Category: Emerging Issues

Top Class Action Lawsuits

Security Co. Securing 20% off Top of Employee Pay Advances? Alpha Centurion security company is facing a consumer fraud class action lawsuit filed by a former employee who alleges the company violated federal law by levying a large finance charge on workers who request an advance on their pay. According to the lawsuit, defendants are unlawfully imposing a 20 percent finance charge on employees’ pay advances. Yikes!

Filed by Jonathan J. DiBello, in the US District Court in Philadelphia, the lawsuit names Alpha Centurion, which provides security guards to private and governmental entities, as well as the company’s owner and chief executive, Joanna Small, and its chief of operations, Patrick A. Panetta, who are husband and wife, as defendants. DiBello, worked for Alpha Centurion from December 2006, first as a security guard and later as a field supervisor.

According to the Alpha Centurion lawsuit, the defendant pays its employees once every two weeks. However, it has a policy of allowing its employees to obtain advances on their wages but only if the employee agrees to a 20 percent finance charge.

In the lawsuit DiBello questions whether a pay advance fee is usurious interest, whether liability arises under the Racketeer Influenced Corrupt Organizations Act for the collection of an unlawful debt, whether the company is liable for failing to make material disclosures under the Truth-in-Lending Act, and whether Alpha Centurion is liable under the Pennsylvania Wage Payment and Collection Law for failing to pay employees their full wages.

According to the lawsuit, on an annualized basis, the 20 percent finance charge equates to an interest rate of 1,042.85 percent A.P.R. on a seven-day loan or 521.42 percent on a 14-day loan.

DiBello paid the 20 percent finance charge on every advance he took, according to the lawsuit, which was automatically deducted from his paycheck. Over a one-year period, provided that DiBello took a $200 advance each pay period, the plaintiff would have paid an aggregate finance charge of $1,040, nearly all of which would be usurious interest, the complaint alleges.

DiBello seeks to represent a class of plaintiffs consisting of all present and former Alpha Centurion employees who took pay advances within four years prior to the filing of the civil action.

The company is believed to regularly employ between 100 and 200 workers, many of whom have apparently taken pay advances. “A class action is a superior means to fairly and efficiently adjudicate this dispute,” the suit reads. “Without a class action it is unlikely anyone would ever obtain a recovery.”

Alpha Centurion has made “usurious payday advances” for years, the suit states, although to date no employee has ever brought an individual action to recover the interest charges. No kidding. Even the big banks wouldn’t try for that. Although…

Berry Bad? OK—you’re not going mad—this is the second food poisoning class action filed against Townsend Farms Mixed Berries. The class action lawsuit was filed against an Oregon-based fruit grower this month, alleging the plaintiff had to seek medical care after consuming a frozen berry mix tied to hepatitis A outbreaks in Colorado and other western states.

This mixed berries lawsuit, was filed by Suzanne Faber, who alleges she sought a hepatitis A vaccination after consuming The Townsend Farms Organic Antioxidant Blend of berries she purchased from a Costco at 5050 N. Nevada Ave. in Colorado Springs. She does not specify whether she contracted hepatitis A. The mixed berries have since been removed from Costco stores.

The Townsend Farms Organic Antioxidant Blend was responsible for sickening 161 people in Colorado, New Mexico, Nevada, Arizona, Utah, Hawaii, Washington, and California, according to a September 13 public health notice by the Centers for Disease Control and Prevention (CDC).

The mixed berries and pomegranate seeds were sold at Costco stores beginning in early 2013 and subsequently removed in May, when the CDC announced the finding of Hepatitis A contamination. Costco also issued a product recall and warned customers against consuming the berries.

Hepatitis A is a chronic liver disease that causes fatigue, nausea, vomiting, and a yellowing of the eyes and skin, among other symptoms. The disease is associated with foods tainted with fecal matter, and the illness can last from several weeks to several months. In some cases hepatitis A can be fatal.

According to the CDC, 70 consumers required hospitalization after contracting the disease. No deaths were reported.

Purely Pomegranate Inc, is also named as a defendant in the lawsuit, as the Hepatitis A contamination was linked to a shipment of pomegranate seeds Townsend Farms received from Purely Pomegranate, which had, in turn, been imported from a producer in Turkey.

The class seeks to represent anyone who ate the tainted berries and contracted hepatitis A or underwent testing or vaccination for the disease. People who came into close contact with sickened consumers are also eligible.

Top Settlements

Cough it up Boys. A $39 million settlement has been reached in the gender bias class action lawsuit pending against Merrill Lynch, now owned by Bank of America Corp (BoFA). The lawsuit was brought by female brokers who claimed they were paid less than men and deprived of handling their fair share of lucrative accounts. Approximately 4,800 current and former female financial advisers and trainees at Bank of America and Merrill are eligible for this settlement.

According to a report by Reuters.com, the gender bias class action settlement was disclosed less than two weeks after news that the bank reached a $160 million settlement with hundreds of black Merrill Lynch & Co. brokers who alleged racial bias in pay, promotions and how large accounts were allocated.

The lawsuit, entitled The gender case is Calibuso et al v. Bank of America Corp et al, U.S. District Court, Eastern District of New York, No. 10-01413, alleged that female financial advisers and trainees were intentionally discriminated against by Bank of America and Merrill because the defendants favored male brokers when awarding pay, allocating client accounts and referrals, and providing professional and marketing support.

According to court papers, such practices created a “cumulative advantage” effect that perpetuated and widened earnings disparities by gender. Bank of America was also accused of retaliating against female brokers who complained of bias.

Under the terms of the settlement agreement, BoFA will retain an independent monitor to oversee improvements to its practices. Additionally, it must hire a consultant to study how it “teams” brokers and how its teaming practices affect the allocation of accounts.

Bank of America is based in Charlotte, North Carolina, and said it ended June with nearly 15,800 financial advisers.

$300 Million Happy Ending. Yup—$300 million is the proposed force placed insurance settlement amount in a federal class action lawsuit pending against JPMorgan Chase & Co, and Assurant. The lawsuit alleged the defendants were overcharging homeowners for forced-placed insurance.

Under investigation by attorneys representing the plaintiffs since 2010, the lawsuit was filed in June 2012 on behalf of borrowers with forced place insurance policies as of June 2008. The lawsuit alleged the banking and insurance firms enriched themselves by more than $1 billion over five years, by forcing insurance on homeowners who declined to purchase insurance themselves.

If approved, the settlement would see Chase and Assurant pay 12.5 percent cash refunds to class members who paid the premiums of the force placed insurance and a 12.5 percent credit to class members who were charged the premiums but never paid them. This applies even if the borrowers already lost their homes.

Additionally, Chase has agreed to stop allowing its insurance agents to collect commissions from making force-placed insurance policies.

Well Done!

Ok Folks, That’s all for this week. Have a good one—see you at the bar!