Emerging Issues

Week Adjourned: 10.15.10

Top Class Actions

Equality? What equality! Where’s Gloria? A gender discrimination lawsuit was filed against Citigroup this week, brought by five former directors and analysts and one current employee.

Interestingly, Bloomberg crunched the numbers and found out that Citigroup’s female finance managers, which include bank tellers as well as executives, earned 63.9 cents for every dollar of income men earned in 2000, based on median salaries. Bloomberg analyzed Government Accountability Office (GAO) statistics to produce its report. And, they also found that in 2007, the last year for which data are available, that figure was down—incredibly—58.8 cents. Not only is that number utterly depressing, but it’s going in the wrong direction!

The suit, filed on behalf of women at job levels from analyst to managing director, alleges that Citigroup is an “outdated boys club” and claims “systematic and pervasive discrimination and retaliation” in decisions involving compensation, promotion and termination.

Top Settlements

Beat Finally Does Go On… Finally—unbelievably, a settlement of the lawsuits against Medtronic over defective Sprint Fidelis leads.

The leads were recalled three years ago in 2007, due to the alleged defect that made the Continue reading “Week Adjourned: 10.15.10”

Week Adjourned: 9.24.10

Top Class Actions

Don’t Put that Mortgage in Reverse. If there’s any possible way to make a buck off consumers, you better believe the banks will figure it out. It seems there’s just no end to the stuff they get up to. Case in point, a Seattle mortgage lender, The Seattle Mortgage Co, a unit of Seattle Bank, is being sued in California over alleged illegal lending practices.

Here’s the deal, the suit focuses on fees paid to brokers and charges levelled against borrowers in reverse mortgage transactions.

FYI—a reverse mortgage, also known as a home equity conversion mortgage, is available only to people over the age of 62 years, and is heavily regulated by the department of Housing and Urban Development (HUD)—but maybe not heavily enough.

While it is the intent of the regulation to ensure that mortgage brokers provide their customers with the best financial advice based on the customer’s needs, it is possible that the brokers may have been influenced by the fees they receive from the banks selling the loan products. In other words, it may have been in the brokers’ and bank’s best interests for your grandmother to take out a reverse mortgage—but not necessarily hers.

The class is estimated to affect as many as 7,800 seniors, and if the court finds in favor of the plaintiffs, reimbursement of costs and damages may total as much as $56 million, the lead attorney representing the plaintiffs has said. And that’s just one state. Similar practices may be going in on other states… but that remains to be seen.

Top Settlements

Payday Loan Violations Get Settled. And then there’s the pay day cash advance market… Continue reading “Week Adjourned: 9.24.10”

Week Adjourned: 9.17.10

Top Class Actions

Wright County Wrong Eggs. A class action lawsuit was filed this week against Wright County Egg and Hillandale Farms. This is the not so small footnote to the largest recall of contaminated eggs in recent history.

In fact, the lawyers who filed the class action believe that there may be as many as 76,000 class members, given that a recently enacted Egg Safety Rule states that for every case reported there may be 38 cases that go unreported. The FDA reports that at least 550 million eggs have been recalled so far. That’s a lot of scrambled eggs!

Wondering if you could be a class member? You qualify, apparently, if you purchased eggs from Wright County Egg and Hillandale Farms from April 9, 2010 (Julian date 99) to August 21, 2010 (Julian date 230). Part of what the lawsuit is seeking is reimbursement for the purchasers.

But, the lawsuit also seeks recoveries on behalf of all consumers who died or were injured from salmonella enteriditis contaminated eggs. According to the press release, “The FDA reports that the salmonella infected eggs has sickened nearly 2,000 people… Infections from salmonella enteriditis can spread into the bloodstream, then to other areas of the body, such as the bone marrow or the meningeal linings of the brain. The infections can lead to severe and fatal injuries, including endocarditis. In addition, class members who recovered from salmonellosis may later develop recurring joint pain, reactive arthritis, and Reiter’s syndrome.”

Better check those eggs!

Top Settlements

Kodak Moment? Eastman Kodak has finally reached a settlement in the race discrimination class action brought against it by African American employees.

The settlement also reportedly resolves race discrimination claims made in a related case, Continue reading “Week Adjourned: 9.17.10”

Week Adjourned: 9.10.10

Top Class Actions

Veterans PTSD. An announcement was issued this week, about an extension of time for veterans to join or opt in to a class action lawsuit over Post Traumatic Stress Disorder (PTSD). Given that tens of thousands of troops deployed to Iraq are ending their tours, the timing of this couldn’t be better.

The lawsuit that was brought on behalf of veterans who served on active duty in the U.S. Army, Navy, Marine Corps, or Air Force and were found by a Physical Evaluation Board (“PEB”) to be unfit for continued service due, at least in part, to the individual’s PTSD, were assigned a disability rating for PTSD of less than 50%, and, as a result, were released, separated, retired, or discharged from active duty on or after December 17, 2002 and before October 14, 2008 (regardless whether such release, separation, retirement, or discharge resulted in the individual’s placement on the Temporary Disability Retirement List), has been extended to November 10, 2010, according to an Order entered by federal Judge George W. Miller.

Under the Rules of the United States Court of Federal Claims, the Court has reportedly allowed the class action lawsuit to be a class action on behalf of the following individuals who choose to opt in:

All individuals who (a) served on active duty in the U.S. Army, Navy,Marine Corps, or Air Force, (b) were found by a Physical Evaluation Board to be unfit for continued service due, Continue reading “Week Adjourned: 9.10.10”

Week Adjourned: 8.6.10

Top Class Actions

Could Say He was Over his Overdraft Fees. I think these guys deserve a Business As Usual, As Usual award. Commerce Bancshares, a Kansas City-based financial institution operating simply as Commerce Bank in the state of Missouri is being sued by a client who claims the company’s bank overdraft fees violate state law.

The plaintiff, Harold J. Joseph Jr., has accused the banking chain of manipulating the sequence of debit card purchases in an attempt to maximize the number and size of overdraft fees that they can impose.

Any of this sound familiar? Excessive bank overdraft fees lawsuits have been filed and/or settled against a variety of banks, including Wells Fargo, Bank of America, M&T Bank and Wachovia. The lawsuits allege that banks charge excessive overdraft fees when customers’ accounts go into overdraft. They further allege that the banks use a number of unethical practices to push their accounts into overdraft, such as misrepresenting customers’ account balances and reordering debits and credits to accounts.

New regulations that will take effect by mid-August seek to rectify this problem by making overdraft protection an opt-in service and by regulating the terms of the action.

FYI: Information about Commerce Bancshares second quarter earnings were posted in a press release July 21. Those of you hit with excessive overdraft fees may find the numbers interesting…”Commerce Continue reading “Week Adjourned: 8.6.10”

Week Adjourned: 7.9.10

Top Class Actions

And the Winner is… It’s nice to know that in these tumultuous times wracked with financial uncertainty that some things remain constant. That we can rely on our institutions to proudly defend their position as looking out for our best interests, when in fact they are looking out for their own. Business as usual. As usual.

This week, the Business as Usual unofficial award goes to City National Bank of Charleston WV. They are facing a class action lawsuit based on allegations that they manipulate debit card transactions so as to maximize overdraft fees.

Now, I realize that this practice is hardly original practice, but it’s reassuring to see that smaller institutions are taking up the larger banks business strategies, following their lead so-to-speak. After all, shareholders may benefit.

So, I’m going to assume that the fellow who filed the lawsuit is not a shareholder. Correct me if I’m wrong. Here’s his beef:

“The plaintiff alleges, among other things, that City National: (a) engages in a systematic policy of re-ordering debit card transactions from highest dollar amount to lowest dollar Continue reading “Week Adjourned: 7.9.10”

Week Adjourned: 6.4.10

Top Class Actions

Rehabilitating your disability insurance. Sun Life Assurance got hit with a potential class action this week—filed by a disgruntled (and rightly so) client (or is there another, more accurate term that could be used here…) who alleges that the company denied her disability claim on the lack of something called discretionary proof. Sounds dodgy to me.

Discretionary proof, you ask? According to information issued by the law firm handling the suit, discretionary proof clauses basically amount to a ‘get out of paying the insurance claim’ loophole. But don’t take my word for it. This from the statement on the class action:

“Discretionary proof clauses have been the subject of intense scrutiny by state regulators and insurance commissioners. The clauses provide that an insurer will pay a disability claim only if it is “satisfied” with the policyholder’s proof. Many insured persons claim that despite extensive proof of medical disability, including surgical reports, treatment records, and doctors’ affidavits, Sun Life and other insurers are “never satisfied” leaving them without disability coverage.”

Why am I not surprised by this?

Apparently, on June 1, 2007, the State of Michigan Insurance Commissioner outlawed discretionary proof clauses in all disability contracts delivered within the state. The insurance industry challenged the Michigan regulation, and on March 18, 2009, a federal appeals court decision found that the Michigan regulation was valid and lawful.

I don’t know about you—but I’m checking the fine print on my policy…

Top Settlements

No Eclipsing that Halitosis. Now—here’s a big win for all you gum chewers out there. Wrigley has agreed a $6M settlement in a class action suit over Eclipse gum.

Before you get too excited—the amount each class member will receive is about enough to buy another couple of packs of gum. The settlement works out to about $10 per person. But the lawyers Continue reading “Week Adjourned: 6.4.10”

Week Adjourned: 2.27.10

Top Class Actions

Lacking Phone Smarts at Verizon. For those of us who do not have ‘smart phones’ but are getting dinged for data service, you may be interested to know that Verizon got hit with a class action this week over this very issue.

According to the press release on the lawsuit, Verizon charged $1.99 at a time for data service people were not using—or should that be could not use. So the lawsuit is seeking to reimburse folks who got dinged. There’s no doubt about it, at the rate we use our cell phones, $1.99 could certainly add up. But this suit also begs the larger question—do you know if your phone is smart? (mine certainly isn’t!)

Top Settlements

Lawsuit Stops Bouncing Around. A 30-year old man from Chicago who was chronically injured on a mini-trampoline when he was in the eighth grade, has finally received justice in the form of a $14.7 million settlement.

Ryan Murray, who is quadriplegic as a result of the accident, sued the Chicago Board of Education. After several years of wrangling—you can sue a government entity—no you can’t—yes you can if the action that led to the injury was intentional… a decision was finally reached: Yes—he could sue and he would have his day in court.

Fortunately, however, Mr. Murray will actually be able to get on with his life as the whole thing has been settled—out of court. Talk about stalling tactics.

Nothing Like Paying a Premium. Boy, does it pay to have insurance. Remember Moneygram? No? MoneyGram International was the subject of a securities class action in May of last year, over allegations that it committed securities fraud stemming from $1.6 billion in losses it suffered on subprime and other risky asset-backed securities in 2007 and 2008.

I can see how this would have gotten lost in the noise of all the other similar lawsuits last year…Anyway, I digress.

The lawsuit was settled this week for a cool $80 million—$60 million of which will be paid by its insurance company to the shareholders who took the losses. While this is nowhere near the value of the assets lost, the deal certainly puts the importance of insurance in a entirely new light…

Reports in the media state that the three directors of Moneygram who were on the board when everything went sideways, remain in their seats but will not seek re-election. That’s big of them.

I wonder how many of these types of settlements insurance companies can afford to pay out on…

That’s it for this week—see you at the Bar!

Week Adjourned: 2.19.10

Top Class Actions

The Internet’s A-Buzz. Over Google Buzz—specifically a class action lawsuit filed by a Harvard Law student, Eva Hibnick, who is alleging that her contacts and contact information were made public by Google when it introduced Buzz, without her authorization.

Here, here I say. I also logged onto my email the morning Google Buzz was launched to find a list of my contacts displayed by the new social networking program. What? Who asked you to do that—was my first thought. It was completely inappropriate—not to mention unnecessary.

As Ms. Hibnick so appropriately put it—she was “shocked to learn that my email contacts may have been shared with others without my knowledge or consent. I signed up for a private email service, not a social networking site.”

The lawsuit seeks to enjoin Google from continuing to operate Buzz without appropriate internet privacy safeguards and it seeks damages, including statutory damages of $100 per day per user.

Enjoin, by the way—in legal terms—means to direct, require, command, or admonish. Personally, I favor command.

Top Settlements

Apropos for Black History Month… History was made on Thursday—when a settlement over a long- Continue reading “Week Adjourned: 2.19.10”

Week Adjourned: 1.22.10

Top Class Actions

Killing Me Softly with his Song…killing me softly… Sorry. Just lost in time there…along with this one. I don’t know if this is the longest class action filed in recent history—but it certainly does cover a significant period of time—36 years, if my math is correct. It was filed against The Variable Annuity Life Insurance Company (“VALIC”) who’ve allegedly been up to no good for the period between January 1, 1974 and January 8, 2010. 1974? Now that’s a blast from the past. There was no public internet in 1974…people bought records—not CDs…Remember Disco? The Joker? Ok. I’ll stop there.

So what’s the beef? Bottom line, “According to the complaint, class members were harmed by entering into expensive annuity contracts that were redundant and unnecessary.” Of course, there’s a bit more to it than that, like, “VALIC agents failed to disclose that the tax deferral feature of the deferred annuity was redundant and unnecessary for Class members…and that these materially false and misleading statements and omissions fraudulently induced purchases of the deferred annuities because they give the impression that the product provides the key tax deferral benefit sought by investors, when, in fact, tax deferral is not a reason for qualified plan investors to purchase the product because any investment funding a qualified plain is already tax deferred.”

Suffice to say, people were sold investment products that they didn’t need. I guess some things really don’t change with time.

Top Settlements

The Now Network gets the Now Settlement. Finally. On Thursday, a federal judge approved a $17.5 million settlement in the class action against Sprint Nextel. Chalk one up to consumers! The lawsuit arose over the flat Continue reading “Week Adjourned: 1.22.10”