Articles Posted in Class-Action

Many consumers frequently rely on important information provided by the manufacturer of a product in order to determine whether or not to buy that product. If a product does not list a particular ingredient, such as gluten, which is a protein found in many processed foods, consumers will frequently assume that the protein is not present in that product. Only recently have food producers begun to label their products as specifically gluten-free.
Walmart has recently encountered a lawsuit by consumers who purchased jewelry from their stores with Miley Cyrus’s brand. The jewelry, which is made by BCBG Max Azria Group Inc., and sold in Walmart stores, allegedly contained cadmium.

Cadmium is a soft metal which is frequently used to stabilize plastics and to prevent corrosion. However, cadmium has been found to have toxic properties and it is included on the European Restriction of Hazardous Substances. This Restriction bans certain hazardous substances in electrical and electronic equipment, although it does allow for certain exemptions and exclusions. Some studies have linked cadmium with lung cancer and prostrate cancer and some people have theorized that the soft metal imitates estrogen and causes breast cancer.

In the past few years, jewelry sold at Walmart and collectible drinking glasses sold at McDonald’s have been recalled when it was discovered that these products contained cadmium. In 2010, reports of high levels of cadmium in children’s jewelry led to an investigation by the U.S. Consumer Product Safety Commission. Despite the fact that there appears to be little hard evidence available that cadmium is dangerous, there have been enough scares and warnings to make consumers wary of the metal.

The plaintiffs of the current lawsuit against Walmart regarding the Miley Cyrus-brand jewelry say that they never would have purchased the jewelry if they had known that the product contained cadmium. A settlement has been reached in the case, but the defendants continue to deny having done anything wrong and any liability. Anyone who purchased Miley Cyrus-branded jewelry from a Walmart retail store after July 1, 2005 is eligible to participate in the class. Class members have four options:

TO REMAIN IN THE SETTLEMENT: In order to remain in the settlement, purchasers of the jewelry must submit a claim form in order to receive a payment from the settlement. They must also agree to the terms of the settlement which include forfeiting their right to sue the defendants in the future.

TO GET OUT OF THE SETTLEMENT: If class members do not wish to
remain as part of the settlement, they can choose to exclude themselves from the class.

TO REMAIN IN THE SETTLEMENT AND OBJECT: Those who decide to remain in the settlement will have the opportunity to object to the settlement.

APPEAR AND SPEAK AT THE FINAL APPROVAL HEARING: Just because a settlement has been reached between the two parties does not mean that it has yet been finalized. A judge must first grant the settlement court approval. If members of the class choose to do so, they can appear at the approval hearing and speak, or they can have an attorney appear and speak on their behalf. Should they chose one or both of these options, it would be entirely at their own expense.

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Class action status is an important tool for plaintiffs in many different types of lawsuits. It gives plaintiffs strength in numbers when filing lawsuits against large corporations. It also allows plaintiffs to collect claims which would normally be too small to justify filing a lawsuit if the plaintiff were left to do so on her own. It is the number of plaintiffs and the subsequently larger claim against the defendant which makes it possible for these plaintiffs to seek redress against defendants.

Many companies utilize illegal business practices and rely on people determining that the small claims are not worth a lawsuit in order to continue those practices. Even if a customer or investor loses a small amount of money, a company that uses the same practice with hundreds of thousands of similarly situated people could potentially rake in millions of dollars illegally.

Despite the fact that class action status is a necessary tool which is provided to plaintiffs in the laws of the United States, the Supreme Court has recently displayed a pattern of ruling against class actions. Such rulings are making it increasingly difficult for plaintiffs to file class action lawsuits which can be upheld in court. As a result of the Supreme Court’s recent rulings, lower courts have had to consistently deny plaintiffs class action status in cases which would normally have been allowed to move forward as class action lawsuits.

The Supreme Court has agreed to hear another case in which the parties are disputing whether or not the case can continue as a class action lawsuit. The lawsuit was brought against Halliburton, a publicly traded energy company, by a class action of the company’s share holders. The shareholders allege that Halliburton misrepresented its potential liability in asbestos litigation, revenue from construction contracts, and benefits from a merger. According to the lawsuit, shareholders allegedly lost money after the company’s stock prices dropped after news about one or more of these factors was revealed.

The plaintiffs in the case are relying on a landmark decision which was made in 1988 in the case of Basic v. Levinson. In that case, the court determined that shareholders have the right to know about a potential merger, even before it happens. The ruling also determined that shareholders don’t have to prove that they made investment decisions based on a company’s misstatement of facts. Instead, the ruling upheld the concept of “fraud on the market,” which assumes that misleading corporate assertions are reflected in a company’s stock price.

Halliburton is hoping that the court will overturn the 1988 ruling in their favor, arguing that “Real-world experience has crippled the theoretical underpinnings of Basic”. The shareholders, on the other hand, argue that “A reversal of Basic v. Levinson would represent the most radical change in the private enforcement of the federal securities law in a generation and would be a severe blow to investors’ rights.”

According to Halliburton, even in a well-developed securities market, “stock prices do not efficiently incorporate all types of information at all times.” Because of this, the energy company argues, shareholders should not be able to sue a company based on price fluctuations alone.

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Generally, when filing a lawsuit, the plaintiff has one of two aims: to reap payment for damages incurred; or for the court to order an injunction against the defendant. Many plaintiffs seek both. In the current case against the NCAA regarding the rights of student athletes, the plaintiffs have managed to gain court approval to move forward as a class to seek one of these goals, but not the other.

U.S. District Judge Claudia Wilken ruled that the plaintiffs can move forward as a class in their lawsuit against the NCAA regarding what student athletes receive in exchange for playing sports for their colleges. However, Wilken denied the motion to certify a class which sought billions of dollars in damages from the NCAA in exchange for improper use of the athletes’ names and likenesses in several forms, including live television broadcasts. According to Wilken, the plaintiffs had failed to identify a legitimate method to calculate damages for former players and that was her reason for refusing to certify a class to seek damages.

Sonny Vaccaro had mixed feelings about the ruling. Vaccaro is the form sneaker marketing executive who convinced O’Bannon, a former UCLA basketball star, to file the lawsuit against the NCAA. Vaccaro was disappointed that the class won’t be able to pursue damages, but he was optimistic about moving the case forward to elicit changes from the NCAA. According to Vaccaro, O’Bannon said of the ruling, “This is what I wanted … They’ll have rights. I never had rights. I didn’t think I would ever have rights.” The goal in this lawsuit now is to prevent the NCAA from taking advantage of student athletes in the future and using their names and likenesses, not only on television, but also in things like video games for EA.

Vaccaro also said that the plaintiffs “won in the sense we’re going forward, … Those damages, whatever they would have been, if we win, going forward, there’s no limit to what the numbers are in the future.

Vaccaro and O’Bannon aren’t the only ones who are pleased with the court’s ruling. Michael Hausfeld, one of the attorneys for the plaintiffs, released a statement saying that, “The court’s decision is a victory for all current and former student-athletes who are seeking compensation on a going forward basis. While we are disappointed that the court did not permit the athletes to seek past damages as a group, we are nevertheless hopeful that the court’s decision will cause the NCAA to reconsider its business practices.”

Another attorney for the plaintiffs, Hilary Sherrer, said, “There is a growing public recognition that the NCAA’s business practices are unfair and must be changed. The court’s ruling is a giant leap in the effort to end these unfair practices.”

The NCAA also claimed that the ruling was a victory for their side. They released a statement which says, “We have long maintained that the plaintiffs in this matter are wrong on the facts and wrong on the law. This ruling is one step closer to validating that position”.

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Some companies might want to make sure to be very careful before making large acquisitions. Otherwise they might find themselves fighting a legal battle for something the company being acquired did years ago. Such is the case for HSBC Holdings Plc, a British bank, which has recently been hit with the largest judgment yet made in U.S. courts. The judgment, a record breaking $2.46 billion, was made against HSBC by U.S. Judge Ronald Guzman following a jury trial in a class action against Household International, which is now a division of HSBC.

According to the class action lawsuit, Household International’s chief executive, chief financial officers, and head of consumer lending all made false and misleading statements about the company in order to artificially inflate the company’s share price. The lawsuit further alleges that Household International engaged in predatory lending and intentionally concealed the quality of its loan portfolio.

Reports of Household International’s lending practices began to reach the public in 2001, which resulted in the company’s share prices sinking to the lowest it had been in seven years. The class action lawsuit was filed against Household International in 2002, the same year that HSBC bought out the U.S. lender. Now HSBC is stuck dealing with the lawsuit. A spokesman for the company sounded confident however, saying that HSBC plans to appeal and believes that it has a strong case. Despite its embroilment in the current legal battle, HSBC seems not to regret the purchase of the U.S. lending company. On the contrary, it appears to be eager to continue the battle against the class action lawsuit. The spokesman did add, however, that the matter has been noted in HSBC’s regulatory filings. It might affect future acquisitions made by the British bank after all.

The case is notable because securities fraud class actions almost always settle before reaching a jury. Defendants frequently prefer to settle outside of court to avoid the negative media attention as well as to avoid the extremely high judgments. When a class is certified by a judge, it frequently puts pressure on the defendant to settle the case outside of court, given that class action status gives the plaintiffs greater leverage.

Plaintiffs in securities fraud class action lawsuits generally rely on the “fraud on the market” theory as a key tool in their litigation. This is the theory that the price of a security trading in an efficient market reflects all publicly available information about that security. Working on that premise, the theory assumes that investors rely on material misrepresentations which are reflected in market prices at the time that the security is traded. Like most securities fraud class action lawsuits, the one against Household International also relied on evidence that investors and the market relied on unreliable statements provided by high-level executives at Household International. Because of the misrepresentations of the company and its lending practices, investors were led to buy shares which they would not have otherwise purchased, or were led to buy them at a higher price than that at which they would normally have bought them.

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CBS News reports:

In a stunning new development, WJZ learns there may be as many as 9,000 victims of a Johns Hopkins gynecologist.

Dr. Nikita Levy killed himself after allegations surfaced that he secretly videotaped his patients during exams.

Mike Hellgren tells us what else his victims claim he did to them.

They say he performed extra exams and touched them inappropriately. Now — a class action settlement process is moving forward in the case, with the lawyers representing the victims praising Johns Hopkins.

Investigators say gynecologist Nikita Levy used a pen camera to record exams at Johns Hopkins’ East Baltimore Medical Center. The FBI is still sifting through thousands of images on Levy’s computer.

There may be 9,000 victims, and their lawyers are now working to settle the class action case through a mediator.

Class actions sometime provide an excellent device to help victims receive treatment for mass traumas such as occurred here. More often individualized injuries from mass torts can be organized into groups of cases for discovery and then bell weather cases can be tried to set a settlement value for the remaining cases. Treating this type of case as a class action is somewhat unusual.

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It is an age old question. If a company finds and harvests gold on someone else’s property, to whom does the gold belong? The company that harvested it or the person who owns the property that the gold was found on? This is the question around which several class action lawsuits in Virginia revolve.

CNX Gas Co. and EQT Production Co. drilled Virginia’s coalfields for methane gas. In doing so, they mined the natural gas from property owned by many different residents of Virginia. So far, the companies have paid $30 million into an escrow fund to pay the residents for their share of the oil that was taken from their land. CONSOL Energy Inc., which owns CNX, has said in its statement that it complied with state law by placing the money into an escrow fund and insists that it supports efforts to release that money to the Virginia property owners.

The class action lawsuits, however, allege that the $30 million is not nearly enough to pay the landowners for the gas that was taken from their property. The lawsuits allege that CNX and EQT deducted post-production costs and other expenses far beyond what was reasonable. In this way, the lawsuits, allege the energy companies cheated the Virginia residents out of tens of millions of dollars.

Don Barrett, a Mississippi attorney who is representing the property owners who first sued, is not convinced that the $30 million is enough to properly compensate the landowners for the gas that was taken from their property. “We’re going to find that the money put in escrow is not nearly what should have been put in escrow,” he said. “What’s in escrow is not half of it.”

In arguing against class certification, the energy companies employed some familiar tactics used by defendants in class action lawsuits. They argued, first, that they had abided by state law and had done nothing wrong. They also argued that the individual claims of the class actions were too diverse and complicated to be handled as a class.

The federal judge disagreed with them and has recently certified the class actions against the companies and now the lawsuits can move forward. Barrett is pleased with the certification of the class actions, calling it “a body blow to the defendants” and “a wake-up call to them.”

According to the plaintiff class action attorney representing the class, Don Barrett, the next step is to make CNX and EQT reveal all of their business dealings with the Virginia landowners. “Now they have to go back and tell us what they’ve taken out of the ground, exactly every penny that was spent for expenses and so on, and why it was reasonable.”
If CNX and EQT are unable to provide the necessary documentation for the gas that they drilled, Barrett says that he can have his own people come up with an estimate of what is still owed to the Virginia residents. “Our experts” he says, “can go back and figure out what the best price for natural gas at that particular time and that’s what they owe.”

Although the exact size of the classes is not yet known, Barrett estimates that thousands of landowners could be included in the lawsuits.

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Many people these days have come to accept as a fact of modern life that corporations have, and use, some of our personal information. Our browsing history, our shopping history, etc., all get recorded and sold by companies like Facebook and Google. However, according to a new class action lawsuit, which includes customers from all over the country, one company has crossed the line.

Aaron’s Inc., a furniture rental company, and SEI, the franchise owner of the Aaron’s store in Niagara Falls, as well as other local stores, have allegedly been spying on customers who rent computers from Aaron’s. The rented computers allegedly contain “spyware” that the companies installed in order to spy on their customers.

SEI claims that the software, known as “PC Rental Agent”, was used to give the company the ability to turn off the computers in case a customer failed to pay their bill. According to the class action lawsuit, however, the software enabled the companies to do much more than just that. Allegedly, the software also gave Aaron’s and SEI access to their customers’ personal information, even allowing them to turn on the webcams on the computers and record or take pictures of customers in their homes.

According to the class action lawsuit, the spyware on the rented computers sent more than 185,000 emails to the rental company, including customers’ social security numbers, passwords, and captured keystrokes. The webcams also allegedly took pictures of their customers, including nude children and people having sex, and sent these pictures back to the companies’ corporate computers.

Aaron’s has denied all responsibility for the invasion of privacy, saying that it did not install the spyware and that individual franchises, such as SEI, were responsible for the violations of privacy. Despite this claim, the class action lawsuit alleges that the sensitive information captured by the spyware was sent to computers at Aaron’s corporate headquarters.
The Federal Trade Commission has ordered seven different rental companies, including Aaron’s, to stop putting spyware on customers’ computers. The customers’ express consent is now required before rental companies can install spyware on their computers. Given this, and other recent violations committed by companies, as you’ll find on this blog, it might be a good idea for customers to begin taking a closer look at their Terms of Service and consumer contracts before signing anything.

Jon Leibowitz, the chairman of the Federal Trade Commission, has gone on record as saying that, “An agreement to rent a computer doesn’t give a company license to access consumers’ private emails, bank account information, and medical records, or, even worse, webcam photos of people in the privacy of their own homes.”

The law firm for the plaintiffs in the class action lawsuit, Herman, Herman, and Klatz, have warned that Aaron’s may still be spying on their customers through their rented computers. Anyone who suspects that they may have had their privacy violated by Aaron’s “or any of its franchises” should check to see if they fit the qualifications to join the class.

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