Week Adjourned: 7.28.17 – Groupon, Nissan, Celgene

Top Class Action Lawsuits

Is Groupon discriminating? Someone thinks so. Andrew Huzar has filed a proposed discrimination class action lawsuit, alleging the discount promotion website discriminates against people with disabilities by not offering tickets for accessible seating at events. Further, the allegations state that Groupon does not provide booking options for disability-accessible hotel rooms. Hmm. Not good.

FYI – The lawsuit seeks to represent two nationwide classes, specifically classes of customers made up of those who were not successful in their attempts to either 1) buy tickets to events or 2) find disability appropriate travel accommodations through the Groupon website. Huzar states in his complaint that he has been unsuccessful in securing both tickets and accommodations.

According to Groupon lawsuit, in 2015, Huzar allegedly tried to purchase a “Groupon Getaway” deal to the Red Lion Hotel in Harrisburg, Pennsylvania. However he was unable to find any option to book an accessible room through the Groupon site. The complaint states that Hazar emailed Groupon about the likelihood of booking a wheelchair-accessible room with the offer, however the response he received allegedly stated, “I’m sorry, unfortunately handicap-accessible rooms are not available.”

“Since July 30, 2015, Mr. Huzar has been deterred from attempting to purchase accessible hotel rooms and Groupon Getaways from defendant as he knows such an attempt would merely be a futile gesture,” the complaint states. “Mr. Huzar continues to desire to purchase hotel rooms and Groupon Getaways from defendant, but fears that he will experience serious difficulty doing so as a result of the complete lack of accessible options.”

With respect to purchasing tickets for events, the complaint notes that in the summer of 2016 Huzar received an email advertisement from Groupon about a deal for New York Jets tickets at MetLife Stadium. When he tried to purchase them through Groupon’s website, he discovered the “complete absence” of any accessible-designated tickets in the stadium, he asserts.

“Mr. Huzar has personal knowledge that accessible-designated seating exists at the MetLife Stadium,” the complaint states. “Mr. Huzar is presently aware that if he tried to try to purchase accessible tickets on defendant’s website, he would be unable to do so.”

“Defendant continues to discriminate against … the classes by failing to make reasonable modifications in policies, practices or procedures, when such modifications are necessary to afford persons with disabilities the ability to purchase tickets; and by failing to take such efforts that may be necessary to ensure that no individual with a disability is excluded, denied goods and services, segregated or otherwise treated differently than other individuals,” the complaint states.

Huzar alleges Groupon has violated the 1990 Americans with Disabilities Act, which “prohibits discrimination on the basis of disability in the activities of places of public accommodations.”

The case is Andrew Huzar v. Groupon Inc., case number 1:17-cv-05383, in the U.S. District Court for the Northern District of Illinois.

Top Settlements

It’s not only the brakes that failed– it was Nissan. That’s what a jury found in a recent Nissan SUV had a defective braking system lawsuit.

A $25 million settlement was awarded to surviving family who suffered the loss of their mother and her two daughters who were killed in 2012 when a Nissan Infiniti QX56 SUV crashed into the family’s minivan in a Hollywood intersection.

Nissan faced claims from both the driver of the SUV, Solomon Mathenge, and the family of Saida Mendez, and her two children, Hilda and Stephanie Cruz. The jury returned a verdict finding the fatal accident was 100 percent attributable to the defective Nissan braking system in the Infiniti SUV. Further, the jury found that Nissan had been negligent in not recalling the vehicle.

Although Mathenge was charged with manslaughter after the crash, the charges were dropped following the Nissan defective brake system class action lawsuit filed against Nissan. That class action alleged the software braking system in certain of Nissan’s vehicles was prone to sudden failure, and inspection of Mathenge’s QX56 revealed it had suffered that very same software error, according to the plaintiffs’ trial brief.

The trial consolidated the claims made by the deceased children’s father, Hilario Cruz, the deceased mother’s surviving daughter, Araceli Mendez, and her mother, Juana de la Cruz Bernardino, with Mathenge’s claims.

The jury awarded Hilario Cruz $14 million in non-economic damages for the deaths of his daughters, and $7 million to Araceli Mendez for the loss of her mother and a further $431,000 for the loss financial support, gifts and household services she would have received from her mother had she not been killed. Mathenge was awarded $3.5 million in damages.

The award was significantly less than the amount plaintiffs’ attorneys were seeking. They had asked the jury to find Nissan guilty of malice, as the company was aware of the defect and its danger, but refused to recall the affected vehicles. However, the jury found Nissan did not act with malice.

The case is Cruz v. Nissan North America, et al., case number BC493949, in the Superior Court of California for Los Angeles County.

It’s a healthcare fraud whopper… but a stopper? Possibly. $280M should provide incentive to stop promoting off-label drugs. It likely will be for Celgene, which has agreed to pay $280 million to settle allegations made by a California Whistleblower under the False Claims Act that the biotech company promoted off-label uses for two of its cancer drugs.

The lawsuit, brought by a former sales rep for Celgene, Beverly Brown, alleged the company promoted two bone cancer drugs, Thalomid and Revlimid, for other cancers they weren’t approved to treat. As part of the promotion, Celgene paid kickbacks to physicians to promote the drugs’ off-label use. The lawsuit also alleged these actions were in violation of laws in no less than 28 states and the District of Columbia, in addition to False Claims Act.

Under the terms of the agreement, the United States will receive the majority of the settlement, $259.3 million, with $20.7 going to 28 states and the District of Columbia. California, where the suit was filed, will receive $4.7 million, the largest amount of any state.

According to documents from the Celgene whistleblower case, which was initially filed in 2010, and Celgene had a massive off-label promotion scheme in place for Thalomid and Revlimid. The documents, which were unsealed in 2014, further reveal that Brown alleged that the two drugs were only narrowly approved to treat multiple myeloma, a form of cancer that affects the bone marrow, however they were routinely marketed to treat other forms of cancer, including breast cancer and leukemia.

According to Brown, the off-label use of these drugs was paid for through government programs which, she contended, Celgene marketed by paying doctors speaker fees and other charitable donations in exchange for promoting Thalomid and Revlimid.

The case is United States of America et al. v. Celgene Corporation, case number 2:10-cv-03165 in the U.S. District Court for the Central District of California.

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

Week Adjourned: 4.6.12 – Lay’s Potato Chips, Groupon, Medtronic

Weekly wrap-up of top class action lawsuits and class action settlements, for the week ending April 6, 2012.

Top Class Actions

Potato Chips are Healthy! Seriously–it’s time for the shovel on this one folks. A federal consumer fraud class action lawsuit filed against PepsiCo and its subsidiary Frito-Lay this week, claims they mislead customers by “misbranding” their potato chips as healthy because they contain “0 grams of Trans Fat.” Call me old-fashioned, but I think that’s a bit of leap. Like—what exactly happened in the potato-chip-making process that suddenly makes the king of junk food healthy?

Not much, it seems. The Frito-Lay lawsuit contends the advertising does not point out that every 50 chips contains more than 13g of fat. Well, hello!

Specifically, the class action lawsuit accuses Frito-Lay of violating federal and California laws that require companies to provide truthful, accurate information on the labels of packaged foods.

“As consumer preferences have begun to favor healthier options, Defendants have chosen to implement a health and wellness strategy to reposition their products as a healthy option,” the Frito-Lay fraud class action lawsuit states. “Defendants recognize that health claims drive food sales and actively promote the purported health benefits of their Misbranded Food Products, notwithstanding the fact that such promotion violates California and federal law.”

Among the deceptive health claims included in the Lay’s potato chips advertising are that the chips are “prepared with healthier oils,” that Frito-Lay’s snack chips “contain 0 grams of Trans Fat, are low in saturated fat and cholesterol-free,” and that the chips contain “good stuff like potatoes, which naturally contain vitamin C and essential minerals.”

Ok. Nothing short of an Easter miracle is going to make potato chips healthy. Come on.

The consumer fraud class action also notes that Frito-Lay tells consumers that “Snacking is an important part of a healthy diet” and that “Snacks may benefit special populations including people with diabetes, children and adolescents, older adults, and pregnant women.” At a loss for words at this point.

According to the lawsuit, “If a manufacturer is going to make a claim on a food label, the label must meet certain legal requirements that help consumers make informed choices and ensure that they are not misled.” However, PepsiCo and Frito-Lay “have made, and continue to make, false and deceptive claims” in violation of state and federal law. Furthermore, lawyers for the plaintiffs contend, “Misbranded food is worthless as a matter of law, and purchasers of misbranded food are entitled to a refund of their purchase price.”

The Frito-Lay consumer fraud class action lawsuit is brought on behalf of all California consumers who, have purchased Frito-Lay potato chips labeled “0 grams Trans Fat” but which contained more than 13 grams of fat per 50 grams and purchased those chips within the past four years.

The lawsuit is seeking damages, restitution or disgorgement, as well as a cease and desist order banning the companies from selling their allegedly misbranded food products. (Just in case the collective consumer wisdom accumulated over the past 50 years fails to kick in?)

Raw Deal of the Day? Somewhere in Groupon’s tagline, the word beleaguered should appear. To say this company is beset with lawsuits would be an understatement. This week, it’s a securities class action alleging it released “materially false and misleading statements” regarding its financial results. The Groupon lawsuit seeks class-action status on behalf of shareholders who acquired Groupon shares between November 4, 2011 and March 30, 2012.

The lawsuit also claims Groupon’s revenue and growth were overstated, and the company “was not nearly resistant to competition as suggested by defendants.”

The fellow who filed the suit, Fan Zhang, claims that Groupon “failed to disclose negative trends” that would have affected its IPO pricing of 35 million shares of common stock at $20 per share.

Short version—Fan Zhang reportedly bought 3,000 shares of Groupon at an estimated $61,800 in February, then sold those shares in March at a $9,000 loss. Ouch! The lawsuit goes on to state “Groupon’s internal controls were so poor and inadequate that Groupon’s reported results were not reliable.”

The defendants include Groupon Chief Executive Andrew Mason and several banks that helped take the company public, including the lead IPO underwriters Credit Suisse, Goldman Sachs and Morgan Stanley. Um. None of those banks are strangers to lawsuits. Oh well, if you’re heading into a lawsuit like this, best to have some experienced people with you…

Top Settlements

And While we’re on the Subject of Groupon… they agreed to settle a consumer fraud class action this week to the tune of $85.million. The Groupon lawsuit, filed by disgruntled customers, (who else?) alleges that the expiration dates on Groupon coupons are illegal.

The proposed settlement applies to anyone who purchased Groupon vouchers before December 1, 2011. Under the terms of the settlement, the class members can either redeem the coupons beyond their expiration date or, if they are unable to do so, obtain a refund from the $8.5 million fund. Residents in some states can seek refunds only for vouchers sold after Aug. 22, 2010.

And, for the next three years, also as part of the settlement, Groupon has agreed not to sell more than 10 percent of its daily deals with an expiration date of less than 30 days after their issue date.

According to Bloomberg.com, the settlement pertains to no less than 17 lawsuits filed against the daily deals dealer, which were subsequently consolidated. The plaintiffs claimed Groupon and various retailers violate federal and state consumer protection laws with improper expiration dates and other provisions for the vouchers, such as the requirement that they be used in a single transaction.

“Groupon effectively creates a sense of urgency among consumers to quickly purchase ‘groupon’ gift certificates by offering ‘daily deals’ for a short amount of time,” according to the first lawsuit which was filed in 2011. “Consumers therefore feel pressured and are rushed into buying the gift certificates and unwittingly become subject to the onerous sales conditions.”

New Meaning to Graft? And then there’s Medtronic. What can we say about these guys—that’s good? Not much really. Although this news is good—for investors. The medical equipment company has agreed to pony up $85 million to settle investors’ claims regarding stock fraud.

The securities class action lawsuit claims that the investors were misled by company leaders on the off-label uses of the company’s highly controversial Medtronic Infuse bone graft. This product is troubling from a number of angles.

The Medtronic stock fraud settlement still awaits final documentation and court approval.

The lawsuit, filed in 2008 by the Minneapolis Firefighters Relief Association, claims that Medtronic’s officers and directors misled investors through a nearly decade-long campaign to illegally promote Infuse for uses not approved by the Food & Drug Administration.

Sales and future growth of the graft were “driven by misconduct that invited, and ultimately brought about, the scrutiny of federal regulators and an abrupt decline in sales,” according to a case brief by attorneys for the investors. As a result, revenues declined, so did the value of shares, which fell to $31.60 from $57.86.

And on that happy note—that’s a wrap. Happy Good Friday everyone.

Wait—is that a bunny on my lawn?

Week Adjourned: 3.11.2011

Top Class Actions

Oh those Groupon coupons—you know—the notice you find in your email every morning offering amazing deals on everything from restaurant meals to hotel stays to my personal favorite—half price pedicures… but are they too good to be true? Some people seem to think so, in fact they believe Groupon Inc. is violating Illinois state and federal laws that prohibit companies from selling gift certificates with expiration dates.   So, they have filed a federal class action lawsuit against the Chicago-based business this week.  

The suit was filed in the state of Minnesota on behalf of a Washington man who claims he bought a $20 Groupon for a one-month gym membership worth $305, only to have it expire before he could redeem it two months later. Umm…sound familiar?

Not surprisingly, the suit alleges that Groupon and its retail partners reap a substantial windfall from the sale of gift certificates that are not redeemed before expiration. The suit claims that Groupon “preys on unsuspecting consumers” by requiring users to agree to “boilerplate” terms and conditions that include a class action waiver. A class action waiver? Well, that certainly was effective.

Top Settlements

Credit Suisse Ponies Up for Subprime Mortgage Exposure…Credit Suisse Group AG agreed to pony-up $70 million this week, to end securities litigation over allegations that it ‘mislead investors about its subprime exposure and ability to limit losses.’ (My question, is there any financial institution out there that didn’t mislead the public over subprime mortgage exposure?) 

The settlement requires court approval, but if approved it will allow recovery for investors who bought Credit Suisse’s American depositary shares, and U.S. investors who bought Credit Suisse securities in Switzerland, between February 15, 2007 and April 14, 2008.

According to reports by Reuters, on February 19, 2008, Credit Suisse took a $2.85 billion write down and suspended some traders who overstated the value of some assets. Company shares fell 6.6 percent that day. Then on March 20, Credit Suisse said write downs would contribute to a surprise first-quarter loss, and its shares fell 6.4 percent. Surprise? I think the real surprise was getting caught.

This is an extraordinary happy Friday story! This week, Midland Funding LLS agreed to drop over 10,000 debt collection cases, totally some $10.2 million in debt that it currently holds against consumers in the state of Maryland. The agreement was approved by a judge this week. The suit was filed against Midland in 2009 by consumers in Maryland.

Bit of back story—Midland is a subsidiary of the publicly traded Encore Capital Group, which buys and collects consumer debt. The case alleges that Midland “prolonged, illegal, and systematic abuse of thousands of Maryland residents.” Plaintiffs further alleged that Midland was operating as a debt collector without a state license, in violation of state and federal law. Oops. That may explain the sudden bout of corporate good will.

As part of the settlement Midland also agreed not to refile lawsuits or to sell the accounts in which there are outstanding debts. However, Midland will be allowed to contact debtors for payment as long as it follows debt-collection laws. Oh yes—Midland is now licensed to collect debts. Convenient. 

Okee dokee—that’s it for this week. See you at the bar.