Settlement Archive
Week Adjourned: 12.23.11
December 23rd, 2011. By LucyC
Top Class Actions
Another Corny Lawsuit? Ummm—you decide. A consumer fraud lawsuit was filed this week—testing the boundaries of food labeling vis-a-vis PepsiCo’s snacks business, Frito-Lay. The issue? Frito-lay is misleading consumers by making claims that its products, which contain genetically modified corn and vegetable oils, are all-natural, according to the lawsuit. (All natural corn=all natural chips? Really?)
Specifically, the lawsuit claims that by labeling some of its Tostitos and SunChips products as “made with all-natural ingredients” Frito-Lay is misleading consumers because genetically modified corn and vegetable oils are also present in the product. “The reasonable consumer assumes that seeds created by swapping genetic material across species to exhibit traits not naturally theirs are not ‘all natural’,” the claim states.
The claimant is pursuing the case on the basis of a violation of California and federal laws relating to unfair and fraudulent claims. I’m still struggling with the thought of any of this type of “food” being ok on any level—never mind whether or not it’s genetically modified. Bah humbug!
Top Settlements
Diamonds are Forever. So’s the De Beers Price Fixing Settlement now. The U.S. Court of Appeals for the Third Circuit has issued an opinion today upholding the settlement in the antitrust class action litigation against the South African company De Beers, the world’s largest diamond supplier, for allegedly conspiring to monopolize the sale of rough diamonds.
The appellate court affirmed an order by U.S. District Judge Stanley R. Chesler of the District of New Jersey that approved a settlement under which De Beers agreed to pay $295 million to U.S. jewelry makers, retailers, and consumers who purchased diamonds and diamond jewelry beginning in 1994.
The settlement also prevents De Beers from continuing its illegal business practices and requires De Beers to submit to the jurisdiction of the Court to enforce the settlement. Ouch! That’s a wee bit more than a wrist slap —but hey—that tennis bracelet sure looks good…
Talk about Soaring Gas Prices… More price fixing—this time in the stock market (now there’s a surprise)—and this time the guilty party is Amaranth Advisors LLC. They got hit with a $77.1 million settlement in a securities lawsuit brought by traders who allege the hedge fund manipulated the natural gas market. Whoa Nelly!
According to Businessweek, Amaranth collapsed in 2006 after losing $6.6 billion on natural gas trades. In August 2009, the Commodity Futures Trading Commission announced that Amaranth paid $7.5 million to settle market manipulation allegations however, in their lawsuit, the traders presented an expert who estimated damages at $3.5 billion.
Then, in April of this year, the Federal Energy Regulatory Commission issued a $30 million civil penalty against Brian Hunter, an Amaranth trader accused of manipulating the natural gas market in 2006.
FYI—the settlement isn’t final yet—a hearing on final approval of the class-action, or group, accord is reportedly scheduled for March 27 and, if approved, could pave the way for investor reimbursement.
Ok—That’s a wrap for this week. Merry Christmas—Happy Hanukkah—and Season’s Greetings—have a wonderful holiday everyone…
Week Adjourned: 12.17.11
December 19th, 2011. By LucyC
Top Class Actions
What Happened to that ‘Good Will Toward Men’ Thing? ‘Tis the season–and this thing called good will towards men apparently hasn’t caught on yet–in some parts. Case-in-point–Capital One. They’re facing a class action over allegations that they illegally obtain background checks on folks applying for jobs with the company. What’s in your wallet indeed!
The lawsuit was filed on behalf of Plaintiff Kevin Smith and seeks to represent a class of all Capital One employees and job applicants for the past three years.
Essentially, the lawsuit accuses Capital One of violating the Fair Credit Reporting Act (“the Act”) Act in a two ways. First, the lawsuit alleges that Capital One’s authorization form is flawed. The law imposes strict formatting requirements on companies who do background checks. The lawsuit alleges that by burying its background check authorization in a job application, including extraneous information, Capital One violated the law. On this claim, Capital One may be liable to all employees and prospective employees who signed Capital One’s standard job application.
Second, the lawsuit also alleges that Capital One failed to provide copies of the reports when it used them to take adverse employment actions, such as refusing to hire an applicant, refusing to promote an employee or terminating an employee. This practice also violates the Act, which requires companies to provide employees with copies of their background checks.
The lawsuit is potentially valuable to class members. Employees and prospective employees may be entitled to statutory damages of up to $1,000 for each violation. “Based on our understanding of Capital One’s practices, everyone who has applied or worked for Capital One in the past three years should be eligible to receive statutory damages if our lawsuit succeeds,” attorneys for the plaintiff(s) state.
Next up–Apple. All I have to say about this is Really? Here’s the skinny…
Cheap to the (Apple) Core? The uber cool icon of new technologies for the 21st century has been hit with an employment class action lawsuit. The suit alleges that Apple devised an illegal scheme of classifying at-home call center employees as independent contractors in order to avoid paying Apple’s share of payroll taxes and other business related expenses through the use of a Yellow Dog Contract.
According to the lawsuit, Apple “hires workers to answer calls from its customers in regard to billing questions and technical support” but has devised an unlawful scheme of classifying the employees as independent contractors in order to avoid paying for regular and overtime hours worked as well as the “the cost of the employer’s share of tax payments to the federal and state governments for income taxes, social security taxes, medicare insurance, unemployment insurance and payments for workers’ compensation insurance.” The complaint specifically alleges that in order to avoid the payment of these costs as required by law, the at home call center employees “are required by APPLE to each form a separate Virtual Services Corporation to act as a shell corporation as part of the scheme to insulate APPLE from APPLE’s liability for APPLE’s Business Related Expenses.” The class action lawsuit against Apple refers to these agreements between Apple and the employees as “Yellow Dog Contracts” that violate not only employment laws, but also fundamental public policy.
Top Settlements
A Fee-for-All at Walmart? Walmart has agreed to a $13.5 settlement of a securities class action this week. The lawsuit was brought by employee Jeremy Braden, and others, who alleged that the retail giant, together with Bank of America’s Merrill Lynch unit, passed along “unreasonably high fees and expenses” to its 2 million workers who had 401(k) plans. As with many 401(k) plans, Walmart’s contained a mixture of mutual funds representing investments in the bond and stock markets. The costs of managing those funds were passed along to employees.
According to a report in the AARP Bulletin the Walmart “settlement is a legal landmark because Walmart provides one of the largest 401(k) plans in the world and is the nation’s largest private employer, with more than $400 billion in annual sales.”
The timing is interesting in that the US Department of Labor is currently refining regulations around “fiduciary duty” and fee disclosure in 401(k) plans. And, the government is pressing for full disclosure of all fees paid to middlemen such as savings plan managers and wants stricter legal guidelines on how to provide the most prudent offerings at the lowest possible cost.
“I believe my account has experienced a loss in value, due to the reduced return on my investment in those plan investment options caused by the unreasonably high fees and expenses in those funds,” Braden stated in the lawsuit.
Under the terms of the settlement, Braden will collect $20,000. “Other employees covered by the class action suit will not receive payouts, but will benefit in the form of up to $9 million in reduced fees going forward. Lawyers for the plaintiffs will collect as much as $4 million,” AARP Bulletin reported.
Ok–That’s enough for this week. See you at the bar.
Week Adjourned: 12.2.11
December 2nd, 2011. By LucyC
Top Class Actions
Are your text messages being traced–by your own hand, so to speak? Ten years ago this would have been the stuff of a James Bond film. Today, sadly, it seems to be business as usual–or more accurately—if you can get away with it…
A group of consumers filed a nationwide class-action lawsuit this week, alleging that smartphone manufacturers HTC Corporation, HTC America, Inc. and Samsung Electronics Co., Ltd use software developed by Carrier IQ, Inc. (“CIQ”) that illegally intercepts incoming text messages and captures users’ key strokes—including those used to compose email and text messages or to dial numbers—without consumers’ knowledge or permission. The lawsuit asks the court to award damages under the Federal Wiretap Act, and prevent companies from including similar software in future smartphones.
The back story—in mid-November, software developer Trevor Eckhart published a video blog illustrating the operation of the CIQ software recording keystrokes, including information sent to secure websites using HTTPS security protocols used in e-commerce and other security-sensitive sites.
After Eckhart published his discovery and documents he found on CIQ’s website, CIQ accused him of copyright violations and threatened legal actions unless he capitulated to the company’s demands. The Electronic Frontier Foundation, a public-interest digital rights watchdog stepped in to defend Eckhart and CIQ later apologized to Eckhart and rescinded its demands.
According to CIQ, its software is embedded on smartphones to allow the company to collect data for the benefit of cellular carriers and device manufacturers, which is important to improving customer experience, such as logging information related to dropped calls. CIQ says its program does not log keystrokes or intercept messages and it does not store or resell the information.
The lawsuit alleges that, in reality, the program does record keystrokes and the content of messages, and could transmit the information to third parties, possibly including information sent to secure websites using HTTPS security protocols used in e-commerce and other security-sensitive sites such as banking.
The complaint was filed on behalf of four smartphone users and names smartphone manufacturers HTC and Samsung as defendants along with CIQ. The lawsuit could be amended to include other smartphone manufacturers that embed the CIQ software on their devices.
The suit, filed in the U.S. District Court for the Northern District of California, accuses the companies of violating the Federal Wiretap Act and California’s Unfair Business Practice Act. The Federal Wiretap Act prohibits the unauthorized interception or illegal use of electronic communications.
Very creepy.
Top Settlements
Could this be a Christmas Bonus? Borders Group Inc has agreed to settle an employment class action lawsuit brought by 198 former employees over Borders’ alleged violations of the Worker Adjustment Retraining and Notification (WARN) Act.
Borders, unfortunately, is in the last stages of liquidation, but has agreed to pay $240,000 as settlement to the former employees who claim they were laid off without sufficient notice, violating federal regulations. After legal fees are deducted, reports indicate that each plaintiff could receive $797. The lawsuit was filed by former employees of Borders’ Ann Arbor headquarters, led by an employee named Jared Pinsker. According to the settlement filing, the parties agreed to settle their dispute to avoid a protracted and costly legal battle.
Borders, which finished closing its stores and liquidating its inventory in September, filed for Chapter 11 bankruptcy protection in February. The company converted its case into a Chapter 11 bankruptcy liquidation in July. A U.S. bankruptcy judge in Manhattan must approve the settlement. Fingers crossed on this one.
Citigroup Settlement Update. Here’s an update on a proposed settlement we wrote about in late October, involving Citigroup and allegations of investor fraud. Judge Jed Rakoff, of the infamous New York Southern District, has rejected a proposed $285M settlement offered by Citigroup to end an civil complaint brought by the Securities & Exchange Commission (SEC) over allegations that they defrauded investors through highly risky mortgage-backed investments. The specific transaction referred by the SEC involved a $1 billion portfolio of mortgage-related investments. (Anyone seen “Margin Call”?)
According to a report by Forbes, “Rakoff is a critic of the custom that allows firms to use their pocketbook to settle charges rather than admitting guilt, and said there is a public interest in finding out the truth.” Consequently, Rakoff has scheduled a trial, for July 16, 2012. However, the SEC and Citi could bring a settlement to the table prior to that, again pending judge’s approval, which, if approved would keep the case out of court. Me thinks an example may be made here.
Ok–That’s enough for this week. See you at the bar.
LawyersandSettlements.com on Best of the Web
December 2nd, 2011. By AbiK
As we enter the holiday season and anticipate celebrations with family and friends, we also—sadly—are reminded every day of things like shopping scams, defective products, toys with lead in them—the list goes on—that attempt to tarnish everyone’s holiday spirit.
That’s why we’re dedicated to ensuring our readers have the latest legal news—emerging issues, recalls, lawsuits filed, settlement announcements—in order to make informed decisions about whatever issues they may be facing that may require legal help.
We’re proud of our 10+ years of reporting on the legal issues that can, and do, affect each of us every day—and we continue to be proud of our A+ BBB rating.
It’s in that spirit that we’re also proud to announce our inclusion in the Best of the Web directory. We’re in some pretty good company as part of the Best of the Web directory, and we’re honored to be listed among such revered sites.
Thanks to all our readers—you’re the reason we continue to strive to deliver the “best legal news you can use”.
Week Adjourned: 11.26.11
November 28th, 2011. By LucyC
Top Class Actions
Do you know who’s got your personal information? An unfair business practices class action lawsuit has been filed in the Southern District Court of Florida against Best Buy Corporation for violating the Drivers’ Privacy Protection Act or “DPPA”, a federal statute that protects the privacy of personal information assembled by State Department of Motor Vehicles (DMVs).
The lawsuit alleges Best Buy has established a business practice of taking, storing, using and/or sharing customers’ personal or highly restricted personal information, without consent, when customers make a normal return of Best Buy merchandise. Their receipt indicates that Best Buy “tracks exchanges and returns … and some of the information from your ID may be stored in a secure, encrypted database of customer activity that Best Buy and its affiliates use to track exchanges and returns.”
The DPPA specifically prohibits Best Buy’s conduct and was instituted to protect consumers from abuses such as identify theft and stalking, which often result when information is unsecured and improperly stored. The class action alleges that Best Buy’s retention of data accessed on a driver’s license is not “use in the normal course of business” as described by the DPPA.
Top Settlements
What’s that old adage—if it sounds too good to be true… Power Balance LLC, the company that made Power Balance bracelets, has reportedly settled a consumer fraud class action lawsuit this week for $57.4 million and filed for federal bankruptcy protection. The details and amount of the Power Balance settlement remain to be confirmed, although it’s all over the Internet.
The company was sued over allegations of misleading advertising, advertising that allegedly claimed the hologram-embedded rubber bracelets enabled the wearers to “achieve their best,” a statement that begs the question—best what? Best outlandish claim? Possibly. Although the company claims there’s science to back up the statement. I have one word—and it’s “placebo.”
About time: Merck Vioxx settlement. There’s not much that’s funny about this. Merck, Sharp & Dohme has agreed to pay $950 million to resolve criminal charges and civil claims related to its promotion and marketing of the painkiller Vioxx (rofecoxib), the Justice Department announced. The FDA approved Vioxx for three indications in May 1999, but did not approve its use against rheumatoid arthritis until April 2002. In the interim, for nearly three years, Merck promoted Vioxx for rheumatoid arthritis, conduct for which it was admonished in an FDA warning letter issued in September 2001.
Merck is also entering into a civil settlement agreement under which it will pay $628,364,000 to resolve additional allegations regarding off-label marketing of Vioxx and false statements about the drug’s cardiovascular safety. Of the total civil settlement, $426,389,000 will be recovered by the United States, and the remaining share of $201,975,000 will be distributed to the participating Medicaid states. The settlement and plea conclude a long-running investigation of Merck’s promotion of Vioxx, which was withdrawn from the marketplace in September 2004.
The parallel civil settlement covers a broader range of allegedly illegal conduct by Merck. The settlement resolves allegations that Merck representatives made inaccurate, unsupported, or misleading statements about Vioxx’s cardiovascular safety in order to increase sales of the drug, resulting in payments by the federal government. It also resolves allegations that Merck made false statements to state Medicaid agencies about the cardiovascular safety of Vioxx, and that those agencies relied on Merck’s false claims in making payment decisions about the drug. Finally, like the criminal plea, the civil settlement also recovers damages for allegedly false claims caused by Merck’s unlawful promotion of Vioxx for rheumatoid arthritis.
Ok—That’s the week that was. Hope everyone had a wonderful Thanksgiving!
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