Month: August 2012

Week Adjourned: 8.31.12 – Enfamil, Dollar Rent A Car, Citigroup

The weekly wrap of top class action lawsuits and settlements for the week ending August 31, 2012. Top stories include an Enfamil lawsuit, Dollar Rent A Car Fraud Allegations and a Citigroup settlement.

Top Class Actions

Sounds too good to be true? You better believe it baby—and pardon the pun. This week, the makers of Enfamil infant formula got hit with a federal consumer fraud class action lawsuit over allegations they falsely advertise that Enfamil and other formulas contain prebiotics that provide immunity-related health benefits for babies and young children.

The Enfamil class action lawsuit, Shenique Route v. Mead Johnson Nutrition Company d/b/a Mead Johnson & Company, LLC, Case No. 12-cv-7350, U.S. District Court, Central District of California, claims that Mead Johnson & Co. mislabel the products and that they do not support a baby’s developing immune system as advertised.

The Enfamil lawsuit targets misleading statements made on the product labels for Enfamil Premium Newborn formula, Enfamil Premium Infant formula, Enfamil A.R. for Spit-Up Infant formula, and Enfagrow Premium Older Toddler Vanilla Milk Drink products. In particular, the lawsuit takes issue with the claims they contain “Natural Defense Dual Prebiotics” and that they “act like breast milk.”

Specifically, the class action lawsuit states: “Enfamil’s ‘Natural Defense Dual Prebiotics’ do not provide health benefits as represented and certainly are not ‘proven’ to do so. Moreover, there is not competent and reliable scientific evidence supporting the Misrepresentation, and any purported link between immune response and prebiotics in the Mislabeled Products is entirely speculative.”

The lawsuit claims, “experts agree that breast milk is immeasurably superior to baby formula in terms of infant nutrition and other health benefits. Therefore, it is misleading for Defendant to advertise the Mislabeled Products as similar to breast milk when formula cannot provide anywhere near the level of benefits provided by breast milk.”

The Enfamil class action lawsuit is brought on behalf of all U.S. consumers who purchased the mislabeled Enfamil products listed above for personal or household use. It is seeking damages, restitution and more for several alleged violations, including violation of California’s False Advertising Law, Unfair Competition Law, and breach of express and implied warranties.

Being taken for a ride?…Dollar Rent A Car is facing a federal consumer fraud class action lawsuit over allegations that the car rental company cheated customers out of millions of dollars by signing them up for insurance and other services they declined. Oh, the insurance—you know—that endless fine print that needs to be signed in less than 3 seconds—i.e. without reading.

The Dollar Rent A Car lawsuit, entitled Sandra McKinnon v. Dollar Thrifty Automotive Group, Inc. d/b/a Dollar Rent a Car, et al., Case No. 12-cv-4457, claims: “Over the last four years Dollar has implemented a systematic program nationwide through which its employees and agents illegally dupe customers into signing up for collision damage waiver (‘CDW’), car insurance and other added services that consumers have specifically declined. This is not an isolated incident with one consumer, but rather a systematic pattern of conduct that has occurred at a number of Dollar locations located throughout the United States.”

“Dollar has received multiple complaints about these issues but incentivizes its employees to make such sales, even by illegal means. If employees fail to obtain an average 30 per day upsales of additional options for three months they may be terminated and not eligible for unemployment,” the lawsuit claims. “Employees are thus incentivized to take advantage of the customers’ irritation, long lines, and misleading or high pressure sales tactics, by just telling them to tap certain lines to decline coverage when it may have the opposite result, or simply forge their signature.”

The class action lawsuit is brought on behalf of Dollar customers who paid for CDW, insurance and other products from Dollar that they specifically declined or did not authorize during the past four years. It is seeking actual, compensatory, statutory and exemplary damages and an injunction barring Dollar from continuing this alleged scheme.

Top Settlements

And the subprime saga continues. This week Citigroup agreed to a securities class action settlement involving a $590 million payout to shareholders who alleged they had been misled about the bank’s exposure to subprime mortgage debt before the financial crisis.

Filed in November 2007, the lawsuit contends that Citigroup together with some of its former senior executives and directors failed to disclose the bank’s huge holdings in securities known as collateralized debt obligations (CDOs) that were tied to mortgage securities until November 2007, when it took a multibillion-dollar write-down on the CDOs. Citigroup later wrote down the CDOs by tens of billions of dollars more.

According to the lawsuit, Citigroup had previously tried to hide the deteriorating value of its holdings through improper accounting practices. “Citigroup used inflated, unreliable and unsupportable marks to keep its CDO-related quasi-Ponzi scheme alive and to give the appearance of a healthy asset base,” the lawsuit states.

The plaintiffs included pension funds in Colorado, Ohio and Illinois. The lawsuit was led by former employees and directors of Automated Trading Desk who received Citigroup shares when they sold the electronic trading firm to the bank in July 2007. The proposed settlement, which was given preliminary approval by Judge Sidney Stein of the U.S. District Court in New York, covers investors who bought Citi shares from Feb. 26, 2007, through April 18, 2008. Shares of Citigroup traded as high as $55 in the summer of 2007. By spring of 2008, its stock price had tumbled by half.

Ok—that’s it for this week—see you at the bar!

 

Week Adjourned: 8.24.12 – Hotel Deals, Parkay, ACS

The weekly wrap of top class action lawsuits and settlements for the week ending August 24, 2012. Top stories include online hotel reservations, Parkay margarine and ACS overtime.

Top Class Actions

And you thought you were getting a hotel deal? Consumers (that would be you and me) have filed an antitrust class action lawsuit against several online travel sites including Expedia, Inc, Travelocity, Booking.com, a subsidiary of Priceline.com, and the nation’s largest hotel operators including Hilton Hotel, Sheraton Hotels and Resorts, a subsidiary of Starwood Hotels and Resorts Worldwide, and Marriott International, Inc, claiming the two groups conspired to use their market dominance to fix prices on hotel rooms across the country.

The hotel price fixing class action lawsuit, filed on behalf of hotel room purchasers nationally, alleges that the online hotel retailers conspired with major hotel defendants to secretly create and enforce Resale Price Maintenance (RPM) agreements to thwart competition on hotel room prices, especially from price-cutting online retailers.

The complaint contends that the defendants’ unlawful conduct caused plaintiffs and other class members to overpay for their purchases of room reservations and seeks to represent all consumers who have purchased hotel rooms from the online retailer defendants.

According to the complaint, online travel sites account for as much as 50 percent of hotel bookings in the United States and traditionally operate under one of two models. Under the agency model, online retailers charge a service fee to a hotel operator on a transaction basis for booking customers, and that customer pays the hotel directly at a rate set by the hotel.

Under the merchant model, online retailers purchase rooms outright at a negotiated rate from the hotel, and then resell the rooms to consumers at a higher price, increasing or decreasing margins depending on competitive influences.

More recently, a new model has emerged that has cut into the traditional online retailers’ profits, the complaint contends, and has led to the creation of the RPM agreements. In this model, known as the Wholesale Model, third-party companies buy up unsold blocks of rooms at the last-minute and resell them to smaller price-cutting online retailers, eroding the profits of the traditional online retailers.

Knowing hotels cannot afford to lose access to online distribution networks, online retailers allegedly devised an illegal scheme, extracting agreements from the hotels that online retailers may not sell rooms below the RPM rates—even through the wholesale model—on penalty of termination and as a condition of doing business through the online retailers, the lawsuit contends.

The complaint states that the online retailer defendants often use terms like “best price guarantee” to create the impression of a competitive market, but in truth these are nothing more than a cover for the price-fixing conspiracy. The suit alleges that the defendants’ activities violate both the federal antitrust laws, as well as California’s Cartwright Act.

What’s the fat content in Parkay Spray Butter advertising? Higher than indicated, apparently…ConAgra Foods got hit with a consumer fraud class action lawsuit over allegations they intentionally misrepresenting the contents of Parkay Spray butter substitute.

Nebraska resident Pamela Trewhitt filed the Parkay lawsuit claiming that ConAgra falsely marketed the butter substitute as “fat-free” and “calorie-free,” even though it contains 832 calories and 93 grams of fat per 8-oz bottle. The lawsuit also claims that the nutrition information on the label underestimates the amount of fat and calories in the products by using artificially small serving sizes of one to five sprays.

“Defendant knew or should have known that its product was mislabeled and engendered confusion among consumers,” the lawsuit states. It cites numerous Internet complaints about the spray by consumers who couldn’t figure out why they weren’t losing weight until they discovered that Parkay Spray was the culprit. “I was literally taking the top of the ‘fat and calorie free butter’ spray and pouring it on my carefully steamed veggies when I found out that a bottle of that stuff is 90 fat grams. I was going through two bottles a week, and working out and getting fat and unhealthy,” one plaintiff alleges.

The Parkay lawsuit accuses ConAgra Foods of violating the Nebraska Consumer Protection Act, intentional and negligent misrepresentation, reaping ill-gotten profits, and fraud. Plaintiffs are seeking more than $5 million in damages as well as an injunction barring ConAgra from labeling Parkay Spray as fat-free and calorie-free.

Top Settlements

Now here’s a happy ending…Workers employed at an Oregon call center by Affiliated Computer Services Inc, have won a $4.5 million settlement in a wage and hour class action lawsuit. The lawsuit alleged the employees were not properly paid all minimum and overtime wages for all the hours they worked.

Filed in 2009, the lawsuit, entitled Bell, et al. v. Affiliated Computer Services, claims that ACS violated federal and state wage and overtime laws by failing to pay employees for all hours worked, all overtime hours and failing to timely pay final wages to employees at the end of employment.

Eligible class members of the ACS settlement include all employees of ACS who worked as a phone agent or representative in an Oregon call center for the “Retail, Travel, and Insurance,” “BPS,” or “Telecommunication and technology” business groups from April 2, 2005 through April 25, 2012.

The settlement has three classes, under which members may make a claim. They are:

Subclass A: Class Members who were employed by ACS in Oregon as of April 25, 2012 will receive a Settlement Award in the maximum amount of $125, not to exceed 2,000 individuals.

Subclass B: Class Members who were employed by ACS in Oregon and whose employment ended at any time between November 6, 2006 and April 24, 2012 will receive a Settlement Award in the maximum amount of $260, not to exceed 13,000 individuals.

Subclass C: Class Members who were employed by ACS and whose employment ended at any time between April 2, 2005 and November 5, 2006 will receive a Settlement Award in the maximum amount of $50, not to exceed 5,000 individuals.

In order to receive a Settlement Award from the ACS settlement class members must submit a valid Claim Form to the Settlement Administrator postmarked or faxed on or before September 1, 2012. Claim Forms have been mailed to Class Members.

A Final Approval Hearing for the Affiliated Computer Services Class Action Lawsuit Settlement will be held October 22, 2012.

Ok—that’s it for this week—see you at the pool bar!

Week Adjourned: 8.17.12 – Jones Lang Lasalle, Doctor Discounts, Avaulta Mesh

The weekly wrap of top class action lawsuits and settlements for the week ending August 17, 2012.

Top Class Actions

More unpaid overtime lawsuits this week – and top of the pile is a potential class action lawsuit filed against commercial real estate brokerage giant Jones Lang Lasalle.

The unpaid overtime class action lawsuit was filed by maintenance worker and lead plaintiff Larry Jackson who alleges he was incorrectly classified as exempt from overtime. In January, Jones Lang Lasalle allegedly reclassified its maintenance workers from salary to hourly employees, according to a lawsuit. Jackson claims that as a result, the refuses to pay him overtime after 40 hours a week.

“Since plaintiff has been re-classified, there have been multiple instances where he has not been paid for all of his overtime hours,” the lawsuit states. “Plaintiff’s manager has either doctored his time card to show that plaintiff only worked 40 hours or outright refused to pay plaintiff for his overtime hours.”

Jackson seeks actual and punitive damages for violations of the Fair Labor Standards Act. He is represented by J. Derek Braziel with Lee Braziel in Dallas.

Top Settlements

It’s settled but not over… for Christine Scott, who was awarded $5.5 in settlement of her Avaulta lawsuit. Scott filed the lawsuit against C.R. Bard over a transvaginal mesh implantation.

Scott, just 53, claims the problems stem from the Bard Avaulta mesh implant she was provided with in 2008 to treat occasional urinary incontinence. The TVM lawsuit alleged Scott now suffers from chronic pain and can no longer enjoy intercourse with her husband as a result of a transvaginal mesh implant. The case is Scott v. Kannappan, S-1500-CV-266034-WDE, Superior Court for Kern County, California (Bakersfield).

Scott was given the Avaulta Plus Biosynthetic Support System, a product C.R. Bard no longer sells in the US. It remains available elsewhere in the world. Scott launched her Avaulta lawsuit in January 2009 upon learning the previous October that the US Food and Drug Administration (FDA) had issued a warning to doctors pertaining to “rare” but “serious” complications originating with the mesh in some patients.

Scott testified that for five months she could only urinate with a catheter. It has also been discovered the mesh has eroded within her body, breaking apart and becoming intertwined with her organs and surrounding tissue. The mesh is causing ongoing internal lacerations, infection and abscesses.

The Bard mesh is also protruding through and into her vagina, making intercourse impossible. And because the mesh has become so intertwined with her vital pelvic organs and other tissue, it can never be safely removed.

The problems with Bard Avaulta have resulted in eight subsequent surgeries and nine additional procedures related to the internal damage wrought by the mesh product. The experience has also resulted in the need for ongoing psychiatric care. At trial, her psychologist testified the plaintiff would require ongoing therapy for the remainder of her life.

Doctor discount program? In what parallel universe does that happen? Certainly not ours, is the answer the courts handed down this week. Final approval of a consumer fraud class action settlement in Smith, et al v. Collinsworth, et al. has been obtained on behalf of approximately 48,000 consumers who were sold a limited benefit health insurance policy and a membership in a doctor discount program marketed as providing coverage that was as good or better than major medical, but who found out otherwise when they got sick and were saddled with large unpaid bills.

According to the Circuit Court of Saline County Arkansas, which approved the settlement, “the value of the settlement exceeds $40 million,” plus it “provides … injunctive relief designed to address the gravamen of the claims at issue in this Action.” The doctor discount program lawsuit has been in progress for seven years.

The lawsuit alleged that the health insurer and the doctor discount network, through their shared sales force, misrepresented the combination of a limited benefits health insurance policy and the doctor discount program as providing coverage that was equal to or better than major medical policies issued by companies such as Blue Cross Blue Shield. In fact the combination of products provided only a fraction of what would have been paid by major medical policy and left class members with crippling bills. The litigation class was certified in September 2009 by the Circuit Court of Saline County, Arkansas, and class certification was affirmed by the Arkansas Supreme Court in December 2010 in United Am. Ins. v. Smith (see 2010 Ark. 468 (2010)).

Ok – that’s it for this week – see you at the pool bar!

Week Adjourned: 8.3.12 – Zynga, JPMorgan, Netflix

The weekly wrap on top class action lawsuits and settlements for the week ending August 3, 2012. Top class action lawsuits include Zynga, JPMorgan and Netflix.

Top Class Action Lawsuits

Ladies and Gentlemen…Check your Portfolios! A lot of securities litigation this week—and at the top of the list is the Zynga securities class action. Not familiar with Zynga? Well, either you’ve been under a rock or you simply haven’t gotten sucked up into their addiction-creating game: FarmVille. Ask your kids…

The Zynga class action lawsuit was filed in the U.S. District Court for the Northern District of California (Case No. 12-cv-124007) on behalf of purchasers of the common stock of Zynga, Inc. (“Zynga” or the “Company”) between February 28, 2012 and July 25, 2012, inclusive (the “Class Period”) and includes those investors who acquired Zynga stock pursuant to and/or traceable to Zynga’s secondary stock offering on April 3, 2012. No class has yet been certified in the above action.

According to the Complaint, Zynga completed a secondary stock offering on April 3, 2012 which enabled Zynga insiders to sell over 43 million shares of their Zynga stock at a price of $12.00 per share for proceeds of approximately $516 million. On July 25, 2012, Zynga announced its financial results for the second quarter of 2012, reporting substantially lower than expected earnings and lowering its 2012 guidance. Following this announcement, the Company’s common stock plummeted 40% in value down to $2.97 per share.

The Complaint asserts violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10(b)(5) promulgated thereunder, against Zynga, certain of its officers and directors, and those who served as underwriters in connection with Zynga’s secondary stock offering. The Complaint alleges that the defendants issued false and misleading statements and omissions, including a false and misleading Registration Statement and Prospectus in connection with Zynga’s secondary offering, about Zynga’s business, operations, and growth prospects.

Top Settlements

More from the Inflated Credit Card Rates Story (the one that never ends…) This week JPMorgan Chase & Co. reached a $100 million settlement of a credit card rate class action lawsuit in which JPMorgan was accused of improperly increasing its credit card minimum payments as a means to generate higher fees. (Could you recite these charges by heart… ya think?)

Filed in 2009, the Chase credit card lawsuit ( re: Chase Bank USA NA “Check Loan” Contract Litigation, Case No. 9-md-2032, U.S. District Court, Northern District of California) alleged the bank decided in late 2008 and 2009 to boost minimum monthly payments for thousands of cardholders from 2 percent to 5 percent of account balances. Cardholders alleged that JPMorgan induced them to transfer credit card balances from other lenders to Chase card accounts, where the bank promised to consolidate their debt into loans with “fixed” interest rates until the balance were paid off.

However, the lawsuit claims JPMorgan increased minimum payments to force credit card holders to either accept higher rates in order to keep the lower payment, to make more late payments and trigger more fees or a 29.99% penalty interest rate, or to close underperforming accounts. This manipulation resulted in millions of dollars in additional fee income from thousands of new cardholders.

According to court documents, lawyers for the cardholders claim that the $100 million class action settlement is 45% of the $220 million in up-front transaction fees that their clients paid for the promotional loans. They called the class action lawsuit settlement an “excellent result” for cardholders, who would recover “a substantial portion of the transaction fees they paid.” The Chase credit card class action lawsuit settlement awaits final court approval.

Netflix Privacy Fix. Netflix made headlines this week due to a proposed settlement  in a privacy class action lawsuit that claims the movie rental company unlawfully kept and disclosed customer information, including records on the movies and TV shows its customers viewed. Netflix denies that it has done anything wrong. Of course.

Here are the straight goods: Any current or former Netflix subscriber as of July 5, 2012 and lives in the U.S. or its territories is included in the Settlement.

The Settlement has been preliminarily approved by the United States District Court for the Northern District of California. Netflix has agreed to change its data retention practices so that it separates (known as “decoupling”) Entertainment Content Viewing History (that is, movies and TV shows that someone watched) from identification information for those subscribers who have not been a Netflix for at least 365 days, with some exceptions.

In addition, Netflix will pay $9 million into a Settlement Fund, from which it will make donations to Court-approved not-for-profit organizations, institutions, or programs that educate users, regulators, and enterprises regarding issues relating to protection of privacy, identity, and personal information through user control, pay notice and settlement administration expenses, attorneys’ fees of up to $2.25 million plus up to $25,000 in expenses, and a total incentive award of $30,000 to the Named Plaintiffs (a total of six individuals).

Proposals from potential donation recipients will be sought, and, after consideration, recommendations will be made to the Court. A list of the proposed donation recipients will be posted on the website. Class Members who do nothing will remain in the Settlement and their rights will be affected. If they do not want to be included, they must exclude themselves by November 14, 2012. If they exclude themselves they keep the right to sue Netflix about the claims in this lawsuit.

Class Members who remain in the Settlement can object to it by November 14, 2012.

The Court will hold a hearing on December 5, 2012 to consider any objections, whether to approve the Settlement, award attorneys’ fees, and incentive award. Any Class Member can appear at the hearing, but they don’t have to. They can hire an attorney at their own expense to appear or speak for them at the hearing.

Ok folks –it’s time for poolside libations! See you—well, you know where.