Week Adjourned: 4.29.11

Top Class Actions

DIRECTTV in Direct Line of Fire over alleged dodgy business practices. A lawsuit by DIRECT TV customers who were illegally charged “early cancellation penalties”—fees of up to $480—has been granted “class action” status by a California court, potentially leading to millions of dollars in refunds. 

FYI—DIRECTTV is the largest satellite TV provider in the US with over 16 million customers. Doesn’t take a rocket scientist to figure out that even a portion of that number of plaintiffs could translate to a rather large settlement.

The suit, filed in September 2008, was certified April 22, 2011, on behalf of DIRECTTV customers who were charged a cancellation penalty when they cancelled service. DIRECTTV applied its unlawful penalty provision to all of its customers including, in some cases, customers who terminated because the satellite equipment stopped working or they were no longer able to receive service when they moved.

In other cases DIRECTV would unilaterally extend a consumer’s “programming commitment” by a year or two if malfunctioning equipment needed to be replaced or the customer decided to upgrade receivers and then charge the fee if the customer stopped service after that. In some cases, according to the suit, DIRECTTV took the fees from their customers’ bank or credit card accounts without their permission. 

Did any of this happen to you? 

Top Settlements

Insured now Assured. Here’s a happy ending to a rather nasty insurance scam. National Western has agreed to pay more than $17 million to settle a class action lawsuit it faced over allegations that it targeted senior citizens—unfairly.

Short version—the suit alleged that National Western set up an unlawful group annuity policy that was issued through an out-of-state group created by National Western, and that the Continue reading “Week Adjourned: 4.29.11”

Week Adjourned: 4.22.11

Top Class Actions

Copping out on COBRA? Brunel Energy Inc and Brunel Energy Group Health Plan got hit with a class action this week. It was filed on behalf of current and former participants in the Brunel Energy Group Health Plan (“the Plan”) who allege Brunel failed to provide health care coverage continuing health care coverage (commonly called COBRA coverage) to employees and their beneficiaries who were covered under the Plan through an insurance policy with BUPA International.

According to the complaint Brunel did not notify employees of their entitlement to COBRA coverage or of their right to obtain coverage at a reduced rate as authorized by Congress in its recent economic stimulus package.

According to the Complaint, when asked for a COBRA package by a terminated employee, Brunel advised the former employee that COBRA coverage was not available. Even after being notified by the U.S. Department of Labor that the former employee was entitled to elect COBRA coverage at the statutorily reduced rate, the Complaint alleges that Brunel did not offer the coverage. Would this come under the heading of ‘cost savings’?

The Complaint seeks an injunction requiring Brunel to bring its health care plan into compliance with the law and an order requiring Brunel to reimburse former employees and their beneficiaries for certain health care costs they would not have incurred had they been allowed to elect COBRA coverage. Wait—there’s more—the complaint also seeks civil money penalties of up to $110 dollars a day for Brunel’s failure to provide statutory notices describing the Plan and apprising employees and their beneficiaries of their COBRA rights as required by law. 

Top Settlements

Don’t Mess with our Vets. JP Morgan Chase was all apologies this week, on the back of a settlement reached with its customers who are or were military personnel, who had filed a class action against the bank alleging that it was wrongly foreclosing on families of service personnel and overcharging them on their mortgages to boot. Does that come under the definition of ‘free market economy’? (don’t get me started on that one)

Well, it obviously did in JP Morgan’s version. But, in February, a J.P. Morgan executive apologized at a U.S. House hearing on its behavior. Then they rolled out a series of programs to help active members and veterans—programs including educational initiatives. And, they said that the bank would no longer foreclose on any currently deployed military personnel. How generous of them.

The financial protections that the suit sought to have reinstated are in fact afforded US military personnel under the Service members Civil Relief Act (SCRA). So, maybe it wasn’t just an attack of conscience on JP Morgan’s part.

In any event, Reuters reported that under the terms of the settlement “J.P. Morgan said it will pay $12 million to the class-action suit and set aside $15 million for additional damages on a case-by-case basis. Any unused funds will be used to benefit a charity selected by the U.S. military.” (Reuters.com

Baby Brain Food? Guess Not. If you got duped into buying an expensive brand of infant formula—Enfamil, made by Mead Johnson & Co—you may be pleased to know they’ve reached a preliminary settlement in the class action they were facing concerning allegations of false advertising.

The suit claimed that Mead falsely represented that Enfamil LIPIL is the only infant formula that contains DHA and ARA—fatty acids it claims are “clinically proved to improve brain and eye function in infants.” Are you kidding? If that really were the case they’d be putting that stuff in the tap water.

If the settlement is approved, people who purchased Enfamil LIPIL formula for six months or less between October 13, 2005 and March 31, 2010, can file a claim to receive either one 12.5 oz container of Infant Formula or $6 in cash.

For those folks who purchased Enfamil LIPIL formula for more than six months between October 13, 2005 and March 31, 2010, you can file a claim to receive either two 12.5 oz containers of Infant Formula or $12 in cash. You can find out if you’re eligible to be a class member here. 

Ok. That’s it for this week. See you at the bar.

Week Adjourned: 4.8.11

Top Class Actions

HAMPered Loan Modifications? It seems there’s no end in sight to the mortgage crisis—with new twists and victims appearing regularly. In fact, you could argue that it’s spawned a whole spin-off industry of fraud, and related legal actions. For example, this week, Saxon Mortgage Inc, the mortgage service division of Morgan Stanley, was hit with a potential class action lawsuit over allegations that the company uses the Homeowners Affordable Modification Program (HAMP) to attract customers into making “trial” payments on loans it has no intention of ever permanently modifying.

Filed in Northern California, the suit alleges a pattern of misconduct by Saxon which involves collecting trial payments, delaying the processing of loan modifications, and then denying the application altogether for demonstrably false reasons. Where do you start?

The suit’s lead plaintiff, a small business owner in San Francisco, Marie Gaudin, had, like millions of Americans, fallen on hard times as a result of the recession and approached Saxon for a loan modification on her home. Long story short, she was directed to Saxon’s “Home Preservation Department” and subsequently asked to provide extensive documentation of her financial condition, which she did. She received a written agreement from them that appeared to promise a permanent HAMP loan modification after she made three “trial” payments as proof she could handle the loan repayments. But—Saxon didn’t honor its agreement. Are we surprised?

The suit claims that Saxon delayed the processing of the HAMP loan modification, while Gaudin continued to make trial payments, which were duly noted as received in correspondence from Saxon. Nevertheless, Saxon denied her a permanent HAMP modification. According to the suit Saxon claimed that Gaudin had failed to make payments or comply with document requests. They also allegedly claimed that she did not make payments, while in the same letter actually acknowledged that she was current on all payments (do they not read their own correspondence before it goes out?). Saxon also claimed that the U.S. Treasury Department was involved in reviewing HAMP applications. Who gets paid to think this stuff up? 

Not surprisingly, the suit alleges that Saxon’s breach of contract, rescission and restitution, and deceptive debt collection practices violated California’s Rosenthal Fair Debt Collection Practices Act (Rosenthal Act), and fraudulent, unlawful, and unfair business practices under California’s Unfair Competition Law (UCL). 

Top Settlements

Goodyear Discrimination Suit Settles. Here’s a good news story—we like those. A jury in Cumberland, NC recently awarded Lashanda Shaw $450,000 as settlement of her wrongful termination suit against Goodyear Tire and Rubber Co.’s Fayetteville plant this week. 

Court documents reportedly state that Shaw was fired for making a complaint about racial and sexual discrimination in the workplace. She filed her suit in 2009. When she finally got to court the trial took five weeks with the jury unanimously agreed on the compensatory damages. I’ll bet she’s sleeping better now. 

May be Justice—but at What Cost? A 79-year old woman in Scranton, PA was awarded $550K this week as settlement of her medical malpractice case. But here’s the downside—Irene Doherty filed the suit because she suffered a 23-month delay in the diagnosis of her lung cancer. The verdict was returned against radiologist Earl Detrick, who practiced in Scranton and Wilkes-Barre, PA, prior to retiring.

Ms. Doherty’s lawyers argued that Detrick failed to properly report to Doherty or her physician his conclusions regarding a computerized tomography (CT) scan of her chest. That’s helpful. It turns out that that scan revealed a mass in Doherty’s right lung that required medical follow-up—but it wasn’t brought to Ms. Doherty’s attention until nearly two years later when she underwent a subsequent CT scan of her chest. The second scan revealed a much larger cancerous mass. So, in the 23 months between CT scans, the mass had doubled in size, and was inoperable. Worse, the cancer had spread to Doherty’s lymph nodes. Frankly, I find this astonishing—how does this kind of oversight happen?

Needless to say, Doherty’s suffering and physical deterioration due to her lung cancer could have been prevented had the radiologist done his job—which was to report the results of the January 2007 CT scan as soon as he saw them. And that’s exactly what her lawyers argued. If nothing else Doherty’s case emphasizes the importance of being your own advocate when it comes to healthcare. Don’t get me started…

Ok. That’s it for this week. See you at the bar.

Week Adjourned: 4.1.11

Top Class Actions

Rosetta Stone getting a lesson in securities litigation? The manufacturer of learning software—and apparent sure-fire way to win the girl (see ad above), got hit with a securities lawsuit this week, over allegations that they’re not playing straight, so to speak. The suit, which has not yet been certified, was filed on behalf of purchasers of the common stock of Rosetta Stone, Inc. (“Rosetta Stone” or the “Company”) (NYSE: RST) between February 25, 2010 and March 1, 2011, inclusive (the “Class Period”).

The specific allegations? Violations of federal securities laws—such as the free and lower-priced competitive product offerings, not a temporary reduction in advertising, was having a material adverse effect on the Company’s Class Period revenues, particularly U.S. consumer revenues; and that the favorable sales booking numbers Rosetta Stone reported during the Class Period was the result of key retail partners maintaining inventory of the Company’s products well above historic levels; and—oh yes—there’s more—that Rosetta Stone’s reported sales bookings and revenues during the Class Period were the product of manipulation.

However, on February 28, Rosetta Stone announced fourth quarter revenue of $74.3 million, a 5% decrease from the prior year, net income on a GAAP basis of $5.0 million, a decrease of 60% from the 2009 fourth quarter. On this news, RS’s shares fell $1.77 to $13.19 per share. Let’s hope it’s not just the shareholders who get an education from this. 

Top Settlements

$17 million for workplace asbestos exposure. Sounds nice—but maybe not so much. As big Continue reading “Week Adjourned: 4.1.11”