery would hike clean up costs further.
On Jan. 8, workers were demoing the smaller gym behind the main
gym and an area used for wrestling when they came across material
they thought might be asbestos, Mr. Emmett said.
"They brought in our testing company that found the area was in
fact hot," he said.
The district closed the main gym on Jan. 9, ordered air testing
and alerted the state Department of Health and Department of
Energy and Environmental Protection, he said.
"They (the state) reviewed our protocol and found that our
protocol was appropriate," Mr. Emmett said.
The air tests came back clean, he said.
The asbestos is in adhesive and filler material beneath plywood
that was the base for the hardwood floors, Emmett said.
Clean up of the materials will begin when school lets out Feb. 14
and be done in time for the students' return Feb. 24, he said.
The district did a similar clean up over Christmas vacation.
Winter sports teams were already playing and practicing outside
the gym. Boys basketball plays at Sports Medical Academy, Girls
basketball uses the gym at Silas Deane Middle School and wrestling
is in the Wethersfield High cafeteria.
The school was originally built in the1950s and added on to
several times. Asbestos and PCBs were commonplace in school
construction until the 1970s.
WHOLE BODY RESEARCH: Removed "Hoffman" Fraud Suit to New Jersey
---------------------------------------------------------------
Whole Body Research, LLC, removed the purported class action
lawsuit styled Hoffman v. Clemens, et al., Case No. BER-L-9254-13,
from the Superior Court of New Jersey, Bergen County, to the
United States District Court for the District of New Jersey. The
District Court Clerk assigned Case No. 2:13-cv-07924-WJM-MF to the
proceeding.
The lawsuit alleges the Defendants sold the Plaintiff a dietary
supplement known as Garcinia Cambogia for $52 in a manner that
violated the New Jersey Consumer Fraud Act and common law. The
Plaintiff contends the Defendants sold their products through a
"scam" that was "carried out through misrepresentation and
material concealment, whose goal was to dupe consumers into
purchasing goods and services, including dietary supplements. . ."
The Plaintiff is represented by:
Harold M. Hoffman, Esq.
240 Grand Avenue
Englewood, NJ 07631
Telephone: (201) 569-0086
Facsimile: (201) 221-7890
E-mail: hoffman.esq@verizon.net
The Defendants are represented by:
Scott Shaffer, Esq.
OLSHAN GRUNDMAN FROME WOLOSKY LLP
Park Avenue Tower
65 East 65th Street
New York, NY 10022
Telephone: (212) 451-2302
E-mail: sshaffer@olshanlaw.com
* Faulty Bicycles, Tables Among Recently Recalled Products
----------------------------------------------------------
The Associated Press reports that card table sets with chairs that
have collapsed and amputated several fingertips are among this
week's recalled consumer products. Others include faulty bicycles
and unstable tables.
Here's a more detailed look:
CARD TABLE AND CHAIRS
DETAILS: Mainstays five-piece card table and chair sets, which
includes a black padded metal folding table and four black padded
metal folding chairs. "Made by: Dongguan Shin Din Metal & Plastic
Products Co," the company that made the chair cushions, is printed
on a white label on the bottom of the chairs. They were sold at
Walmart stores nationwide and online at www.walmart.com from May
2013 through November 2013.
WHY: The chairs can collapse unexpectedly, posing a fall hazard
and a risk of finger injury, including finger amputation.
INCIDENTS: 10 reports of injuries from collapsing chairs,
including one finger amputation, three fingertip amputations,
sprained or fractured fingers, and one report of a sore back.
HOW MANY: About 73,400.
FOR MORE: Call Walmart at 800-925-6278 or visit www.walmart.com
and click on "Product Recalls" for more information.
CAR SEAT ADAPTER
DETAILS: Joovy's Zoom car seat adapters for strollers. The
adapters are gray with black plastic clips designed to attach
infant car seats to stroller frames. Models include 00945 for
Graco, 00946 for Chicco, and 00947 for Peg Perego frames. "Joovy"
and the model numbers can be found on the label at the center of
the end bar of the adapter. They were sold from May 2012 through
August 2013.
WHY: Adapter clips can loosen on the stroller frame, posing a fall
hazard.
INCIDENTS: Nine reports of incidents involving loose adapters on
stroller frames. There are no injuries reported.
HOW MANY: About 1,500.
FOR MORE: Call Joovy at 855-251-0759 or visit www.joovy.com, then
click on the "Customer Service" menu at the top of the page, then
select "Recall Information" for more information.
BICYCLES
DETAILS: 2012 Source Eleven and Source Expert Disc bicycles with
Supernova Switchable Dynamo Front Hubs. The name "Specialized" is
printed on the bicycle's down tube and "Source Eleven" or "Source
Expert" are printed on the top tube. The front hubs have
"www.supernova-lights.com" and one of the following model numbers
printed on them: 1207, 1208, 1226, 1227, 1228, 1241, 1254, 1263,
1284 and 1344. They were sold from October 2011 to September
2013.
WHY: The set screws in the front hub of the recalled bicycles can
loosen and stop the front wheel from turning, posing a fall
hazard.
INCIDENTS: None reported.
HOW MANY: About 173.
FOR MORE: Call Specialized Bicycle Components at 877-808-8154 or
visit www.specialized.com and click on "Safety/Recalls" at the
bottom of the page for more information.
KITEBOARD BINDING
DETAILS: Cabrinha H2 Hydra series bindings for kiteboards. The
binding mounts on the twintip style kiteboards and is used to
connect the rider by his or her feet to the board. The H2 binding
is blue and black and has dual adjusting straps with 'Cabrinha'
and 'H2' on the footstrap. The product was made in June and July
2013. The H2 binding comes in two sizes: standard and small. The
product code is KB4H2BDSL which is found on the retail packaging.
They were sold from August 2013 through December 2013.
WHY: The binding can detach from its base while riding and lead to
loss of control.
INCIDENTS: None reported.
HOW MANY: About 62 in the U.S. and Canada.
FOR MORE: Send an email to support@cabrinhakites.com, call Pryde
Group Americas collect at 305-591-3922, or visit
www.cabrinhakites.com and click on "Safety Alert" under the
Support tab at the top of the page for more information.
TABLES
DETAILS: Norwood Furniture science tables. The affected products
include item numbers NOR-PIH1027-SO for the table measuring 24
inches wide by 48 inches long by 30 inches high; NOR-PIH1028-SO
for the table measuring 24 inches wide by 54 inches long by 30
inches high; and NOR-PIH1029-SO for the table that's 24 inches
wide by 60 inches long by 30 inches high. Consumers can locate
the item number on the underside of the tabletop which is listed
with the Commercial Furniture phone number, the OCI# and Country
of Origin: China. They were sold at www.schooloutfitters.com from
June 2013 through September 2013.
WHY: The wooden legs can split, causing instability.
INCIDENTS: Eight reports of instability of the tables, three of
which are reports of the legs splitting. No reported injuries.
HOW MANY: About 655.
FOR MORE: Call School Outfitters at 866-619-1776 or visit
www.schooloutfitters.com and click on "Email Customer Service" for
additional information.
* FTC Imposes Hefty Fines on Four Diet-Supplement Makers
--------------------------------------------------------
FindLaw reports that as part of an initiative to curb deceptive
advertising in the weight loss product industry, the Federal Trade
Commission imposed hefty fines on four diet supplement companies.
The FTC will make these funds available for refunds to consumers
who bought the products. In total, the weight-loss marketers will
pay approximately $34 million for consumer redress.
A breakdown of the four companies involved and how much they'll be
"forking" over:
Sensa. The marketers of the powdered food additive Sensa --
who urged consumers to "sprinkle, eat, and lose weight" -- will
pay $26.5 million to settle FTC charges for making unfounded
weight-loss claims and misleading endorsements. Marketers
deceptively advertised that Sensa enhances food's smell and taste,
making users feel full faster, so they eat less and lose weight,
without dieting, and without changing their exercise regime.
L'Occitane. The FTC will require L'Occitane to pay $450,000
and stop making deceptive claims that its Almond Beautiful Shape
and Almond Shaping Delight skin creams have body slimming
capabilities ("Trim 1.3 inches in just 4 weeks!") and are
clinically proven ("Clinically proven slimming effectiveness.").
HCG Diet Direct. The marketers of HCG Diet Direct Drops
deceptively advertised an unproven human hormone (found in human
placenta) that has been "touted by hucksters for more than half a
century as a weight-loss treatment," according to the FTC.
Marketers made false claims of rapid weight loss via YouTube
videos, product packaging, and in statements and testimonials on
the company website. The company also falsely claimed that the
product was FDA-approved and failed to disclose that endorsers in
some of the ads were compensated. But the $3.2 million judgment
against the HCG Diet Direct defendants was suspended due to their
inability to pay.
LeanSpa. The FTC and the state of Connecticut shut down owner
Boris Mizhen's operation, including LeanSpa and three other
companies he controls. Mizhen used fake news websites to promote
acai berry and "colon cleanse" weight-loss products, made
deceptive weight-loss claims, and misled consumers about the
actual costs of the "free" trials. LeanSpa will surrender assets
totaling an estimated $7.3 million in a partial settlement with
the FTC.
Although the FTC is doing its best to trim the false advertising
fat in the diet product industry, consumers should sprinkle some
common sense into their diet plans. If a fad diet sounds too good
to be true, it probably is. Even on a carb-free diet, don't
forget to use your noodle.
* High-Chair-Related Injuries Up 22% Between 2003 & 2010
--------------------------------------------------------
Alan Mozes, writing for HealthDay News, reports that young
children are falling out of high chairs at alarming rates,
according to a new safety study that found high chair accidents
increased 22 percent between 2003 and 2010.
U.S. emergency rooms now attend to an average of almost 9,500 high
chair-related injuries every year, a figure that equates to one
injured infant per hour. The vast majority of incidents involve
children under the age of 1 year.
"We know that these injuries can and do happen, but we did not
expect to see the kind of increase that we saw," said study
co-author Dr. Gary Smith, director of the Center for Injury
Research and Policy at Nationwide Children's Hospital in Columbus,
Ohio.
"Most of the injuries we're talking about, over 90 percent,
involve falls with young toddlers whose center of gravity is high,
near their chest, rather than near the waist as it is with
adults," Dr. Smith said. "So when they fall they topple, which
means that 85 percent of the injuries we see are to the head and
face."
Because the fall is from a seat that's higher than the traditional
chair and typically onto a hard kitchen floor, "the potential for
a serious injury is real," he added. "This is something we really
need to look at more, so we can better understand why this seems
to be happening more frequently."
For the study, published online Dec. 9 in Clinical Pediatrics, the
authors analyzed information collected by the U.S. National
Electronic Injury Surveillance System. The data concerned all
high chair, booster seat, and normal chair-related injuries that
occurred between 2003 and 2010 and involved children 3 years old
and younger.
The researchers found that high chair/booster chair injuries rose
from 8,926 in 2003 to 10,930 by 2010.
Roughly two-thirds of high chair accidents involved children who
had been either standing or climbing in the chair just before
their fall, the study authors noted. The conclusion: Chair
restraints either aren't working as they should or parents are not
using them properly.
"In recent years, there have been millions of high chairs recalled
because they do not meet current safety standards. Most of these
chairs are reasonably safe when restraint instructions are
followed, but even so, there were 3.5 million high chairs recalled
during our study period alone," said Dr. Smith. However, even
highly educated and informed parents aren't always fully aware of
a recall when it happens, he noted.
Still, Dr. Smith believes that a 2008 Consumer Product Safety
Improvement Act will lead to a notable drop in recalls in coming
years because it calls for independent third-party testing of
children's products before they're put on the market.
This could eliminate many serious head injuries, he believes.
According to the study, the most frequent ER diagnosis after a
high chair fall is a concussion or internal head injury, otherwise
known as a "closed head injury." This type of head trauma
accounted for 37 percent of high chair injuries, and its frequency
climbed by nearly 90 percent during the eight years studied.
Nearly six in 10 children experienced an injury to their head or
neck after a high chair fall, while almost three in 10 experienced
a facial injury, the study found. Injuries related to falls from
traditional chairs were more likely to be broken bones, cuts and
bruises.
For now, Dr. Smith said, the top three things parents can do to
ensure their child's safety: "Use the restraint, use the
restraint, use the restraint!" The tray is not meant to be a
restraint. Children need to be buckled in, he added.
Also, supervision is a must. Stay with your child during meal
time and make sure he or she doesn't defeat the restraint, he
said. "Even if a chair does meet current safety standards and
the restraint is used properly, there's never 100 percent on this
. . . Parents will always need to be vigilant." Also, if the high
chair has wheels, lock them in place. Make sure the high chair is
stable, and position it away from walls or counters that the child
can push against.
Kate Carr, president and CEO of the Washington, D.C.-based group
Safe Kids Worldwide, described the findings as a wake-up call.
"An alarming number of children under the age of 3 are seen in
emergency departments," she said. "This is an important reminder
for parents and caregivers to take the time to make sure their
children are safe and secure in their high chairs."
* Law360 Cites Class Actions to Watch for in 2014
-------------------------------------------------
Stephanie Russell-Kraft, Max Stendahl, Greg Ryan, Kurt Orzeck,
Eric Hornbeck and Melissa Lipman, writing for Law360, report that
the U.S. Supreme Court could potentially alter the landscape of
class action lawsuits in 2014, with a key component of securities
class actions being challenged along with years' worth of efforts
to limit and streamline the types of class action lawsuits that
come into federal court.
But the high court's busy docket doesn't end there, with the
justices also set to consider in the new year whether suits
brought by state attorneys general count as mass actions under the
Class Action Fairness Act.
Here's a look at the class action cases to watch in 2014:
Halliburton Co. v. Erica P. John Fund
It's the case that could all but end securities class action
suits.
The Supreme Court in November agreed to take on Halliburton Co. et
al. v. Erica P. John Fund, which challenges 1988's Basic v.
Levinson decision establishing the fraud-on-the-market theory that
has underpinned most securities class actions since.
That theory, which assumes an efficient market, posits that when a
public company makes a misrepresentation, that information is
carried through the market and thus affects the company's stock
price. An investor purchasing a security is thus presumed to have
relied on that misstatement.
But the concept of an efficient market, which was widely
uncontested by economists in the 1980s, has come under significant
academic scrutiny in recent years and has been questioned by
Justices Samuel Alito, Clarence Thomas, Anthony Kennedy and
Antonin Scalia, who have hinted they are eager to take on its
legal implications.
Halliburton gave them that opportunity when it challenged the
Fifth Circuit's refusal in May to toss the case, which was
originally filed in 2002 by investors claiming the energy giant
misled them about key information, such as its liability in
asbestos litigation. Arguing that the Fifth Circuit found no
evidence Halliburton's alleged misrepresentations substantially
affected the market price of its stock, the company urged the high
court to at least modify its Basic opinion.
The court's ruling has the potential to "blow up" class
certifications for SEC Rule 10b5 cases, according to Bruce
Ericson, managing partner at Pillsbury Winthrop Shaw Pittman LLP.
If the high court overturns Basic, and if each class member is
forced to prove he or she relied on the misrepresentation, class
certification will be nearly impossible, plaintiffs attorneys
fear.
And the impact might be more widespread than that, affecting the
use of statistics and economic theory in other class
certifications.
"If the Supreme Court overturns the fraud-on-the-market theory,
simply the reasoning behind the ruling could provide additional
defense arguments in a whole range of class action cases including
consumer class action," said Robert Herrington --
herringtonr@gtlaw.com -- co-chair of Greenberg Traurig LLP's
products liability and mass torts practice.
Rex Heinke -- rheinke@akingump.com -- co-head of the Supreme Court
and appellate practice group at Akin Gump Strauss Hauer & Feld
LLP, said the case essentially raises two questions for the court:
Should the fraud on the market rule stand and allow a presumption
of reliance? And assuming there is a presumption, can a defendant
prevent certification by introducing evidence that its alleged
representations didn't affect the price of a stock?
He expects the court to draw a line of how far the parties can get
into the merits of a case before certifying a class. Where that
line will be, however, is up in the air.
Oral arguments have been scheduled for March 5.
The plaintiffs are represented by Boies Schiller & Flexner LLP.
The defendants are represented by Baker Botts LLP.
The case is Halliburton Co. et al. v. Erica P. John Fund, case
number 13-317, in the Supreme Court of the United States.
The "Washing Machine" Cases
A pair of cases currently being petitioned to the Supreme Court
has the potential to limit issue-based class actions and define
the scope of the court's 2013 ruling in Comcast v. Behrend in the
context of consumer class actions.
Whirlpool Corp. and Sears Roebuck & Co. have asked the high court
to overturn rulings last summer by the Sixth and Seventh circuits
respectively, supporting the certification of classes of washer
buyers who claim that 21 different models of Whirlpool's high-
efficiency, front-loading Duet clothes washers sold since 2001
contain a design defect that causes moldy odors.
The companies say consumers haven't met class certification
predominancy requirements and that most of the alleged members
weren't harmed.
Earlier in 2013, the high court vacated the circuit courts'
rulings and instructed them to reconsider the cases in light of
Comcast, which held that plaintiffs in an antitrust class action
had not shown that common issues predominated on the issue of
damages. Both courts again upheld certification over the summer,
finding that Comcast does not apply to the cases.
"The decisions of the Sixth and Seventh circuits run contrary to
Supreme Court case law from Walmart to Comcast," Thompson Hine LLP
partner Brian Troyer -- Brian.Troyer@ThompsonHine.com -- said.
"These cases present some questions that are very much in need of
clarification by the Supreme Court, like whether it's proper to
certify a 23b3 class when damage and injury questions are
individual ones and most class members have not experienced the
alleged defect."
If either of the cases is picked up by the Supreme Court, it could
become as important as Halliburton, attorneys say.
The Supreme Court is expected to rule on whether to take up the
cases in early 2014.
Whirlpool and Sears are represented by Stephen M. Shapiro --
sshapiro@mayerbrown.com -- of Mayer Brown LLP.
The class members are represented by Samuel Issacharoff.
The cases are Whirlpool Corp. v. Glazer et al., case number 13-
431; and Sears Roebuck & Co. v. Butler et al., case number 13-430,
in the Supreme Court of the United States.
The SLUSA Cases
The Supreme Court's ruling this year in a set of cases alleging
Proskauer Rose LLP and Chadbourne & Parke LLP and insurance broker
Willis Ltd. aided the $7 billion Stanford Ponzi scheme will
clarify the limits of the Securities Litigation Uniform Standards
Act's preclusion of state law class actions. The 1998 law aimed
to prevent shareholders from evading the tough pleading standards
of federal litigation by filing suit in state courts.
Specifically, SLUSA bars state-based suits alleging fraud "in
connection with the purchase or sale" of covered securities.
Attorneys for the law firms are hoping to convince the Supreme
Court that they should not be held responsible for the losses
investors and insurance brokers suffered in connection with Robert
Allen Stanford's $7 billion Ponzi scheme.
The plaintiffs in the case did not directly purchase SLUSA-covered
securities, but rather certificates of deposits backed by SLUSA
securities, and a Texas federal judge presiding over multidistrict
litigation concerning the Ponzi scheme originally found their
claims were precluded by SLUSA.
But the Fifth Circuit revived the lawsuits in March 2012, after
finding they were only "tangentially related" to SLUSA-covered
securities trades. The firms have argued that the Second, Sixth
and 11th circuits have interpreted the "in connection with"
standard as more broad, holding that fraud that "coincides with"
or "depends upon" SLUSA-covered securities trades should bar the
suits. They say the Fifth Circuit's standard gives plaintiffs a
way to avoid adhering to SLUSA.
The Supreme Court's decision is expected to resolve that circuit
split and may end up limiting securities class actions.
"The court may choose to close the door plaintiffs use to bring
these actions to state court," Arnold & Porter LLP partner John
Massaro -- John.Massaro@aporter.com -- said.
A ruling in the case is expected by June 2014.
The investors are represented by Goldstein & Russell PC.
Chadbourne is represented by O'Melveny & Myers LLP. Proskauer
Rose is represented by Davis Polk & Wardwell LLP. Willis is
represented by Bancroft PLLC.
The cases are Chadbourne & Parke LLP v. Troice et al., case number
12-79; Willis of Colorado Inc. et al. v. Troice et al., case
number 12-86; and Proskauer Rose LLP v. Troice et al., case number
12-88, in the Supreme Court of the United States.
Mississippi ex rel. Hood v. AU Optronics Corp.
Another significant case being decided by the Supreme Court this
year is Mississippi ex rel. Hood v. AU Optronics Corp., which has
the potential to determine whether so-called parens patriae
cases -- suits brought by state attorneys general to recover
damages on behalf of consumers -- count as mass actions under the
Class Action Fairness Act. A mass action tries the claims of "100
or more persons."
The case up for review stems from long-running litigation accusing
a group of electronics companies of fixing the price of liquid
crystal display panels. As did many other attorneys general,
Mississippi's Jim Hood sued on behalf of state residents after a
2006 U.S. Department of Justice investigation revealed that AUO
and other LCD makers orchestrated a global conspiracy to fix
prices on the displays, which are widely used in laptops, monitors
and other electronic devices.
The justices have been asked whether a mass action under CAFA must
involve at least 100 separate plaintiffs or if a case like this
one, which is designed to recover damages for more than 100
people, can count as a mass action if the state is the only named
plaintiff.
In other words, as Mr. Herrington asked, "If it sounds like a
class action and looks like a class action, should the defendant
be able to move it to federal court?"
The outcome will determine whether defendants can forum shop or
state attorneys general will be able to keep these types of cases
in their home courts, where they often face a more friendly forum.
The case is being closely watched by the business community and
states like California, where the attorney general currently has
significant power to file a claim on behalf of California
citizens.
The court is expected to rule on the case in the first half of
2014.
Mississippi is represented by the attorney general's office as
well as attorneys from Massey & Gail LLP, Abraham & Rideout, and
Zimmerman Reed PLLP.
AUO is represented by Phelps Dunbar LLP and Nossaman LLP.
The case is Mississippi ex rel. Jim Hood v. AU Optronics Corp. et
al., case number 12-1036, in the Supreme Court of the United
States.
Carrera v. Bayer
The Third Circuit has been asked in Carrera v. Bayer Corp. et al.
to reconsider whether it should be a precondition for class
certification that plaintiffs can show they can find every class
member.
Gabriel Carrera first brought the class action in 2008, alleging
the pharmaceutical company deceptively advertised its product
One-A-Day WeightSmart by falsely claiming it enhanced metabolism.
But since Bayer doesn't sell its products directly to consumers,
the Third Circuit ruled in August that a New Jersey federal judge
shouldn't have certified the class of Florida consumers alleging
Bayer lied about the effects of the vitamin. The panel said that
without adequate sales records, it would be too difficult to
determine whether consumers actually belong to the class.
"Some people are concerned that the very narrow view of
ascertainability will put a heavy burden on the plaintiffs," said
Alexandra Lahav, a Joel Barlow professor of law at the University
of Connecticut School of Law. "It's often difficult to determine
who has bought a product. Bayer doesn't have a record of all its
customers."
The plaintiffs have said the ruling also gives an incentive to
companies like Bayer to avoid tracking customer purchases.
Ms. Lahav said the ruling, if upheld, could make it very difficult
to bring consumer class actions, especially ones with smaller
injuries that are harder to find.
Mr. Carrera has petitioned the appellate court for a rehearing en
banc.
Mr. Carrera is represented by Caroline Bartlett, James Cecchi and
Lindsey Taylor of Carella Byrne Cecchi Olstein Brody & Agnello PC;
and Joe Whatley of Whatley Drake & Kallas LLC.
Bayer is represented by Matthew Ford --
matthew.ford@bartlit-beck.com -- Christopher Landgraff --
chris.landgraff@bartlit-beck.com -- and
Rebecca Weinstein Bacon -- rweinstein.bacon@bartlit-beck.com -- of
Bartlit Beck Herman Palenchar & Scott LLP.
The case is Carrera et al. v. Bayer Corp. et al, case number 12-
2621, in the U.S. Court of Appeals for the Third Circuit.
* Proposed Law to Radically Overhaul Medical Malpractice System
---------------------------------------------------------------
Greg Bluestein and Misty Williams, writing for The Atlanta
Journal-Constitution, report that there have been quiet visits to
doctors' offices, expensive pitches sent to voters' doorsteps and
big money pouring in from all sides -- all over a proposal that's
likely a longshot to win legislative approval this year. At the
heart of the conflict: proposed legislation that would radically
overhaul Georgia's medical malpractice system, moving patients'
claims from the courts to a new administrative system that would
be the first of its kind in the country.
Supporters of Senate Bill 141 argue the changes would avoid
lengthy and costly jury trials many patients simply can't afford.
It would also, they say, cut down on so-called "defensive
medicine" practices, in which doctors order unnecessary medical
tests to protect themselves in case of lawsuits, that drive up
health care costs.
"Doctors are just checking the box so they don't get sued," said
state Sen. Brandon Beach, the Alpharetta Republican who is
sponsoring this legislation. "That's what we're really trying to
fix. And I believe in my heart that defensive medicine is causing
healthcare costs to rise."
The bill's opponents have called it flatly unconstitutional --
denying patients the right to have their complaints heard by a
jury of their peers -- and warn it would actually lead to higher
health care costs and more administrative headaches for doctors.
"It takes away the constitutional right to have your day in
court," said Elena Parent, executive director of Georgia Watch, a
nonprofit consumer advocacy group.
Gov. Nathan Deal isn't championing the legislation, and many
observers don't believe it has enough support to pass this year.
But that hasn't stopped both sides from mobilizing over one of the
more intriguing clashes in the statehouse.
It's really a continuation of a fight that reached a climax eight
years ago, when powerful lobbies representing physicians and trial
lawyers warred over an overhaul of malpractice rules. Back then,
newly minted Republican leaders flexed their muscles and won broad
changes that infuriated patients' advocates and delighted doctors
groups.
Yet the courts have since dismantled key parts of the law,
including a 2010 Georgia Supreme Court ruling that toppled the
crowning achievement: A $350,000 cap on jury awards in pain and
suffering cases that was ruled unconstitutional.
But if this fight teaches us anything, it's that Georgia's
political ground is constantly shifting. The Medical Association
of Georgia and the Georgia Trial Lawyers Association, which have
fought bitterly over malpractice changes over the years, are now
united in opposition to the plan.
The doctors' advocates and its lobbyists argue the new scheme
could cost upward of $44 million to administer. And lawyers'
associations warn it could block access to the courts and brandish
the recent pronouncement of former Attorney General Mike Bowers,
who said the proposal had a "snowball's chance in Hades" of
passing legal muster.
"This bill will be struck down as unconstitutional," said
Bill Clark, the chief lobbyist for the trial lawyers. "The
constitutional right to a trial by jury is one boundary the
Legislature should not broach."
Opponents argue it would also dramatically increase the number of
claims for insignificant injuries, such as lacerations and rashes,
by expanding the filing standard from situations where doctors are
considered negligent to any type of avoidable injury.
Just because there is a bad outcome for a patient doesn't mean the
doctor did something wrong that should be compensated, said
Dr. Michael Greene, a family physician in Macon. Negative
outcomes sometimes happen even with the very best of care,
Dr. Greene said.
"There is no perfect treatment," he said. "I think we have to get
back to reality."
Wary legislators are reluctant to pick sides on the eve of an
election-year session where leaders are likely to tread lightly
around controversial issues. The governor said in an interview
that the proposal is not part of his agenda, and House
powerbrokers privately say it's not expected to be a priority in
what's likely to be a speedy session.
The supporters, though, are rallying behind a costly and ambitious
lobbying campaign to force the issue. They've got the backing of
Patients for Fair Compensation, a nonprofit supported by business
interests, and Bernie Marcus, the co-founder of The Home Depot.
"All eyes are on Georgia," wrote Mr. Marcus, a well-connected GOP
donor, in a recent AJC editorial. "If our legislators pass long
overdue medical malpractice reform, other states will follow suit.
With Georgia's leadership, national health care costs can be cut
dramatically, and both doctors and patients will get real
justice."
The boosters have paid for billboards on busy highways and mailers
featuring Mr. Marcus' mug. They've highlighted the Medical
Association of Georgia's ties to the powerful MAG Mutual insurer,
which also opposes it.
A quieter campaign is also well underway. Wayne Oliver, who heads
Patients for Fair Compensation, has spent the last 90 days
traveling the state and meeting with hundreds of doctors to push
the overhaul in a pre-session push to drive the agenda.
"I don't think the voters of Georgia send our Legislature to
Atlanta to embrace the status quo and to do anything except to
rock the boat," he said. "Most legislators embrace the
opportunity to be bold. And this is an opportunity."
That push is unfolding already at the statehouse, where a Senate
committee recently held the final of five hearings on the
legislation. In a cramped Capitol room, Senate legislators heard
from experts who offered vivid night-and-day opinions on how the
proposal could transform Georgia.
Even the analysts corralled by supporters conceded that the new
system would lead to a sharp increase in new malpractice claims,
but they said they would likely cost less overall. Some also
predicted the system would lead to improved medical outcomes by
holding physicians more accountable.
"Many cases of preventable harm are being missed, and with this
more reporting of harm should occur," said Allen Kachalia, a
Harvard Medical School professor who boasted of the benefits of
the change. "By providing patients with the ability to easily
report harm, the healthcare system should benefit immensely."
But Donald Palmisano, who heads the Medical Association of
Georgia, said his organization deduced after a yearlong review
that it would be a bigger administrative headache for providers
and lead to more expensive payments overall.
And then there was Frank Vandall, an Emory University legal
professor who was nothing if not blunt in his analysis that the
proposal will backfire and wind up being "enormously expensive."
He urged lawmakers not to bite off more than they can chew.
"It's like blind people trying to look at an elephant," he said.
"They think it's 12 inches across, but they're just holding the
leg."
* Wage-and-Hour Suits Up 10% in 2013, Seyfarth Lawyer Says
----------------------------------------------------------
Ashby Jones, writing for The Wall Street Journal, reports the 2011
U.S. Supreme Court case known as Wal-Mart Stores v. Dukes has in
many ways made it harder for plaintiffs to bring successful
workplace-discrimination class-action suits. But that hasn't
meant that the plaintiffs' bar has stopped filing employment-
related suits altogether.
To the contrary -- plaintiffs have merely switched tactics,
according to employment lawyers. For starters, they're filing
more wage-and-hour litigation, accusing employers of shortchanging
employees by misclassifying them, stiffing them on overtime pay,
or otherwise failing to pay what they owe.
In 2013, about 10% more wage-and-hour suits were filed than in
2012, according to Gerald Maatman, a labor & employment lawyer at
Seyfarth Shaw LLP in Chicago, and the editor of the annual
Workplace Class Action Litigation Report. Mr. Maatman predicted
no slowdown in wage-and-hour suits heading into 2014.
"For advocates of workers, wage-and-hour is really where the
action is right now," said Mr. Maatman, who called such suits
"low-hanging fruit" for plaintiffs' lawyers, partly because of
worker-friendly laws in six populous states: California, New York,
New Jersey, Florida, Pennsylvania and Massachusetts.
Lawyers who work in labor and employment will also continue to run
headlong into an increasingly aggressive Equal Employment
Opportunity Commission. As a result of the budget cuts known as
sequestration that went into effect for part of 2013, the EEOC
furloughed employees and froze hiring. Still, it brought in more
money for aggrieved workers -- about $372 million -- in 2013 than
in any year in the agency's history.
Lawyers expect more of the same in 2014. "It's a virtual
certainty we're going to see an uptick in [discrimination] cases
brought by the EEOC," said Steven Pearlman --
spearlman@proskauer.com -- a labor and employment lawyer at
Proskauer LLP in Chicago. "It's become an extremely aggressive
player."
Mr. Pearlman said that a recent ruling stood to make life even
more difficult for defendant companies. The ruling, by the
Seventh U.S. Circuit Court of Appeals in Chicago, dealt with a law
that requires the EEOC to try to resolve employment disputes
before allowing lawsuits to move forward. The three-judge panel
said that employers cannot challenge -- and courts cannot review
-- whether these efforts are adequate.
In a statement, EEOC General Counsel David Lopez hailed the
ruling, saying that the Seventh Circuit "carefully applied the
letter of the law . . . in a way that promotes Title VII's goals,
protects victims of discrimination, and preserves the EEOC's
critical law-enforcement prerogatives."
But Mr. Pearlman said the ruling means the EEOC doesn't have to
engage in a very robust "conciliation" effort. "It's just going
to embolden the EEOC, further this 'shoot-first, ask-questions-
later' mentality it's developed."
Other areas likely to stay hot in '14, according to Mr. Pearlman:
lawsuits concerning employees' use of social media and lawsuits
filed under the whistleblower provisions of Dodd-Frank. The
Securities & Exchange Commission paid out $14 million in bounties
in 2013. "Big numbers beget tips, and tips turn into lawsuits and
investigations," said Mr. Pearlman. "It's turned into a bit of a
landmine for employers."
*********
S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
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Adala, Joy A. Agravante, Valerie Udtuhan, Julie Anne L. Toledo,
Christopher G. Patalinghug, and Peter A. Chapman, Editors.
Copyright 2014. All rights reserved. ISSN 1525-2272.
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