Apple - Part 3

Week Adjourned: 2.24.12

The weekly wrap of top class action lawsuits and lawsuit settlements for the week ending February 24, 2012.

Top Class Actions

Hotels.com—too good to be true? Kaylen Silverberg thinks so. She filed a consumer fraud class action lawsuit this week against the online booking agency, alleging it does not back up its promise to refund money if hotel guests can find a better rate elsewhere online.

Instead, Silverberg’s lawsuit claims, Hotels.com sets an “arbitrary and undisclosed limit” on refunds.

Silverberg’s lawsuit states Hotels.com will not back up its promise: “‘after you book with Hotels.com, if you find a lower publicly available rate on line for the same dates, hotel, and room category, we will match the price and refund you the difference.'” Instead, the lawsuit states, “Hotels.com has an arbitrary and undisclosed policy to refund only a portion of the difference between its rate and other, lower rates. For example, in Silverberg’s case, Hotels.com stated that ‘we can only refund you $142,’ even though the price difference was substantially greater.”

Silverberg’s story, short version, is allegedly that she booked a room through Hotels.com for two nights in Rancho Palos Verdes, CA., for $355 per night, then found a $223 rate at HotelClub.com. A third website advertised an even lower rate, $213. Silverberg then asked Hotels.com to back up its guarantee but she was told by the company that they would refund her only $71 a night, which she calls “an arbitrary and undisclosed limit.”

The lawsuit seeks restitution and class damages for breach of contract and unjust enrichment—otherwise known as “business as usual.”

Top Settlements

Every so often a class action settlement comes along that results directly from very unfortunate circumstances. This is one such settlement. This week, Teva Pharmaceuticals, the maker of Propofol, announced it will settle 120 personal injury lawsuits arising from a hepatitis C outbreak in Southern Nevada. The amount of the Nevada Propofol settlement is a reported $285 million.

The Israeli-based generic drug maker was facing lawsuits brought by some 150 former patients of The Endoscopy Center of Southern Nevada and its sister clinics, who contracted the disease after receiving propofol at the clinics. LAS reported on this in some detail at the time.

According to a report in the Las Vegas Review Journal, nine hepatitis C cases were found to be linked to the clinics which were run by Dr. Dipak Desai. Seven of the nine cases were genetically linked to the center. Health officials called another 106 cases “possibly linked.” According to health officials, more than 60,000 former clinic patients were potentially exposed to hepatitis C because of unsafe injection practices by nurse anesthetists at the clinics.

Teva lost the first three trials and was facing payments of nearly $800 million dollars in compensatory and punitive damages. The fourth trial was under way when settlement talks began in earnest. The settlement leaves 15 lawsuits unresolved.

Antennagate may be drawing to a close…if a preliminary settlement reached in a defective products class-action lawsuit against Apple is approved. The lawsuit alleges underperformance of its iPhone 4 resulting from antenna problems. And oh brother did we ever hear about it! While the iPhone 4 settlement per class member is certainly not large, by anyone’s measure—the size of the class certainly is—25 million US residents no less, each of whom could receive $15 in cash or a bumper case provided by Apple under the terms of the settlement. So, don’t be quitting your day job just yet.

The class action combined 18 separate lawsuits, all of which allege Apple was “misrepresenting and concealing material information in the marketing, advertising, sale, and servicing of its iPhone 4—particularly as it relates to the quality of the mobile phone antenna and reception and related software.”

As part of the iPhone 4 settlement original purchasers will be sent emails before April 30, 2012 alerting them to the settlement. The claims period is then open for 120 days.

OK—And it’s off to the bar we go. See you there!

Week Adjourned: 12.17.11

A wrap of the top class action lawsuits and settlements for the week ending December 17, 2011.

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: 11.4.11

Week Adjourned: the weekly wrap of class action lawsuits and settlements, November 4, 2011

Top Class Actions

Could this mean resolution for thalidomide victims?…New research suggests that thalidomide—a drug that caused thousands of horrific cases of deformities in children—caused far more deformities in the U.S. than were reported during the height of the pharmaceutical crisis of the early 1960s.

Invented by German drug company Grunenthal, thalidomide was widely used throughout Europe during the late 1950s and early 1960s, resulting in thousands of deaths and extreme, disfiguring birth defects when used by women during pregnancy. The drug was never approved in the United States, but the new lawsuit filed late October 2011 alleges that as many as 2.5 million doses of the drug were distributed by more than 1,200 doctors to more than 20,000 people, including pregnant women.

Newly discovered and translated documents reveal that Smith, Kline and French (SKF), now owned by GlaxoSmithKline (GSK)conducted a trial of the drug in 1956 and 1957, but buried the evidence, allegedly resulting in a missed opportunity to save thousands of lives.

Instead, according to the filed lawsuit, brought on behalf of 13 men and women with severe birth defects, SKF concealed the results of its trial from the public, allowing another company, Richardson-Merrell, now owned by Sanofi-Aventis to move ahead with large-scale “clinical trials” that involved more than 20,000 people, including pregnant women.

The lawsuit also claims that conclusions made in the early 1960s about the types of birth defects caused by the thalidomide were incorrect.

According to legal counsel, researchers concluded that thalidomide causes bilateral birth defects, such as two missing or shortened arms or hearing loss in both ears. As a result, babies born with unilateral defects, such as one deformed limb, or hearing loss in only one ear were not deemed thalidomide victims, even when their mothers were given the drug while pregnant.

However, new research involving thalidomide as part of a treatment regimen in cancer patients show that many of the assumptions used in the 1960s are incorrect. The thalidomide lawsuit alleges that this new understanding of the drug means that many individuals who experienced unilateral defects may have been misdiagnosed when their doctors told them thalidomide could not have been the cause.

“Among other things we intend to show in court that thalidomide does not work through a neural mechanism as previously thought, but affects the vascular system,” a lawyer for the plaintiffs said.

The complaint claims that the defendants are either guilty of or liable for a civil conspiracy, failing to report and covering up evidence that thalidomide was harmful, especially when taken during the early stages of pregnancy. The lawsuit also says that the defendants were negligent in continuing to manufacture, test and distribute the drug.

Top Settlements

Motrin SJS Verdict. This is one for the books. Let’s hope it makes a difference. On October 3, 2011, a Los Angeles jury returned a record-setting verdict against Johnson & Johnson and their fully owned subsidiary McNeil Consumer Healthcare for $48.2 million—with pre-interest and cost of judgment it’s expected to reach $60 million. The lawsuit alleged that Motrin caused SJS/TENS or Stevens Johnson Syndrome (SJS), also known as Erythema Multiforme, Leyll’s Syndrome, and in its later stages, Toxic Epidermal Necrolysis (TEN). SJS/TEN is a serious and potentially life-threatening disease that causes large areas of the skin to become detached and lesions to develop in the mucous membranes.

The verdict was based on findings of malice towards the consumers of the over-the-counter drug Motrin, specifically for not putting a warning label on the product that could have spared Trejo’s and others’ health. This is believed to be the first verdict of its kind involving punitive damages associated with this over-the-counter temporary pain reliever.

At age 16, Christopher Trejo, who is now 22 years old, took some Motrin as directed on the label for less than one week, but contracted TEN. It caused a severe inside-out exfoliating reaction affecting all of his mucosal membranes, which is equivalent to second- and third-degree burns over 100% of his body. The TEN reaction also caused severe pulmonary damage, near-blindness, infertility, whole-body scarring and a hypoxic brain injury. Trejo’s abilities to see, hear, smell, taste and touch have been severely diminished.

After hearing the evidence, the jury found that the labeling on Motrin was inadequate and should have been changed years earlier to properly educate and alert consumers to the developing signs of severe reactions, which include skin reddening, rash and blisters. Early detection and treatment of these symptoms can prevent TEN or SJS.

Apple Playing the Same Old tune? Apple, Inc., has agreed to settle a consumer fraud class action lawsuit that could amount to over $50 million dollars in payouts—but before you get all excited know this “Apple has agreed to provide an iTunes® Store credit in the amount of $3.25 to all settlement class members who qualify and submit a valid claim form. ” That’s the skinny.

The lawsuit claimed that Apple advertised and sold gift cards which stated that if one purchased and used the gift card, all songs purchased at Apple’s online iTunes® Store would cost 99¢ per song. The lawsuit further claimed that in April, 2009, Apple raised the price of certain songs at the iTunes® store, yet refused to honor the promised 99¢ price when the gift cards were redeemed. In addition, the company continued to sell iTunes® gift cards with the phrase, “Songs are 99¢” printed on them.

Consumers who were overcharged for iTunes songs while using iTunes® 99¢ gift cards are now eligible to receive an iTunes® Store credit in the amount of $3.25 after completing the simple iTunes® class action lawsuit online claim form. Millions of e-mails are currently being sent to persons who may have used affected gift cards to purchase songs from the iTunes® Store.

You can find out how to make an Apple iTunes lawsuit claim here.

Ok—That’s enough for this week. See you at the bar—don’t forget your iPod.

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.

Congratulations!

$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: 12.10.10

Top Lawsuits

Hilton’s in the news this week. This time it’s not Paris who’s behaving badly, but rather the hotel chain that is her family namesake. A former employee of Hilton Worldwide Inc, is suing the company over allegations of unlawful employment practices. No. Really?

Yes. Specifically, the Hilton lawsuit contains facts related to nonpayment of wages, harassment, and sexual favoritism.

In a nutshell, Brian Marcus was employed by Hilton as the Director of Food & Beverages at the Hilton San Diego Bayfront Hotel (“Bayfront”) in San Diego and during his employment, Marcus alleges that he was subjected to harassment and then terminated so that Hilton could avoid having to pay him a bonus that he had already earned. Both of these actions are in violation of California law.

Mr. Marcus alleges that “just over a month before the end of 2009, Hilton terminated Mr. Marcus’s employment and refused to pay him any portion of his bonus for 2009 which he had earned under Hilton’s bonus program. The Complaint alleges that Mr. Marcus’s termination was part of a plan by his supervisor to eliminate him from the hotel so that the supervisor could continue to take additional control without intervention. Hilton created the system by which this supervisor was able to manipulate others for her financial gain and the financial detriment of people like Mr. Marcus.”

In addition, “Hilton subjected Mr. Marcus to a hostile, abusive and intimidating work environment in which sexually inappropriate behavior permeated the workplace. Mr. Marcus is seeking lost pay and benefits and damages associated with mental suffering.”

Bad behavior, it seems, is the Hilton Modus Operandi…

Top Settlements

Just in time for Christmas—five years on. A jury in El Paso has awarded a $132 million settlement to the victims of a bus crash that killed two people and critically injured several Continue reading “Week Adjourned: 12.10.10”

Week Adjourned: 7.31.10

Top Class Actions

Another Bite out of Apple. So, Apple is in the news this week, as it was last week, this time over allegations that its iPad is not up to scratch. Essentially, the proposed class action alleges that the smash hit techno gizmo “overheats and fails to operate properly in warm conditions.”

The complaint reportedly states that the iPad “does not live up to the reasonable consumer’s expectations created by Apple” because it “overheats so quickly under common weather conditions.” And, “that in direct sunlight, the iPad turns itself off after just a few minutes of use.”

FYI—Apple said that customers bought 3.27 million iPads last quarter. It was only introduced at the beginning of April. So, no surprise it has outsold the iPod outsold revenue-wise: $2.17 billion in the quarter ended June 10 compared with $1.54 billion for the iPod. Well, if there is a problem, at least we know they can afford the fix.

C’mon, Smile and Say “Fleeced!” What would the week be without a wages class action? This one pertains to back wages reportedly owed to thousands of employees of Consumer Programs Incorporated (CPI) who work at Sears Portrait Studios and Wal-Mart Picture Me Portrait Studios.

BTW—CPI states it is the largest portrait studio operator in North America, with photography services in over 3,000 locations nationally. Umm. That’s a lot of overhead…

The specific allegations include failure to pay employees for all the time they work, Continue reading “Week Adjourned: 7.31.10”