Week Adjourned: 5.26.17 – GM Emissions, Doctor Kickbacks, Target

Top Class Action Lawsuits

More Emissions Cheating?? Of course—you knew it was coming. General Motors (GM) got hit with a consumer fraud class action lawsuit this week, accusing the automaker of emissions cheating. A little late to the party—but maybe they figured why not?

Read on…

According to the complaint, GM used defeat devices similar to those used in Volkswagen’s diesel cars, to enable its Silverado and Sierra 2500HD diesel vehicles to pass emissions tests.

The GM emissions complaint alleges that despite GM’s claims that its top-selling Silverado and Sierra 2500HD vehicles are environmentally friendly with high fuel economy and low emissions, in fact they emit far more pollution while on the road than in emissions testing conditions. Well now there’s a surprise.

The complaint states that currently some 705,000 Silverado and Sierra diesels are on the road in the US. Data from emissions testing show that those vehicles emit levels of nitrogen oxide far above standards set by the US Environmental Protection Agency (EPA).

Auto parts supplier Robert Bosch GmbH is also named in the lawsuit, and allegedly plays a pivotal role in the emissions scandal that has plagued the auto industry since Volkswagen defeat devices were revealed in 2015. The auto parts supplier developed the electronic diesel control that enabled GM to implement the defeat devices in its cars.

According to the plaintiffs, there are at least three defeat devices in GM’s Duramax diesel engines. The GM vehicles affected are model years 2011 to 2016 Silverado 2500HD/3500 HD trucks and Sierra 2500HD/3500HD trucks.

“GM turned a blind eye to the two-fold to five-fold increase in deadly nitrogen oxide emissions its scheme caused, all to drive up its sales and profits,” the plaintiffs state.

The named plaintiffs are Andrei Fenner, a Californian who bought a used 2011 GMC Sierra from an authorized GM dealer in 2013, and Louisiana resident Joshua Herman, who bought a new 2016 Silverado in June, allege violations of the Racketeer Influenced and Corrupt Organizations Act and states’ deceptive trade practice and consumer violations laws. They seek to represent a nationwide class on the RICO claim and state classes for the residents of California, Louisiana and other states.

The case is Fenner et al v. General Motors LLC et al., case number 2:17-cv-11661 in the U.S. District Court for the Eastern District of Michigan.

Go get ‘em! 

Top Settlements

Just Blowin’ that Whistle… Here’s an interesting tale. And the good guy won! A former employee who filed a wrongful termination lawsuit alleging he was let go by his employer after reporting illegal sale activity, has been awarded $22 million by the jury hearing his case.

Steven Babyak, who had worked from October 2012 to June 2015 as a sales manager for defendant Cardiovascular Systems Inc. (“CSI”), alleged he was let go from his job in June 2015 after acting as a whistleblower by revealing illegal kickbacks to doctors, as well as FDA policy violations and violations of the Sarbanes-Oxley Act (SOX).

The jury awarded a total award of $25,142,120, which includes economic damages regarding lost past and future earnings of $2,742,120, and punitive damages of $22,400,000.

The trial took just five days, during which time Babyak stated that as a result of complaining directly to CSI’s upper management about the alleged violations, he was immediately retaliated against.

When Babyak reported the alleged retaliatory behaviors and actions to CSI’s upper management, an investigation was launched, but CSI stated that they found “no evidence of retaliation” or wrongdoing by the company.

Several weeks after Babyak had reported his initial concerns and a resulting re-assignment of sales territory, he discovered new and additional legal violations which he reported to CSI’s regulatory department as a possible SOX violation. Upon hearing Mr. Babyak’s new complaint about possible SOX violations, CSI management became extremely displeased and even told plaintiff to stop reporting violations and to “get on the bus and move on.” Babyak then submitted a formal complaint outlining the SOX issue. Just weeks after his formal SOX complaint, CSI terminated Babyak.

Target on target to pay $18.5 million …in data breach class action settlement. Yup, the discount retailer will pony up the pennies to pay out 47 states in what is being touted as the largest multi-state data breach deal in US history. All stemming from the 2013 Target data breach, which happened just before US Thanksgiving… remember that?

Under the terms of the Target data breach agreement, Target must adopt improved measures to make secure customers’ information, including executive oversight of a comprehensive information security program, and hiring an independent third party to conduct a security assessment. The retailer must also update and maintain appropriate data encryption policies.

More than 41 million Target customer payment card accounts were affected by the massive 2013 data breach, with contact information compromised for more than 60 million customers. Shortly after the data breach became public, states’ attorneys general launched an investigation which found that hackers accessed Target’s server by using stolen credentials and exploiting weaknesses in its security systems.

Specifically, the investigation revealed that the hackers, after accessing a customer service database, were able to install malware in Target’s system that was able to capture the shoppers’ data, including full names, telephone numbers, email and mailing addresses, payment card numbers, expiration dates and encrypted debit PIN numbers.

Target announced the data breach in December 2013, stating that they were aware the breach had occurred between November 27 and December 15 2013, and confirmed that payment card data was stolen in real time as the cards were swiped in its stores. 

Ok – That’s a wrap for this week. See you at the bar!