Morgan Stanley

Week Adjourned: 4.17.15 – Source Naturals, Southwest Airlines, HAMP Mortgages

Top Class Action Lawsuits

Source Naturals a little light on the content? According to a consumer fraud class action lawsuit filed this week, it is. The plaintiff alleges the amounts of vitamins and minerals in the vitamins are inaccurate.

In her Source Naturals complaint, Jennifer Dougherty alleges she purchased the products online for about $20 in November. According to the lawsuit, Source Naturals advertised that its multivitamins contained 12,500 IU per serving of vitamin A. Dougherty claims that the amounts of the of six vitamins and minerals in its multivitamins were off by as much as 90 percent, which was shown in tests. Those same tests also revealed that the vitamin B-3 contained in the product was about 19 percent less than represented; calcium per serving was about 22 percent less; zinc was under by about 24 percent; manganese was under by about 36 percent; and magnesium was under by about 12 percent than what Source Naturals claimed, according to the lawsuit.

The Source Naturals lawsuit is seeking class action status for those that purchased the multivitamins and seeks less than $5 million plus court costs. The $5 million figure represents a threshold for removal under the Class Action Fairness Act.

Southwest Early Bird Check-In a scam? At least one passenger thinks so. Teri Lowry filed a consumer fraud class action lawsuit over allegations the airline misleads customers into purchasing early flight check-ins, billed as “Early-Bird” priority boarding.

Specifically, the Southwest Airlines lawsuit contends that the airline deceived her into purchasing an “Early-Bird” priority boarding cost for a flight she took in March 2014 from Los Angeles to Indianapolis.

Lowry claims she purchased a “Wanna Get Away” ticket offered by Southwest, and then added on the “Early-Bird Check-in” feature for $25 roundtrip. She states in her lawsuit that she purchased the feature based on previous experience when she traveled with Southwest and received a “B” boarding group assignment.

The lawsuit states that when Lowry contacted others who had received a higher boarding position than she did for her trip to Indianapolis, none of them had purchased the “Early Bird Check-In.”

According to the complaint, Southwest Airlines allocates boarding in the order in which a customer checks in online, with boarding broken into three groups of about 60 board positions each. According to the lawsuit, Southwest Airlines’ website states customers can obtain an A boarding position by purchasing an “Early Bird Check-in.”

In her complaint, Lowry alleges Southwest’s website says customers who purchased “Anytime” fares receive priority over other fare types including “Early Bird Check-ins.” The lawsuit alleges that contradicts other areas of the website that say “Anytime” or “Wanna Get Away” fares don’t have priority over other fares.

Top Settlements

A $4.5 million settlement has been reached in a consumer banking deceptive practices violations class action lawsuit against a unit of Morgan Stanley (Saxon). The lawsuit was filed by homeowners who allege the finance company denied thousands of California homeowners new terms through the federal Home Affordable Modification Plan (HAMP), which they claim resulted in some people losing their homes.

The Morgan Stanley HAMP settlement is preliminary and requires final approval, which, if granted, would pay the approximate 2,705 class members an average of $1,663 each. According to court documents, the settlement represented about 15 percent of the roughly $30 million in total trial payments made by the class.

According to the lawsuit, plaintiff Marie Gaudin alleged Saxon delayed processing her loan while urging her to make trial payments as part of its Home Affordable Modification Program, meant for homeowners who were behind on loan payments. Saxon later pulled the offer of permanent loan modification without cause, according to the lawsuit.

If approved, 1,365 class members who lost their homes after Saxon denied them permanent loan modifications would be paid back. All class members would receive a base award of approximately $184, with tiered payments being made to those who lost their homes in foreclosures or short sales without being offered loan modifications, and to those who entered into alternative modifications elsewhere.

The class is defined as California borrowers who entered into HAMP TPPs with Saxon through October 1, 2009, and made at least three trial period payments but did not receive HAMP loan modifications.

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

Week Adjourned: 1.18.13 – Clinique, Dell, Morgan Stanley, Goldman Sachs

The week’s top class action news–lawsuits and settlements that made the buzz this week. Top stories include Estee Lauder’s Clinique line, Dell computers, Morgan Stanley and Goldman Sachs.

Top Class Action Lawsuits

Speaking of wrinkles—it appears that Estée Lauder has hit one. The maker of Clinique cosmetic and skin care products is the latest to face a consumer fraud class action lawsuit over allegations of false and deceptive marketing practices.

In the Clinique false advertising lawsuit, entitled Margaret Ohayon et al. v. Estee Lauder Inc. et al., Case No. 2:33-av-00001, U.S. District Court for the District of New Jersey, plaintiff Margaret Ohayon alleges Estee Lauder uses deceptive advertising tactics to promote its Clinique Repairwear, Youth Surge and Turnaround collection as having the ability to make wrinkles “disappear,” rebuild firming collagen, and produce other anti-aging benefits.

The lawsuit alleges that if, in fact, the Clinique products could “rebuild stores of natural collagen” or “deliver 63% of the visible wrinkle-reducing power of a laser procedure,” the products would be regulated by the Food and Drug Administration. Not to mention your girlfriends would be all over it—like you could keep the effects a secret—I don’t think so.

The Clinique consumer fraud class action lawsuit is brought on behalf of a proposed class of all consumers who have purchased at least one Clinique product from the Repairwear, Youth Surge or Turnaround collection in the US.

The lawsuit seeks compensatory, treble and punitive damages; restitution; injunctive relief and more for alleged breach of express warranty, unjust enrichment, and violations of the New Jersey Consumer Fraud Act and consumer fraud laws of various states.

Top Settlements

Heads up: Taxing Situation at Dell… An unfair business practices class action lawsuit filed in California against Dell Computer Corp, has reached a tentative settlement totaling $275 million in potential refunds.

The class action lawsuit revolves around the payment of California sales tax on Dell service contracts…read on…

The lawsuit, entitled Mohan, et al. v. Dell, Inc. et al. alleged the Defendants (Dell Inc. f/k/a/ Dell Computer Corp.; Dell Marketing LP (“DMLP”), on its own behalf and as successor by merger to Dell Catalog Sales LP (“DCSLP”); BancTec, Inc.; and Worldwide Tech Services, LLC f/k/a/ QualxServ LLC) improperly charged California use tax on purchases of certain Optional Service Contracts and remitted these taxes to the California State Board of Equalization (“SBE”).

The parties have reached two distinct settlement agreements to resolve the legal action: the Dell Settlement and the SBE Settlement. Under the terms of the respective settlements, which cover purchases made between April 8, 1999 and June 30, 2008, funding for the settlements will be provided by Dell and the California State Board of Equalization. The settlements followed a 2006 trial court’s decision, later affirmed on appeal by the California Court of Appeals in 2008, ruling that optional service contracts sold by Dell were not subject to California sales or use tax, as they did not constitute tangible personal property and were readily separable from the computer hardware with which they were sold.

Further, the terms of the two settlements stipulate that customers of Dell who purchased and paid tax on service contracts covering computer hardware during the class action period will be entitled to a full refund of all such taxes that they paid.

The settlement consists of more than $275 million in refunds. Notices will be mailed to customers informing them of the amounts of refunds available to them and instructions for the timely filing of claims. The Court will review the settlement agreements at the Final Hearing to be held in April, 2013.

Class members who are eligible to receive a refund under one or both of these settlement agreements must file a claim or claims to receive any refund(s). Each settlement agreement has different criteria for eligibility. For more information on eligibility and how to file a claim for the separate settlements, visit sctaxsett.com.

Welcome Home[Owner] News. This one’s a whopper…and some welcome news for home owners who suffered dodgy loan servicing and/or foreclosure at the hands of Morgan Stanley or Goldman Sachs. This week the Federal Reserve announced it has reached a settlement with the two financial institutions over alleged loan servicing and foreclosure abuses.

Under the terms of the settlement, reported by CNNMoney.com, Morgan Stanley will provide $97 million in direct cash payments to borrowers and $130 million worth of other relief, including loan modifications and the forgiveness of deficiency judgments. Goldman will pay $135 million to borrowers with a further $195 million provided as relief.

Here’s the skinny. The settlement provides for over 220,000 homeowners who held mortgages with the two banks’ former subsidiaries: Goldman’s Litton Loan Servicing and Morgan’s Saxon Mortgage Services, and subsequently faced foreclosure in 2009 and 2010. According to CNNMoney.com “over four million borrowers will split a total of $3.5 billion in cash compensation, with payments ranging from a few hundred dollars to potentially as much as $125,000 in a small percentage of cases. Those eligible are expected to be contacted by the end of March, regulators said.”

This settlement follows the $8.5 billion agreement announced last week by the Federal Reserve and the Office of the Comptroller of the Currency with 10 other banks over foreclosure issues.

Goldman Sachs was ordered to review its subsidiary’s foreclosure practices in September 2011, as was Morgan Stanley in April 2012. Those reviews were not initiated and will now be scrapped as a result of this settlement deal.

Well this news is worth a minor celebration—on top of the fact that it’s Friday. So—see you at the bar!

Week Adjourned: 4.8.11

Top Class Actions

HAMPered Loan Modifications? It seems there’s no end in sight to the mortgage crisis—with new twists and victims appearing regularly. In fact, you could argue that it’s spawned a whole spin-off industry of fraud, and related legal actions. For example, this week, Saxon Mortgage Inc, the mortgage service division of Morgan Stanley, was hit with a potential class action lawsuit over allegations that the company uses the Homeowners Affordable Modification Program (HAMP) to attract customers into making “trial” payments on loans it has no intention of ever permanently modifying.

Filed in Northern California, the suit alleges a pattern of misconduct by Saxon which involves collecting trial payments, delaying the processing of loan modifications, and then denying the application altogether for demonstrably false reasons. Where do you start?

The suit’s lead plaintiff, a small business owner in San Francisco, Marie Gaudin, had, like millions of Americans, fallen on hard times as a result of the recession and approached Saxon for a loan modification on her home. Long story short, she was directed to Saxon’s “Home Preservation Department” and subsequently asked to provide extensive documentation of her financial condition, which she did. She received a written agreement from them that appeared to promise a permanent HAMP loan modification after she made three “trial” payments as proof she could handle the loan repayments. But—Saxon didn’t honor its agreement. Are we surprised?

The suit claims that Saxon delayed the processing of the HAMP loan modification, while Gaudin continued to make trial payments, which were duly noted as received in correspondence from Saxon. Nevertheless, Saxon denied her a permanent HAMP modification. According to the suit Saxon claimed that Gaudin had failed to make payments or comply with document requests. They also allegedly claimed that she did not make payments, while in the same letter actually acknowledged that she was current on all payments (do they not read their own correspondence before it goes out?). Saxon also claimed that the U.S. Treasury Department was involved in reviewing HAMP applications. Who gets paid to think this stuff up?

Not surprisingly, the suit alleges that Saxon’s breach of contract, rescission and restitution, and deceptive debt collection practices violated California’s Rosenthal Fair Debt Collection Practices Act (Rosenthal Act), and fraudulent, unlawful, and unfair business practices under California’s Unfair Competition Law (UCL).

Top Settlements

Goodyear Discrimination Suit Settles. Here’s a good news story—we like those. A jury in Cumberland, NC recently awarded Lashanda Shaw $450,000 as settlement of her wrongful termination suit against Goodyear Tire and Rubber Co.’s Fayetteville plant this week.

Court documents reportedly state that Shaw was fired for making a complaint about racial and sexual discrimination in the workplace. She filed her suit in 2009. When she finally got to court the trial took five weeks with the jury unanimously agreed on the compensatory damages. I’ll bet she’s sleeping better now.

May be Justice—but at What Cost? A 79-year old woman in Scranton, PA was awarded $550K this week as settlement of her medical malpractice case. But here’s the downside—Irene Doherty filed the suit because she suffered a 23-month delay in the diagnosis of her lung cancer. The verdict was returned against radiologist Earl Detrick, who practiced in Scranton and Wilkes-Barre, PA, prior to retiring.

Ms. Doherty’s lawyers argued that Detrick failed to properly report to Doherty or her physician his conclusions regarding a computerized tomography (CT) scan of her chest. That’s helpful. It turns out that that scan revealed a mass in Doherty’s right lung that required medical follow-up—but it wasn’t brought to Ms. Doherty’s attention until nearly two years later when she underwent a subsequent CT scan of her chest. The second scan revealed a much larger cancerous mass. So, in the 23 months between CT scans, the mass had doubled in size, and was inoperable. Worse, the cancer had spread to Doherty’s lymph nodes. Frankly, I find this astonishing—how does this kind of oversight happen?

Needless to say, Doherty’s suffering and physical deterioration due to her lung cancer could have been prevented had the radiologist done his job—which was to report the results of the January 2007 CT scan as soon as he saw them. And that’s exactly what her lawyers argued. If nothing else Doherty’s case emphasizes the importance of being your own advocate when it comes to healthcare. Don’t get me started…

Ok. That’s it for this week. See you at the bar.