Week Adjourned: 8.19.11

Top Class Actions

Vita Coco a bit Loco with their Health Claims?  A consumer fraud class action lawsuit was filed this week, against All Market Inc., the manufacturer of Vita Coco Coconut Water, over allegations that you ain’t getting what you pay for.

The plaintiff in the lawsuit alleges that Vita Coco products are falsely marketed as “super-hydrating,” “nutrient-packed,” “mega-electrolyte,” “life-enhancing,” and healthy “super-water” that should be regularly consumed to help maintain optimal hydration. In reality, Vita Coco products are no more hydrating than a standard sports drink and, for some Vita Coco products, do not even contain the levels of electrolytes indicated on their nutritional labels.

According to a recent independent study, certain Vita Coco products have nearly 50% less sodium and significantly less magnesium than advertised.

Lawyers representing the plaintiffs state that consumers are paying a premium for a product that simply does not live up to its health claims, and that Vita Coco products do not deliver on their nutritional promises. Well, if the products lived up to the advertising they should be putting that stuff in the tap water!

The lawsuit was filed on behalf of purchasers of Vita Coco products between August 10, 2007 and the present.

Top Settlements

Asbestos Mesothelioma Lawsuits Continue to Rise. These two asbestos settlements total $51 million. Separate verdicts totaling $32 million and more than $19 million were awarded on August 17 in cases involving individuals who contracted asbestos mesothelioma after being exposed to asbestos.

In the case of Ronald Dummitt and Doris Kay Dummitt v. A.W. Chesterton, et al., a jury found Crane Co. and Elliott Turbomachinery Co., responsible for the asbestos exposure that led to a U.S. Navy boiler tender’s diagnosis of pleural mesothelioma, an incurable form of cancer.

In returning its verdict, the jury determined that Crane and Elliott acted with a reckless disregard for the safety of others in failing to warn. The jury apportioned 99 percent responsibility to Crane and 1 percent responsibility to Elliott. The award included $16 million in past pain and suffering and $16 million in future pain and suffering to Mr. Dummitt.

In the case of David Konstantin and Ruby Konstantin v. 630 Third Avenue Associates, et al., the jury found Tishman Liquidating Corporation, formerly known as Tishman Realty & Construction, Co., Inc., responsible for Mr. Konstantin developing mesothelioma of the tunica vaginalis, one of the rarest forms of cancer in the world. Like all cases of mesothelioma, this form of the disease is not curable.

The jury found Tishman 76 percent liable and to have acted with reckless disregard for the safety of others. The jury awarded Mr. Konstantin $7 million for past pain and suffering, and $12 million for future pain and suffering. The verdict amount also included $64,832 for past lost wages, and $485,325 for future lost wages.

If ever there were an Argument for Being your own Health Advocate… this would probably be it. A man admitted to Temple University Hospital for three severe hypoglycemic episodes over two days, episodes that left him with permanent brain damage—by the way—has been awarded $19 million in settlement of his medical malpractice lawsuit.

The short version of his terrifying story is that after having been released from hospital without a diagnosis or explanation as to why he was suffering from hypoglycemia, Ronald S. Campbell was admitted and subsequently discharged again—and for the last time—at 1:04 am. The middle of the night—or the wee hours of the morning. Whichever you prefer to call it, Campbell’s lawyers argued, rightly, that it was a time when his family would probably be asleep (you think?) and that hospital staff knew that and that Campbell’s family would therefore not able to monitor his condition.

In their defense, the hospital said it met the standard of care in restoring Campbell’s blood sugar to a stable level and noted that he had been previously noncompliant with insulin instructions. Yes—but since when do you discharge people in the middle of the night—and without figuring out what was going on? This whole situation may have been preventable… but instead he has brain damage.

OK. That’s it for this week. See you at the Bar—pool bar most likely.

Week Adjourned: 8.12.11

Top Class Actions

Latest Book Club? Apple, and some the publishing industry’s biggest names got hit with a nationwide antitrust class-action lawsuit this week, over allegations that they conspired to fix prices in electronic books (e-books)–at least that’s the short version.

According to published info, Apple Inc., HarperCollins Publishers, a subsidiary of News Corporation, Hachette Book Group, Macmillan Publishers, Penguin Group Inc., a subsidiary of Pearson PLC, and Simon & Schuster Inc., a subsidiary of CBS, colluded to increase prices for popular e-book titles to boost profits and force e-book rival Amazon to abandon its pro-consumer discount pricing. Nice!

Here’s the skinny: the publishers believed that Amazon’s enormously popular Kindle e-reader device and the company’s discounted pricing for e-books would increase the adoption of e-books, and feared Amazon’s discounted pricing structure would permanently set consumer expectations for lower prices, even for other e-reader devices.

So, according to the lawsuit, the five publishing houses forced Amazon to abandon its discount pricing and adhere to a new agency model, in which publishers set prices and extinguished competition so that retailers such as Amazon could no longer offer lower prices for e-books. That’s anti-free market for sure!

If Amazon attempted to sell e-books below the publisher-set levels, the publishers would simply deny Amazon access to the title, the lawsuit states. The defendant publishers control 85 percent of the most popular fiction and non-fiction titles. Lawyers for the plaintiffs note that while Amazon derived profit from the sale of its Kindle and related accessories, likely allowing the company to discount e-books, Apple was steadfast in maintaining the 70/30 revenue split it demanded with its App Store.

Still with me? Read on…

While free market forces would dictate that e-books would be cheaper than the hard-copy counterparts, considering lower production and distribution costs, the complaint shows that as a result of the agency model and alleged collusion, many e-books are more expensive than their hard-copy counterparts.

As a result of the pricing conspiracy, prices of e-books have exploded, jumping as much as 50 percent. When an e-book version of a best-seller costs close to—or even more than—its hard-copy counterpart, it doesn’t take a forensic economist to see that this is evidence of market manipulation, lawyers for the plaintiffs note. For example, “The Kite Runner” costs $12.99 as an e-book and only $8.82 as a paperback.

The lawsuit goes on to claim that because no publisher could unilaterally raise prices without losing sales, they coordinated their activities, with the help of Apple, in an effort to slow the growth of Amazon’s e-book market and to increase their profit margin on each e-book sold.

The lawsuit claims Apple and the publishers are in violation of a variety of federal and state antitrust laws, the Sherman Act, the Cartwright Act, and the Unfair Competition Act.

Once approved, the lawsuit would represent any purchaser of an e-book published by a major publisher after the adoption of the agency model by that publisher.

Does this affect you?

Top Settlements

Pharma Sales Reps Score One—in Overtime. Well now—here’s a great big slice of sunshine for all those hardworking pharmaceutical representatives. Schering Plough’s reps have won a complete victory in Federal Court in a nationwide collective lawsuit alleging unpaid overtime pay at the mandatory rate of time and one half. The federal class action was filed on behalf of all pharma reps who worked for SP during the last three years, anywhere in the United States.

No numbers have been made public as yet—but the press release states “The amount to be distributed to the class will be determined by the Court, but will likely include double damages for the violation.”

Apparently, the US Department of Labor recognizes that pharmaceutical reps are not exempt from overtime pay, and that the precedent for the class claim was set in the U.S. Court of Appeals for the Second Circuit, which found earlier this year that Novartis pharma reps  were entitled to overtime compensation on the same grounds alleged against Schering Plough.

The US Supreme Court refused to hear the drug companies’ appeals. Saving tax payer dollars—always a good thing. The Second Circuit issued a similar ruling in a case brought by pharma reps against Schering Plough, as have district courts in Connecticut, Illinois, Florida and Texas in cases against Boehringer Ingelheim, Abbott, and Auxilum Pharmaceuticals. However, this ruling is the first of its kind as it found that pharma sales reps are not exempt under any of the parts of the exemption. Schering had to prove all the parts of the exemption, but it lost on all points.


$5 Million Drunk Driving Accident Judgment. I wonder how many people are affected by drunk drivers? This guy certainly was. Twenty-two year old Dwight Grant—he was 22 in 2007 at the time of the incident—sustained brain damage as a result of an accident caused by a drunk driver. He was recently awarded $5 million in settlement of his personal injury lawsuit.

Apparently, he was a passenger in stopped vehicle when the vehicle was struck by Mathew Lyons who was being chased by the police. After hitting the car Grant was in, Lyons fled the scene.

Grant suffered fractures to his face and skull, which resulted in his sustaining brain damage, specifically, damage to his frontal lobe. This damage, Grant alleged, caused him a seizure disorder that now requires constant care.

The parties ultimately agreed to a $5 million final judgment.

OK. That’s it for this week. See you at the Bar—I’m taking a taxi.


Week Adjourned: 8.6.11

Top Class Actions

Let’s hope that WebMD has a cure for what ails it… which would be a securities class action. The online health information company was served this week, reportedly, over allegations that certain of its officers and directors violated the Securities Exchange Act of 1934. (Given the number of securities suits that cite this particular infraction, I’m going to assume that the SEA is not a popular read).

FYI—in case your computer’s been down for the past 10 years—WebMD provides health information services to consumers, physicians and other healthcare professionals, employers, and health plans through its public and private online portals, mobile applications, and health-focused publications in the United States.

The lawsuit was filed on behalf of purchasers of the common stock of WebMD Health Corp. (“WebMD” or the “Company”) between February 23, 2011 and July 15, 2011, inclusive (the “Class Period”).

The complaint alleges that, during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and prospects. Specifically, defendants misrepresented and/or failed to disclose the following adverse facts: (i) that WebMD was experiencing sponsorship cancellations due to extended legal and regulatory reviews; (ii) that WebMD’s customers, including several consumer product companies, were delaying advertising on the Company’s website as a result of smaller advertising budgets; and (iii) as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the Company and its prospects.

On July 18, 2011, WebMD announced its preliminary second quarter financial results and lowered its financial guidance for 2011. In reaction to the Company’s announcement, the price of WebMD stock fell $14.01 per share, or 30%, to close at $32.48 per share, on extremely heavy trading volume.

Top Settlements

All you new parents out there—heads-up—the Department of Health and Human Services recently settled a lawsuit brought by the parents of a toddler who allegedly sustained injuries as a result of receiving immunizations. Details as to which immunizations were administered were not released, unfortunately.

The settlement for $8,713,625, agreed by the parents, included future lost earnings, past and future pain and suffering, past and future medical expenses, attendant care, rehabilitation, and residential expenses for their child.

The parents alleged the child began suffering febrile seizures within 24 hours of having the immunizations.

Apparently, results of testing revealed that the child had suffered a stroke, lack of muscle coordination, loss of hearing and loss of sight. The parents also alleged that the child suffered significant delays, including speech, intellect and fine motor skills development. At the age of nine, the child required a G-tube for nutrition and was not potty trained. It is worth noting that this is not a common situation, but that is precisely what makes it all the more heart-wrenching.

Wachovia Pick-A-Pay proposed setlement anything but picayune… Here’s one for the records—as in size of potential settlement—if it’s approved that is. A Wachovia securities class action, led by The Orange County Employees’ Retirement System, the Louisiana Sheriffs’ Pension and Relief Fund, and the Southeastern Pennsylvania Transportation Authority, the court-appointed representatives of a class of investors who purchased certain Wachovia Corporation (Wachovia) bonds and preferred securities pursuant or traceable to numerous public offerings between July 31, 2006 and May 29, 2008, may have reached a settlement—in the amount of $627 million. Shut the front door!

According to the press release, the combined $627 million recovery is among the 15 largest securities class action recoveries in history. It also is believed to be the largest settlement ever in a class action case asserting only claims under the Securities Act of 1933. The case also represents one of the handful of largest securities class action recoveries ever obtained where there were no parallel civil or criminal securities fraud actions brought by government authorities.

The lawsuit was based on allegations that the Wachovia offering materials at issue misrepresented and/or omitted to disclose material facts concerning the nature and quality of Wachovia’s multi-billion dollar option-ARM (adjustable rate mortgage) “Pick-A-Pay” mortgage loan portfolio, and that Wachovia’s publicly disclosed loan loss reserves were materially inadequate at all relevant times, in violation of Generally Accepted Accounting Principles (“GAAP”). So—it all comes back to mortgages…

The lawsuit alleges that the undisclosed problems in the “Pick-A-Pay” mortgage loan portfolio brought Wachovia to the brink of insolvency by September 2008. Cast your mind back—Wachovia was one of the largest financial institutions to be “bailed out” during the financial crisis, when Wells Fargo & Company agreed to acquire it in early October 2008.

Both settlements must be reviewed and approved after formal notice is provided to the class.

OK. That’s it for this week. See you at the Bar.