DECEMBER 2 016

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BeasleyAllen.com I. A number of guest speakers presented II. special programs, including a panel discus- CAPITOL sion with Alabama Supreme Court Justices MORE James Allen Main and Tommy Bryan. Other OBSERVATIONS special guest presentations included AUTOMOBILE remarks from Ken Riley, President of the NEWS OF NOTE Alabama Association for Justice; Clay The Tenth Annual Beasley Allen Legal Hornsby, Deputy Director of the Alabama Conference Law Institute; Shane Smith, Chairperson, Beasley Allen Joins Other Firms In Filing Family Law Section of the Alabama State We were pleased to host our firm’s tenth Bar; and Bill Blanchand, former President, Class Action Alleging Additional VW annual Legal Conference & Expo at the Alabama Defense Lawyers Association. Our Emissions Cheats Renaissance Montgomery Hotel & Spa on own Cole Portis, who is serving as Presi- Lawyers at Beasley Allen have joined Nov. 17-18. The event is open to all dent of the Alabama State Bar, was our lun- with several law firms to file a new class Alabama lawyers in private practice, and cheon speaker this year. action lawsuit against Volkswagen. The provides them with a full 12 hours of Con- While all of the presentations were filing came after it was revealed that Volk- tinuing Legal Education (CLE) credits, for good, the highlight of the conference was swagen used an emissions cheat device in free. The conference has grown steadily the Friday morning prayer breakfast. This Audi vehicles equipped with 3.0-liter gaso- each year, from about 400 lawyers in 2007 part of the program has always been well to 1,453 in attendance this year. It is one of attended by lawyers and their families. It the top five legal conferences in atten- was again this year. The prayer breakfast IN THIS ISSUE dance in the United States. sets the right tone for the conference. This In addition to benefitting lawyers year the presentation was by Rev. John I. Capitol Observations...... 2 throughout the state, the conference is Schmidt, the Senior Pastor at Centerpoint very good for the Montgomery area’s Fellowship Church. John’s message was II. More Automobile News Of Note. . . . 2 economy. Dawn Hathcock, Vice President one that any person—especially a lawyer of the Montgomery Area Chamber of Com- who does trial work—needs to hear. III. Purely Political News & Views. . . . .5 merce Convention and Visitor Bureau, had We also were happy to be able to present this to say: our annual Beasley Allen Pro Bono Award IV. Court Watch...... 5 to the Montgomery County Bar Foundation The Beasley Allen Law Firm has suc- Volunteer Lawyers Program. The $15,000 V. Whistleblower Litigation ...... 6 cessfully coordinated a unique con- grant will allow the MCBF VLP to continue VI. Product Liability Update ...... 7 ference for the last 10 years, and I to provide crucial civil legal services to the applaud their efforts. Lawyers from poor, who might not otherwise be able VII. Mass Torts Update...... 9 all over the state have been given the to afford a lawyer. Tim Gallagher, President opportunity to see everything Mont- of the MCBF, and Mike Martin, Execu- VIII. An Update On Securities Litigation. . .13 gomery has to offer as a destination tive Director, were on hand to accept but that is just the beginning. the award. IX. Business Litigation...... 13 Hosting nearly 1,500 attendees at the A popular attraction each year is the state’s largest legal conference pro- Legal Conference Expo, where vendors X. Insurance and Finance Update . . . .14 vides a huge economic impact in the provide demonstrations of products and River Region estimated to be roughly answer questions about how attorneys can XI. Employment and FLSA Litigation. . . 15 a million dollars. best enhance their practice. Event plati- XII. Premises Liability Update...... 16 We are proud to be able to support our num sponsors for 2016 were Jackson Thornton Valuation & Litigation Consulting River Region in this way each year. Our XIII. Workplace Hazards...... 16 plan is for the conference to be an annual Group, Freedom Reporting and Virage. event for years to come. It’s good to know Legal and community groups also partic- XIV. Transportation...... 18 that we are helping lawyers develop their ipated in the event to provide information skills and field of knowledge, which in about their programs and services. This XV. Environmental Concerns...... 20 turn helps their clients. It’s also good to year we welcomed representatives from help our area economy. the Alabama State Bar Volunteer Lawyer XVI. Update On Nursing Home Litigation . .22 The conference gives us an opportunity Program, Alabama State Bar Lawyer Refer- to connect with our colleagues from firms ral Program, Alabama Law Foundation, XVII. An Update On Class Action Litigation. .23 of all sizes, ranging from those in private Alabama Civil Justice Foundation, Alabama XVIII. The Consumer Corner...... 24 practice to lawyers from some of the Association for Justice, and Cumberland School of Law. biggest firms in the state. Practice areas XIX. Recalls Update...... 30 addressed at the conference included The Beasley Allen Legal Conference has been very successful. It is a unique oppor- Product Liability, Business Litigation, Whis- XX. Firm Activities...... 36 tleblower Litigation, Consumer Fraud, and tunity for lawyers and we are honored to Medical Device and Drug litigation. A sepa- be able to offer this event each year. We XXI. Special Recognitions...... 37 rate section on Legal Ethics was on the look forward to the next one. agenda and as usual Tony McLain, General XXII. Favorite Bible Verses...... 38 Counsel, Alabama State Bar, did a tremen- dous job. Tony has been a great asset to XXIII. Closing Observations...... 38 Alabama lawyers and is a very good person in every respect. XXIV. Parting Words...... 39

2 BeasleyAllen.com line engines and a specific ZF model Section, at [email protected], or (EPA) to use on further production of high- 8HP55 transmission. Subject vehicles lawyers in this section, Clay.Barnett@beas- polluting vehicles. include the A6, A8, Q5 and Q7. In October, leyallen.com or Archie.Grubb@beaselyal- The affected Cummins diesel engines the automaker settled similar claims affect- len.com, or call us at 800-898-2034. concealed true emissions output, and ing vehicles with 2.0-liter diesel engines, Source: Bloomberg resulted in wearing out the catalytic con- agreeing to pay out nearly $15 billion to verter more quickly, meaning the vehicle affected vehicle owners. This is believed to burned fuel at a higher rate. This often be the largest automobile settlement in required truck owners to replace the con- history. Claims related to the VW’s 3.0-liter Chrysler And Engine Maker Accused Of verter after the warranty had expired at a diesel vehicles remain unresolved. Emissions Cheating cost of approximately $3,000 to $5,000. Audi did not limit its “cheat device” The accusations in this case against Chrys- scheme to the diesel engine market, but A class action lawsuit was filed last ler and Cummins are very much like the some Audi gasoline engines contained a month in a Michigan federal court against claims made against Volkswagen AG in its similar device. Just as with the devices the U.S. unit of Fiat Chrysler Automobiles emissions-cheating scandal. found in diesel vehicles, it turned off the NV and engine maker Cummins Inc. The The truck owners are represented by emission system under certain driving con- proposed racketeering class action alleges Steve W. Berman and Jerrod C. Patterson of ditions, which in turn produced illegal that Dodge Ram trucks with diesel engines Hagens Berman Sobol Shapiro LLP, Christo- levels of carbons that were released into hid the trucks’ emissions of illegally high pher A. Seeger of Seeger Weiss LLP, James the environment unbeknownst to the con- levels of pollutants. In the complaint, con- E. Cecchi of Carella Byrne Cecchi Olstein sumer. This new class action lawsuit sumers accused Chrysler and engine manu- Brody & Agnello PC, Robert C. Hilliard of recently filed addresses this problem and facturer Cummins of conspiring to Hilliard Munoz Gonzales LLP, and E. Powell provides a remedy very much like the knowingly deceive consumers and regula- Miller and Sharon S. Almonrode of The diesel engine class we filed previously. tors that Dodge Ram 2500 and 3500 trucks Miller Law Firm PC. The case is James This additional software, like the 2.0 equipped with the Cummins 6.7-liter turbo Bledsoe et al. v. FCA USA LLC et al. in the diesel cheat software, monitors steering diesel engine were emitting dangerous U.S. District Court for the Eastern District wheel input and holds the vehicle in “low levels of nitrogen oxides. The com- of Michigan. plaint states: power” mode until the steering wheel is Source: Law360.com turned. However, this cheat software is The defendants never disclosed to programmed into the vehicle’s transmis- consumers that the affected vehicles sion control module, whose job is to select may be “clean” diesels in very limited Tour Bus Crash That Killed 13 shift points necessary to maintain vehicle circumstances, but are “dirty” diesels Underscores Gaps In Safety Regulations speed over variable driving conditions. under most driving conditions. Specifically, when a subject vehicle is cranked, its transmission engages a “low The Dodge Ram trucks outfitted with There is a tremendous need for signifi- CO2” program, shifting gears early to the Cummins 6.7-liter turbo diesel engine cant improvements in the regulation of maintain artificially low engine revs and contained a technology to trap and break buses that operate on our nation’s high- emissions. Once the driver inputs 15 down pollutants that was meant to limit ways. Currently there is an inadequate degrees of turn into the steering wheel, the amount of NOx escaping in the patchwork of federal and state protections. the subject vehicle deactivates the program exhaust of the engines. However, more Over the past several years we have seen a and shifts into its normal, more pollutant pollutants were emitted than allowed by large increase in low-cost bus services in fashion that consumes more fuel, delivers California and federal law when the trucks the U.S. That’s primarily because of more more power and produces more CO2. Audi were traveling for long distances or travel- casinos opening around the country. Safety designed this software to fool emissions ing up hills. For example, the legal limit of experts say that regulations and safety testing equipment and personnel. NOx emissions for stop-and-go driving is oversight have not kept up with the According to the latest investigation into 200 milligrams per mile. When tested, the growth in the industry. Even the most the issue, U.S. Environmental authorities in Dodge Ram 2500s emitted 702 milligrams basic improvements have been very slow California reportedly discovered certain per mile, with a maximum emission of in coming. A prime example is the need for Audi gasoline and diesel models with the 2,826 milligrams per mile. The California seat belts in buses. ZF 8HP55 AL 551 automatic transmission NOx limit for highway conditions is 400 The rule requiring seat belts on newly were equipped with a separate cheat soft- milligrams per mile, but testing for the manufactured buses that went into effect ware to fool emissions tests. The class 2500 Dodge Ram shows an average of 756 last month was first proposed by safety action lawsuit was filed in Federal District and maximum of 2,252 milligrams experts more than 30 years ago. This came Court in the State of Minnesota on behalf per mile. after a horrific 1968 bus crash in California of Plaintiffs in Minnesota, Missouri, Penn- The complaint has claims for fraudulent that took 19 lives. Recently, a tour bus sylvania, Florida, as well as owners concealment, false advertising, and viola- crashed into a truck on the way back from nationwide. tion of the Racketeer Influenced and a casino, killing 12 passengers and the Lawyers representing the Plaintiffs in Corrupt Organizations (RICO) Act and con- driver. The bus did not have seat belts. Nor this class include Beasley Allen lawyers sumer protection laws. The consumers do thousands of other buses that will be on Dee Miles, Clay Barnett and Archie Grubb; accuse Chrysler, now officially known as U.S. highway for years to come, and that’s Adam Levitt with Grant & Eisenhofer; FCA US LLC, and Cummins of intentionally because there is no requirement to install Bryan Bleichner of Chesnut Cambronne; misleading the public, concealing emis- them. Jim Hall, former chairman of the Marc Dicello of Dicello Law; and Tom sions levels, illegally selling noncompliant National Transportation Safety Board Young of Tom Young Law Office. For more polluting vehicles, knowingly profiting (NTSB), had this to say after the recent Cal- information about this litigation, contact from the dirty diesels and using fraudu- ifornia bus crash: Dee Miles, who heads up our firm’s Con- lently gained emissions credits from the We don’t invest into doing an ade- sumer Fraud and Commercial Litigation U.S. Environmental Protection Agency quate job to protect people from inci-

JereBeasleyReport.com 3 dents like this. That individuals who Settlement In Takata Air Bag Death Lawsuit duced between May 2000 and November ride buses are at lower income levels 2001, and April 2006 and December 2014. of our society concerns me. We A settlement has been reached between The airbags have now been linked to at should ensure that we have the same all Defendants and the Texas parents who least 16 deaths globally, with most of the safety standards for everyone. filed a product liability suit in April alleg- deaths in the U.S. The inflator recall began th ing their daughter was the 12 person to around 2008 and continues to expand. The There are two standards of safety for die as a result of a deployed Takata air bag latest recall includes about 20,000 cars that transportation in our nation—one for avia- sending shrapnel into her body. The family were fitted with replacement Takata infla- tion and one for ground transportation. of 17-year-old Huma Hanif and defendants tors following an initial 2010 recall, as the The level of safety for buses is grossly inad- TK Holdings Inc. and American Honda replacement parts are also seen to be at equate. The Federal Motor Carrier Safety Motor Co Inc., agreed to the settlement. risk of exploding as they do not contain a Administration (FMCSA), the federal The settlement was reported last month by drying agent. agency that regulates buses and trucks, has State District Court Judge Dan Hinde. The Transport authorities around the world 1,140 employees to oversee 525,000 com- terms of the settlement are confidential. now consider inflators without a drying panies across the nation. The agency relies The lawsuit was filed about a month agent to be unsafe, and have ordered all of largely on state law-enforcement teams to after the youngster died on March 31 in them to be withdrawn. Since global trans- conduct inspections and hand out cita- Fort Bend County, Texas, as a result of a portation authorities expanded their recall tions. Interestingly, about half of the agen- low-speed collision in her 2002 Honda from May, about 100 million Takata airbag cy’s $600-million budget is sent to states to Civic. The car in front of her, driven by one inflators have been classified as defective help pay for truck and bus inspections. of the named Defendants, Samantha Iona worldwide. Takata is seeking a financial The U.S. Transportation Department’s Martin, came to a sudden stop, causing investor to help pay for huge liabilities inspector general launched an audit of Hanif to rear-end the vehicle and her from the recall, and has been meeting with truck and bus safety last year, saying that Civic’s air bags to deploy. Hanif stepped potential sponsors and automaker clients investigations into a series of fatal crashes outside her car after the crash, clutched to discuss its survival options. had disclosed that the motor carrier admin- her neck where shrapnel entered her body, Source: Law360.com istration had failed to uncover any prob- then collapsed on the pavement and was lems. Safety reviews had been conducted pronounced dead at the scene. prior to these accidents, one about five The suit alleged negligence, gross negli- days before the bus was in a crash. gence, breach of warranty and failure to Toyota To Pay $3.4 Billion To Settle Rusty It appears that the number of new warn. The family named as Defendants Truck Frame Action casinos in the U.S. has resulted in an Honda, Takata, Martin, the dealership that increase in the number of “tour buses” sold the used car, Westside Hummer, and Toyota Motor Co. has agreed to pay needed to haul folks to the casinos. NTSB Discount Lube and Tune, an auto shop that approximately $3.4 billion to compensate member Earl Weener recently disclosed inspected the car last year. owners of certain truck models with that the investigation was ongoing into The family is represented by Muhammad frames that are prone to rust corrosion and accidents involving casino buses. However, Suleiman Aziz and Scott P. Armstrong of perforation. This will settle a proposed the agency has yet to publish any data. Abraham Watkins Nichols Sorrels Agosto & class action lawsuit in a California federal Representatives of the bus industry claim Friend, by Nomaan Husain and Omar court. The owners of certain Tacoma, that the bus-related tragedies are very rare. Khawaja of Husain Law & Associates PC Tundra and Sequoia trucks asked U.S. Dis- Peter Pantuso, President of the American and by Mohammed “Ali” Zakaria of M. Ali trict Judge Fernando M. Olguin to give pre- Bus Association, contends that the industry Zakaria & Associates PC. The case is liminary approval to the settlement, which is “highly regulated.” Based on our experi- Muhammad Hanif et al. v. TK Holdings et provides inspections for the approximately ence, that is certainly far from reality. al. in the 269th District Court in Harris 1.5 million vehicles possibly affected by Motor carrier administration data reveals County, Texas. the defect, as well as the replacement of that in 2014, 44 occupants of buses were frames for an estimated 225,000 trucks. Source: Law360.com killed in crashes. That is similar to other If approved, the settlement will end the years over the past decade. An additional proposed class action complaint filed in 233 people in other vehicles or walking March 2015 by owners from nine states, were killed in crashes with buses. By con- Toyota Recalls Nearly 1.5 Million Cars In including New York, California and trast, although the two industries carry Europe Over Takata Airbags Florida, alleging that the frames of model roughly the same number of passengers year 2005 to 2009 Tacoma vehicles were annually, no airline passengers were killed Toyota Motor Corp. recalled about 5.8 not properly protected from rust corro- in the U.S. that year and few accidents million cars recently over the faulty airbag sion, and that Toyota knew about the involving major U.S. airlines have occurred inflators made by Takata Corp. The recall defect but failed to do anything about it. in the last decade. affects about 1.47 million vehicles sold in Tundra and Sequoia owners were added There is definitely a need for stronger Europe, about 820,000 cars sold in China to the case. The settlement covers 2005 to regulation of buses of all kinds. However, and 1.16 million cars in the Japanese 2010 Tacomas, 2007 to 2008 Tundras, and there is a tremendous need in the “tour market. The action also extends to Central 2005 to 2008 Sequoias. Toyota says that an bus” industry and for school buses. It will and South America, Africa, the Near and inspection for each of the 1.5 million vehi- be interesting to see how the Trump Middle East and Singapore. Affected cles will cost approximately $60, totaling Administration reacts in this area of models include the Corolla compact car, $90 million, and the replacement frames concern. Hopefully, President Trump will one of the world’s best-selling models, the for the 225,000 vehicles will cost $15,000 see the need and provide strong leadership. Yaris/Vitz subcompact, the Hilux pickup each, for a total of $3.375 billion. and the Etios line of sedans and hatch- Source: Los Angeles Times Toyota has promised that the inspection backs. The recall covers driver-side and and replacement campaign will be at no passenger-side airbags installed in cars pro- cost to the vehicle owners. Additionally, the program will last 12 years from the

4 BeasleyAllen.com date the vehicle was sold or leased, IV. court affirmed its original dismissal in meaning any future perforations will be January of 2014 based on the Court’s con- covered as well. The replacement and COURT WATCH clusion that an antitrust violation can result inspection policy remains valid if an owner from a settlement only if the brand manu- sells the vehicle to another party. The facturer provides a large, unjustified owners also asked Judge Olguin to certify a payment of money as opposed to some High Court Won’t Review Lamictal Pay-For- class of Tacoma, Tundra and Sequoia other form of compensation. Delay Ruling In Favor Of Plaintiffs owners or lessees from the 50 states, On appeal in June 2015, the Third Puerto Rico, Washington D.C. and all U.S. The United States Supreme Court Circuit found that a cash payment was not territories. recently declined to review a Third Circuit necessary and so-called no-authorized The owners are represented by Timothy ruling in favor of the Plaintiffs, holding generic settlement agreements could be G. Blood and Paula R. Hearst of Blood that “reverse payment agreements” settling considered a transfer from a brand drug Hurst & O’Reardon; Ben Barnow and Erich drug patent litigation that lack a cash manufacturer to a generic manufacturer P. Schork of Barnow & Associates; Philip J. payment to the generic manufacturer can and could be scrutinized under Milligan of Milligan Law Offices; Michael L. raise antitrust scrutiny. With the Supreme antitrust law. Roberts of Roberts Law Firm; and Jeffrey S. Court declining to review the ruling, the Drug makers GSK and Teva filed a peti- Hurst of Monteleone & Mccory. The case is Court has left in place a ruling that revives tion for Supreme Court review in February Brian Warner et al v. Toyota Motor Sales the Plaintiff’s pay-for-delay dispute against of this year, arguing that the justices USA Inc. in the U.S. District Court for the drug makers GlaxoSmithKline and Teva should take the opportunity to clear up Central District of California. over the anti-convulsant drug, Lamictal. “disagreement and confusion” about what Source: Law360.com In these “pay-for-delay” agreements, or kinds of settlements can be scrutinized “reverse payment agreements”, a brand- under Actavis. The United States Supreme name drug company and a generic rival Court declined to review the Third locked in patent litigation reach a settle- Circuit ruling. III. ment. Historically, the brand-name drug These “pay-for-delay” agreements have PURELY POLITICAL company may offer cash or something else raised antitrust concerns for years now. of value to the generic drug company and, The Federal Trade Commission has esti- NEWS & VIEWS in return, gains more time to sell its brand mated that these deals cost Americans $3.5 drug without encountering lower-cost billion annually in higher health care costs. generic competition. The generic drug Challenging drug makers over these anti- competitive “reverse payment” agreements President Elect Donald Trump maker, meanwhile, also comes away with a large payment and an agreement to sell its is just another way Plaintiffs can positively affect the price of prescription drugs in I am totally convinced that most Ameri- generic equivalent at a specified this country. cans are very glad the race for President is future date. If you would like to know more about over. Donald Trump’s election came as a In the case of In re Lamictal Direct Pur- the pay-for-delay litigation, contact Ali surprise to the so-called political experts. chaser Antitrust Litigation, the Third Hawthorne, a lawyer in our firm’s Con- However, his message sold to enough Circuit looked at one of the biggest ques- sumer Fraud & Commercial Litigation voters in the key states to put Trump in the tions facing the courts in the wake of the Section, at Alison.Hawthorne@beasley- White House. I would give Sen. Jeff Ses- Supreme Court’s 2013 landmark U.S. allen.com. sions a great deal of credit for the upset Federal Trade Commission v. Actavis deci- victory on Nov. 8. sion: whether actual cash has to change Source: Law360.com Not only was Jeff an important hands for a reverse payment to occur. “endorser” at a critically important time, Buyers of Lamictal, which is used to but the senator also was a most important treat epilepsy and bipolar disorder, have $40 Million Damages Award Affirmed In claimed that GSK paid off Teva to delay its “advisor” during the entire campaign. The Fatal Jeep Fire Suit huge rally in Mobile early in the campaign introduction of a generic version of the was a huge shot in the arm for the Trump drug. Instead of exchanging a lump sum of A $40-million jury verdict was affirmed campaign. Jeff will be named Attorney cash, GSK compensated Teva, the generics last month by the Court of Appeals of General and I have to believe that his selec- maker, by agreeing not to launch its own Georgia. The verdict was awarded to the tion will prove to be one of the new Presi- authorized generic during Teva’s 180-day parents of a 4-year-old boy killed in a 2012 dent’s best appointments. exclusivity window. The Plaintiff argued Jeep crash fire. The appellate court Donald Trump is currently forming his that no-authorized generic settlements like rejected Fiat Chrysler’s arguments that government. I sincerely hope that Presi- these amount to a “reverse payment” and certain evidence was wrongly allowed and dent Trump will put aside all of the nega- can be scrutinized under antitrust laws. the award resulted from prejudice. The tive things he ran on and truly be president The reasoning is that such an agreement Court concluded that a lower judge did not of all Americans. Based on his recent com- has considerable value to the first drug- err by allowing the parents of Remington ments and actions, it appears that he will maker to file for approval to make a generic Walden to present during a 2015 trial work hard to accomplish that goal, which version of a treatment. similar crash instances and other evidence is critically important to our country. This Lamictal litigation was originally to support their theory that by placing the However, satisfying his early base may filed in New Jersey where the New Jersey fuel tank behind the vehicle’s rear axle, prove to be the most difficult task facing District Court dismissed the case on Dec. Fiat Chrysler Automobiles NV acted with a President Trump. Personally, I hope and 6, 2012. The Plaintiff appealed and the reckless or wanton disregard for human pray that the new president will be Third Circuit Court of Appeals remanded life and breached its duty to warn that a successful. the case after the Actavis decision, order- rear-end crash could result in a gas ing the District Court to reconsider in light leak and fire. of Actavis. On remand, the New Jersey

JereBeasleyReport.com 5 Four-year-old Remington was riding in combat widespread fraud committed by vital part of any whistleblower program. the backseat of a 1999 Chrysler Jeep Grand contractors who provided the government Without sufficient protections, would-be Cherokee in March 2012 when it was with ill horses and mules, spoiled rations, IRS whistleblowers will not speak out for struck from behind by a pickup truck faulty rifles and ammunition, and other fear of retribution from their employer. driven by Bryan Harrell. The rear-located deficient goods and services. But “Lincoln’s Burns and Oswald propose that the False gas tank was punctured and the Jeep Cher- Law,” as it was widely known then, didn’t Claims Act “tax bar” be removed. That okee caught fire, killing the boy. have the muscle it needed to effectively would open the Act’s anti-retaliation pro- In 2015, a Georgia state court jury found prevent fraud or correct it once it tections to tax whistleblowers and allow for the parents, awarding them $120 happened. qui tam lawsuits to enhance the IRS’s million in damage for wrongful death, and However, it wasn’t until Oct. 27, 1986, ungainly fraud-fighting efforts. Our firm $30 million in damages for pain and suffer- when President Ronald Reagan signed into fully supports the FCA and commend those ing after finding Harrell to be 1 percent at law a series of amendments to the original working to make the law even more fault and Fiat Chrysler to be 99 percent at law, that the powerful False Claims Act as effective. fault. The state court judge then denied the we know it today was born. Sources: The Hill, Taxpayers Against Fraud automaker’s motion for a new trial, but By its 30th birthday this past October, the reduced the wrongful death verdict to $30 retooled False Claims Act had helped the million and the pain and suffering damage U.S. government recover $50 billion in award to $10 million. false claims billed to taxpayer-funded agen- The Implied False Certification Theory Is A The appellate court ruled the parents cies and programs, not counting the crimi- Basis For FCA Liability had presented sufficient evidence to nal penalties collected. Much of the law’s support their claim that Fiat Chrysler knew success in that time could be attributed to On June 16, the United States Supreme that the location of the fuel tank in the better whistleblower protections and Court unanimously held that an implied 1999 Grand Cherokee was dangerous, yet incentives. false certification theory is a basis for liabil- consciously and deliberately continued to However, as the False Claims Act evolved ity under the False Claims Act (FCA). In manufacture and sell the vehicle with the into a better anti-fraud weapon, with even Universal Health Servs., Inc. v. United gas tank in that location and failed to warn more provisions signed into law by Presi- States, 136 S. Ct. 1989 (2016) (Escobar), a the public of the danger. Among the evi- dent Barack Obama, it fell under repeated teenager was prescribed medication for dence presented was 17 other instances attacks from corporate interests attempt- bipolar disorder and suffered an adverse where a Jeep vehicle with a fuel tank ing to weaken the badly needed law. reaction including seizures. After the reac- located behind the rear axle was rear- According to whistleblower advocates, tion, the teenager’s parents learned few of ended, causing gas to leak. now is the time to help the Act reach its the employees at the counseling center The Waldens are represented by Karsten full potential. were actually licensed to provide mental Bicknese and Robert H. Betts of Seacrest, Writing for The Hill, Patrick Burns and health treatment and the center had Karesh, Tate & Bicknese; James Butler Jr. R. Scott Oswald say the False Claims Act minimal supervision of its counseling and and James E. Butler III of Butler Wooten & should be further strengthened by closing mental health services. Peak; and L. Catharine Cox and George C. the information gap between the law and The counseling services were also mis- Floyd. The case is Chrysler Group LLC v. would-be whistleblowers. As part of the representing staff qualifications and regu- Walden et al. in the Court of Appeals for Deficit Reduction Act of 2005, President lation compliance in order to obtain the State of Georgia. George W. Bush signed into law Section reimbursement from Medicaid. The parents filed a qui tam suit in 2011 alleging Source: Law360.com 6032, a measure requiring major recipients of Medicaid funds to educate employees Universal Health Services had violated the about the False Claims Act and other whis- FCA under an “implied false certification tleblower laws. theory of liability.” V. Since that rule took effect, False Claims The court granted Universal Health Ser- Act cases involving Medicaid fraud roughly vices’ motion to dismiss because none of WHISTLEBLOWER doubled to about $2 billion annually. Tax- the regulations violated were a condition LITIGATION payers Against Fraud (TAF) advocates for of payment. However, the First Circuit applying the same rule to all recipients of Court of Appeals reversed on the basis that government money, not just Medicaid. each time a party submits a claim the party Burns and Oswald note in their editorial: implies it conformed to the relevant Retooled FCA Celebrates 30 Years Of program requirements entitling it Fighting Fraud Indeed, ‘How to Blow the Whistle on to payment. Fraud’ posters should be standard at The U.S. Supreme Court affirmed, ruling The False Claims Act has been fighting the workplaces of all government the theory of implied false certification fraud involving the government for 30 contractors. was valid to hold a provider liable under years. We can look back to the 18th Century the FCA in certain circumstances when the to put things in perspective. “There is no The False Claims Act also needs to be misrepresentation of compliance would be kind of dishonesty into which otherwise cleaned up as it pertains to the Internal material. good people more easily and frequently fall Revenue Service and tax fraud, TAF Even though the FCA does not itself than that of defrauding the government of explains. The group says that the agency define false or fraudulent acts, the high its revenues,” Benjamin Franklin said in a has not only been “lackadaisical in pursu- court found Congress intended to use a 1767 letter to the London Chronicle, ing its own whistleblower program,” but common-law definition of fraud, which tapping into a problem that would ulti- has been “putting up arbitrary legal includes misrepresentations by omission as mately give rise to the government’s best hurdles at every turn,” according to well as actively providing false informa- fraud-busting tool: The False Claims Act. Senator Chuck Grassley. tion. Misleading claims or other half-truths The federal False Claims Act (FCA) was The tax code also offers whistleblowers are material and actionable under the FCA born in 1863 during the Civil War to no protection from retaliation, which is a when they fail to include information

6 BeasleyAllen.com related to compliance with regulations and CFO Awarded $1.9 Million In Sarbanes- lawyers on the Whistleblower Litigation the noncompliance is significant enough Oxley Anti-Retaliation Case Team: Archie Grubb, Larry Golston, Lance the government would likely have acted Gould or Andrew Brashier at Archie. differently if the information was known. Greg Becker was awarded $1.9 million [email protected], Larry.Golston@ To prove the misrepresentation was last month in his Sarbanes-Oxley (SOX) beasleyallen.com, Lance.Gould@beasleyal- material under the FCA, it must be shown whistleblower anti-retaliation case. Becker, len.com, or Andrew.Brashier@beasleyallen. the government would likely have denied the chief financial officer (CFO) for Rock- com. You can also call them at 800-898- payment had they known of the noncom- wood Clinic, was fired for refusing to file 2034. These lawyers will be glad to talk pliance. The Escobar decision clarifies that false financial reports. The clinic pres- with you about any aspect of whistle- the implied false certification theory is sured Becker to project the company’s blower litigation. acceptable to create liability under the 2012 losses at $4 million instead of $12.8 FCA. The decision definitely opened up the million, which Becker had estimated. potential for additional claims. Becker refused to project the losses at $4 Source: Universal Health Servs., Inc. v. United States, million because doing so would violate VI. 136 S. Ct. 1989 (2016) federal financial reporting laws and mislead investors. Thereafter, he was PRODUCT forced to resign. LIABILITY UPDATE Sarbanes-Oxley provides retaliation pro- Duke Involved In One Of The Largest FCA tection for those blowing the whistle on Suits To Focus On Academic Research fraud against shareholders and violations of Do Your Tires Make The Grade? securities laws. In order to file an anti-retal- The majority of False Claims Act (FCA) iation case under Sarbanes-Oxley, the com- cases involve health care or military con- Did you know that passenger tires are plaint must be filed with the U.S. tracts; however, the FCA is both able and graded on their ability to resist tread wear, Department of Labor within 180 days of beginning to be used by a more diverse generate heat and provide suitable traction the adverse action. Under SOX, recovery range of industries, which now includes for stopping? The federal government can include: reinstatement, back pay, academic research. Allegedly, Duke Univer- requires passenger tire manufacturers to special damages, and attorney fees. Front sity has submitted fraudulent data in appli- provide tire performance information to pay has also been accepted as a possible cations for more than 60 grants, worth consumers to assist them in selecting remedy under Sarbanes-Oxley in circum- more than $200 million. The issue began appropriate tires for their vehicles. Most stances where reinstatement would not be with a researcher working in the lab of a people are aware that they can find appropriate. prominent pulmonary scientist at Duke. maximum tire pressure information on the Becker was awarded front pay, back pay, When the researcher, Erin Potts-Kant, was tire as well as load ratings that state the special damages, and attorney fees. Specifi- arrested for embezzlement, Duke took a maximum load carrying capability of the cally, the judge awarded Becker $341,380 closer look at the researcher’s work. tire. However, tread wear, traction and in back pay and almost $1.5 million in front Fifteen of the researcher’s papers had to be temperature information can also be found pay. Becker was also awarded $15,000 for retracted for unreliable data. on the sidewall of a tire. This information reputation damage, attorney fees, and cost. The FCA case against Duke was filed by can help you determine which tire may be The $1.9 million awarded demonstrates the biologist Joseph Thomas. According to best suited for your purposes. significance of the case. Thomas, Duke was aware of the miscon- A tire’s traction grade can be found on Many whistleblower provisions include duct before the investigation and failed to the sidewall and indicates a tire’s stopping anti-retaliation provisions. Where the pro- disclose the scope of what it knew to capability as measured in straight-ahead vision under SOX requires the complaint to federal funding agencies. Additionally, braking traction tests. However, these be filed in 180 days, the Dodd-Frank Wall Thomas alleges that Duke received 64 braking tests do not include cornering or Street Reform and Consumer Protection grants either based on or arising from the turning traction. The grades on a tire will Act of 2010 (Dodd-Frank) permits whistle- research of Potts-Kant. These grants consist of grades of “AA,” “A,” “B,” and “C.” blowers to file in federal court within two totaled more than $200 million. Because A tire rated with an “AA” has the highest years of the adverse action. Dodd-Frank public universities are government entities, traction grade and indicates good ability of also permits the recovery of double back they may have some protection against the tire to stop on wet pavement. A tire pay, special damages, attorney fees, and FCA lawsuits; however, private universi- that has a “C” grade will provide the reinstatement under the same section. ties do not. poorest traction, comparatively speaking, Private universities, like Duke, make up under the same or similar test conditions. the top 25 recipients of federal funding for Tires also contain information regarding academic science. The FCA provides treble The Beasley Allen Whistleblower Team tread wear. The tread wear grade is a damages, meaning Duke could be forced to ratings system based on the wear rate of return three times the amount of funding it Several months ago, because of the the tread under a specified government received from the 64 grants, totaling more increased activity in whistleblower litiga- test procedure. While the actual tread than $600 million. Therefore, depending tion, our board created a whistleblower liti- wear can vary depending on the use of the on how this case against Duke resolves, gation team with lawyers in our Consumer tire including service conditions, the tread there could be a flux of FCA cases concern- Fraud & Commercial Litigation Section wear grade is at least an indicator of the ing academic research in the near future. being on the team. If you have any ques- potential tread wear performance of a tire. The complaint was filed by Joseph Thomas tions about whether you qualify as a whis- Under test conditions, a control tire is under the qui tam provision of the FCA. tleblower, you can contact a lawyer on the assigned a grade of 100. Other tires are team. You can get a free and confidential then compared to the control tire to deter- Source: Sciencemag.org evaluation of any potential claim. You can mine tread wear. For example, a tire grade find a contact form on the firm’s website or of 300 should wear three times longer than you can contact one of the following the control tire.

JereBeasleyReport.com 7 The National Highway Traffic Safety neously combusting devices have made us Could The F-35 Fighter Jet Be Déjà Vu For Administration (NHTSA) reports the fol- give these devices more than a passing Military Personnel? lowing on tread wear grades for current glance. The culprit that has sparked these tire designs: devices and the corresponding national Two F-35 fighter jets caught fire during conversation is the lithium-ion battery that training flights within a month of each • 15 percent are rated below 200 powers them. other this fall, according to Reuters Busi- ness Insider. In September, a U.S. Air Force • 25 percent are rated 201 to 300 While riding an attraction at the Univer- sal Orlando amusement park, a 14-year-old F-35-A caught fire as soon as the pilot • 32 percent are rated 301 to 400 girl suffered burns to several areas of her started the engine. The following month, a body when another passenger’s e-cigarette U.S. Marine Corps F-35B Joint Strike Fight- • 20 percent are rated 401 to 500 exploded. After a passenger’s replacement er’s internal weapons bay caught fire while Samsung Galaxy Note 7 smartphone burst in flight. The pilots were unharmed in • 6 percent are rated 501 to 600 into flames inside the plane’s cabin, a both mishaps. Even with these recent, • 2 percent are rated above 600 Southwest Flight was evacuated while on back-to-back incidents, both the Air Force the runway. When an 8-year-old plugged in and Marine Corps have declared the F-35 When selecting a tire for your vehicle, a her brand-new hoverboard to charge for fighter jet “combat ready” and have begun tire with a higher tread wear grade should the first time, it exploded and caught the integrating it into their squadrons. take longer to wear out than a tire with a girl’s bedroom on fire. This could be a discouragingly familiar lower tread wear grade. Hand-held video cameras were among refrain. In 1991 the U.S. Department of Tires used on vehicles generate heat the first devices powered by lithium-ion Defense (DOD) began testing the V-22 during use. Heat is an element that can batteries, which were introduced to the Ospry. The hybrid tilt-rotor aircraft was damage tires and increase the likelihood of market in the early 1990s. Now, they are intended to function as both a helicopter premature failure and wear. For this used to power just about everything. They and an airplane. The two aircrafts have reason, the federal government requires are extremely popular because they charge completely different functions, which is a tire manufacturers to grade tires ability to faster, last longer, and have a higher power key reason the Ospry does not perform resist the generation of heat and the ability density for more battery life than tradi- either function well. It has claimed 37 lives of a tire to dissipate heat under controlled tional battery technology. Moving lithium including 30 who died during testing acci- test conditions. Temperature grades range particles between a negative and positive dents from 1991 to 2000. Despite the from “A” being the highest to “B” and “C.” electrode to charge and discharge, the bat- “intense Congressional attack” following Tires used in driving long distances, teries create energy and a certain the deaths of 23 Marines in two crashes of under load, or in hot weather can generate amount of heat. test flights in 2000, the DOD officially significantly high temperatures on the tire. Lithium-ion batteries catch fire or deployed the V-22 in 2007. The heat will deteriorate the components explode due to a faulty manufacturing The most recent V-22 crash happened in of the tire which can lead to blowouts and process. There are at least two common May 2015 at Bellows Air Force Station in tread separations. Tires that can resist heat situations that can quickly turn an ordinary Hawaii—killing 21-year-old Lance Cpl. or dissipate heat with the best grade repre- electronic device into a dangerous object. Matthew Determan and 24-year-old Cpl. sent tires that are more likely to perform at First, thermal runaway occurs when a lith- Joshua Barron, both Marines. Earlier this safe levels throughout the life of the tire. ium-ion battery is defective and when the year, Determan’s family hired the Beasley According to NHTSA, only 27 percent of heat generated by the charging and dis- Allen Law firm and Honolulu lawyer the current tires available on the market charging ignites the electrolytes—com- Melvin Y. Agena to represent them in a are rated at an “A” grade. monly known as overheating. This will wrongful death lawsuit alleging the air- Tire grades regarding traction, tread cause a fire or explosion. craft is dangerous and defective. Still, the wear and temperature can be found on the The other common situation that can DOD stands by the aircraft. sidewall of the tire. Additionally, this same cause a lithium-ion battery to catch fire or Similarly, the F-35 has its critics and information can be located in publications explode occurs when the battery is suscep- problems, too. According to Reuters Busi- available from NHTSA. Information can be tible to puncture or tear. The battery is sus- ness Insider, the Pentagon’s chief weapons found at the government’s website, www. ceptible if its outside shell or the barrier tester noted in a July 2016 memo that the safercar.gov. Knowing how your tires separating the electrodes is defective. Even F-35 program was “not on a path toward graded out can help you understand how a slight breach can allow the positive and success but instead on a path toward the tires may perform throughout their negative electrodes to touch and create a failing to deliver.” The fifth generation useful life. If you need more information short circuit. The instant electrical dis- fighter presents stealth and advanced elec- on tires contact Ben Baker, a lawyer in our charge from the short circuit can be tronic attack and communications systems, Personal Injury & Products Liability explosive. but has been plagued throughout develop- Section, at 800-898-2034 or by email at Although businesses and researchers ment with electrical problems, software [email protected]. continue exploring new battery technolo- issues, and glitches with its advanced gies, these lithium-ion batteries remain the helmet system. standard. If you would like more informa- In June 2014, the first F-35 engine fire Lithium-ion Batteries—Once Popular Power tion about lithium-ion batteries, you can occurred while one fighter was preparing contact Will Sutton, a lawyer in our Toxic to take off from Eglin Air Force Base in Source Goes Up In Smoke Torts Section. He can be reached at 800- Florida. Following the incident, the New It is difficult to fathom how ordinary 898-2034 or by email at William.Sutton@ York Times reported that the fleet was devices, such as the Samsung Galaxy Note beasleyallen.com. grounded for the second time in a month. 7 smartphone or a toy like the hoverboard, Sources: Righting Injustice; Orlando Sentinel; CNN; A Popular Mechanics article explained can be ticking time bombs in our hands, CBS News; New York Times; The (Lebanon) Daily that the cause of the 2014 incident was our houses or even under our child’s feet. News; U.S. Consumer Product Safety Commission; fixed and the entire fleet was retrofitted to Yet recent, high-profile incidents of sponta- Associated Press; and Samsung address the problem.

8 BeasleyAllen.com The cause of the latest F-35 fire, which In her lawsuit, Janet Delana said the VII. occurred in October, remains undeter- Odessa, Mo., shop “negligently sold or mined. However, Popular Mechanics entrusted a gun” to her mentally ill adult MASS TORTS reports that investigators believe the Sep- daughter, Colby Sue Weathers, despite tember fire “started after strong tailwinds prior warnings. Ms. Delana called Odessa UPDATE redirected heat from the fighter’s engine Gun & Pawn on June 25, 2012, to urge during startup procedures.” Although both them not to sell a firearm to her daughter 2016 incidents remain under investigation, because she posed a potential safety risk to A One Billion Dollar Verdict In The Third there has not been a fleet-wide grounding. herself and others. But two days after Ms. J&J Hip Implant Bellwether Trial The U.S. Congress has also been critical Delana’s call, the daughter bought a of the fighter’s manufacturer, Lockheed handgun from the shop. About an hour A Texas federal Court jury found against Martin Corporation (Lockheed). In April, later, the 38-year-old woman fatally shot Johnson & Johnson’s DePuy Orthopaedics the U.S. Senate Armed Services Committee her father, Tex Delana. Inc. unit and awarded more than $1.04 held a hearing on the F-35 program. A CNN In May 2012, Ms. Weathers bought a billion in the six-plaintiff bellwether trial report quoted from hearing testimony that pistol from the same store. Afterwards, she that has been going on for two months. it is the “largest and most expensive acqui- had suicidal intentions, and the family took The case involved the metal-shedding arti- sition program in the history of the Depart- the gun for her safety. The complaint ficial hips that are part of the Pinnacle line. ment of Defense.” During the hearing, alleged the shop knew or should have Jurors deliberated for less than a day and committee chairman Sen. John McCain known during the June sale that Ms. found J&J and DePuy had negligently (R-Ariz.), criticized the numerous delays, Weathers had a history of mental illness designed the hip implant, had failed to design problems and spiraling costs, which and thus posed a risk to public safety. Ms. warn surgeons about dangerous conditions has almost doubled the initial estimate, Weathers was charged with murder and related to the implant and had concealed which currently is nearly $400 billion for later found not guilty due to her mental the implant’s risks. 2,457 fighters. Expressing frustration, impairment. She was committed to a state The verdict includes between $4 million McCain questioned the rationale of invest- mental hospital. and $6 million per plaintiff in damages for ing in a program that is not likely to match The Defense lawyers tried to have the physical injuries and pain and suffering, the defense capabilities of the nation’s case thrown based on the Protection of and $1 million each to four spouses for loss potential opponents such as China Lawful Commerce in Arms Act (PLCAA). of consortium. More than $504 million was and Russia. But in April, the state Supreme Court unan- awarded against DePuy and J&J in punitive There is much at stake with the F-35 imously decided to allow the lawsuit to damages. It’s very significant that the jury program. However, as former Secretary of proceed. The appellate court decided that found the companies had acted with Defense Chuck Hagle said following the a gun store could be held responsible for “malice” or “fraud.” first F-35 fire in 2014, “the safety of our the fatal shooting despite the PLCAA. The DePuy and J&J were each found liable military men and women should remain 2005 federal shield law grants firearms for negligent design defect, negligent our top priority (as reported by Breaking companies broad immunity from legal failure to warn, strict liability failure to Defense).” Repeating the mistakes made actions for weapons used in crimes. The warn, failure to recall, negligent misrepre- with other technological advancements in measure has prevented a large number of sentation, intentional misrepresentation the military, such as the V-22 Ospry, will lawsuits brought by gun violence victims and fraudulent concealment. J&J was also result in more unnecessary deaths of those and their families from going to trial. The found liable for aiding and abetting DePuy serving our country. law bars negligence claims, but among its in each of the seven causes of action. The If you need more information on this exceptions is “negligent entrustment,” jury found that J&J did not conspire with subject contact Mike Andrews, a lawyer in which was cited in the Missouri case. DePuy on the design defect claim, but did our firm’s Personal Injury & Product’s Lia- The Brady Campaign to Prevent Gun Vio- find J&J liable for conspiracy on the other bility Section, at 800-898-2034 or by email lence has declared the settlement a land- six claims. at [email protected]. Mike mark victory for the gun safety movement. The case involved six Plaintiffs from Cal- handles aviation litigation for the firm. Jonathan Lowy, lead counsel for Delana, ifornia, who each had to undergo “revision Sources: NBC News, Righting Injustice, Reuters who also serves as Director of the Brady surgeries” after being fitted with metal-on- Business Insider, New York Times, Popular Center’s Legal Action Project, said in a metal artificial hip systems made by DePuy, Mechanics, CNN, Breaking Defense statement: known as the Pinnacle hip system’s Ultamet variety. Friction between the Today’s settlement sends the latest device’s metal socket and metal ball head resounding message to gun dealers rubs away billions of microscopic particles Missouri Gun Shop Agrees To Pay $2.2 across the country that if they don’t with every step, polluting the bloodstream Million To Settle Wrongful Death Lawsuit clean up their act, they will be forced and surrounding tissue with “wear debris” to pay the consequences when they over time. The Plaintiffs proved that J&J A Missouri firearms shop has agreed to choose to irresponsibly arm danger- knew the device was riskier than others settle a wrongful death lawsuit. This ous people with guns. available, but still marketed it aggressively, outcome may serve as a precedent that will even paying “kickbacks” to a number have national repercussions on gun dealer Hopefully, this case will serve that of surgeons. liability. Don’t be shocked to learn that is a purpose. We can’t continue to act irrespon- In closing arguments, Mark Lanier, one view not shared by those in the gun sibly in this area of concern. There can be of the Plaintiffs’ lawyers, asked the jury to making and selling industry. Odessa Gun & responsible gun control without doing any impose a stiff enough penalty on Johnson Pawn will pay $2.2 million to settle the damage to rights of individuals protected & Johnson that the company would change lawsuit. It was alleged that the gun shop by the U.S. Constitution. its behavior with future medical devices. negligently sold a weapon to a mentally ill Source: Newsweek He suggested that a $500 million punitive woman who used the gun to kill her father. award would hardly be felt by a company

JereBeasleyReport.com 9 worth $72 billion. The proof at trial with the product to “follow patients in the The jury found that Baby Powder con- revealed some very bad conduct and the usual manner.” tributed to the development of Ms. jurors recognized how bad it was. A number of other studies have found Giannecchini’s ovarian cancer. The verdict The next bellwether trial is set to begin Physiomesh to lead to additional hernias or includes $575,000 in medical damages, $2 in September 2017, with the parties prepar- to be the cause of additional surgeries, million in compensatory damages, and $65 ing for 10 plaintiffs all from New York. J&J organ perforation, mesh migration, sepsis million in punitive damages against has objected to proceeding with any more and even death. A study published in the Johnson & Johnson and $2.5 million in trials in the multidistrict litigation (MDL) journal Surgical Endoscopy concluded punitive damages against Imerys. until the appeals from the second bell- patients treated with Physiomesh suffered Ms. Giannecchini was 59 when she was wether trial have been resolved. The “significantly greater hernia recurrences diagnosed with Stage IV ovarian cancer company also contended the Texas federal and postoperative pain compared with four years ago. Since then, she has gone court lacks jurisdiction over out-of-state (Ventralight patients).” through multiple surgeries and chemother- residents. The U.S. Food and Drug Administration apy regimens. Ms. Giannecchini used The patients are represented by W. Mark (FDA) cleared Physiomesh through a 510k Johnson & Johnson’s Baby Powder for femi- Lanier of The Lanier Law Firm; Richard submission, known as a Traditional or nine hygiene for more than 40 years. She Arsenault of Neblett Beard & Arsenault, Abbreviated Premarket Notification Sub- clearly met the duration and frequency Jayne Conroy of Simmons Hanly Conroy; mission in April 2010. The submission clas- requirements. and Khaldoun Baghdadi of Walkup Melodia sifies a product as “substantially Another jury has now heard the evi- Kelly & Schoenberger, among others. The equivalent” to other products on the dence proving a link between Johnson’s lawyers for the Plaintiffs have done a tre- market and allows it to forgo providing the Baby Powder and ovarian cancer, and has mendous job against a company that extensive safety and efficacy testing found a clear connection. When is enough appears to have lost its moral compass. The required of new products or products going to be enough? Despite repeated ver- MDL is In re: DePuy Orthopaedics Inc. determined to have undergone significant dicts that hold the company accountable, Pinnacle Hip Implant Products Liability changes. Ethicon maintained the mesh was Johnson & Johnson has refused to remove Litigation in the U.S. District Court for the substantially similar to Proceed mesh it its talcum powder products from shelves, Northern District of Texas. already had on the market at the time, has refused to warn consumers about the though Proceed mesh was recalled in risk, and continues to deny its responsibil- October 2010 due to layers of the mesh ity. It’s time for this company to come separating once implanted. clean and put consumer health and the The Physiomesh Litigation Many reported complications in hernia well-being of people ahead of profits. Physiomesh, intended for hernia repair, surgeries, according to the FDA, are associ- Ms. Giannecchini was represented by is a flexible polypropylene mesh designed ated with now-recalled surgical mesh, Beasley Allen attorneys Ted G. Meadows, to reinforce the abdominal wall, prevent- which it credits as the main cause of bowel David P. Dearing, Danielle Ward Mason, ing future hernias from occurring. Even perforation and obstruction complications. Lauren Razick, and Ryan Beattie, along though there are several types of hernias, Defects in Physiomesh were found only with Allen Smith of The Smith Law Firm, most occur when an organ or tissue pro- after it was put on the market. Tim Porter of Porter Malouf, and Stephanie trudes through a weak spot in abdominal Lawyers in our firm’s Mass Torts Section Rados, Jim Onder, and Wylie Blair of the St. muscles. This can cause a bulge in the are currently investigating cases involving Louis firm of Onder, Shelton, O’Leary & stomach or groin region that aches or serious injury or death as a result of Ethi- Peterson, LLC. burns, and it can also cause heartburn, con’s Physiomesh. If you or a loved one has Lawyers in our firm’s Mass Torts Section vomiting and occasionally swelling of the received hernia treatment that included are heavily involved in litigating cases on testicles. The condition often requires Physiomesh and have experienced compli- behalf of women who were diagnosed surgery where mesh, like Physiomesh, cations, reoccurring hernias or the need with ovarian cancer following the genital which is intended for laparoscopic use, is for additional surgeries, you may have a use of talcum powder. If you have any used to fill in a hole in the abdominal claim. If you need help or just need more questions regarding these cases, or about muscle or laid over or under it to prevent information, contact Matt Munson by the talc litigation generally, contact Ted any further protrusions. calling toll free at 800-898-2034 for a free, Meadows, the lead talc lawyer in our Mass On May 25, 2016, Ethicon, a subsidiary no-cost, no-obligation evaluation of Torts Section, at Ted.Meadows@beasleyal- of Johnson & Johnson and manufacturer of your case. len.com or by phone at 800-898-2034. Physiomesh, issued a voluntary recall of Source: BA staff & website the product due to high rates of reoccur- rence. In a safety notice, the company said Jury Finds Johnson & Johnson And Imerys unpublished data using two large indepen- Liable For $70 Million In Third Trial New Whistleblower Evidence Used In Third dent hernia registries found the need for Talc Trial additional operations increased when Phys- After almost a month of trial, in our third iomesh was used in comparison to when lawsuit against J&J, the jury found for our The third trial in St. Louis had a new other similar meshes were used in abdomi- client, Deborah Giannecchini, and wrinkle. After seeing media reports about nal, or ventral, hernias. awarded $70.075 million in damages. This the first two verdicts against Johnson & The company said it has not been able to is the third jury to find Johnson & Johnson Johnson, a whistleblower came forward pinpoint a cause for the product’s failure, legally responsible for failing to warn of a with some shocking information. An but in the health interest of patients, which known risk that talc—containing body employee of a company that had been are at a higher risk of needing additional powder, Baby Powder, can cause ovarian hired by Johnson & Johnson to review surgery or experiencing another hernia, cancer. For the first time, however, the adverse event reports involving the compa- Ethicon removed the product from the jury also held Johnson & Johnson talc sup- ny’s Baby Powder realized she had some global market and advised medical profes- plier Imerys Talc America liable as well. information that could be devastating to sionals who previously treated patients Johnson & Johnson.

10 BeasleyAllen.com This person first approached Johnson & cient evidence to show the Plaintiff’s inju- Xarelto carries a significant risk of Johnson to reveal that she was being ries had been caused by the medication. severe, uncontrolled internal bleeding, instructed to change the adverse event The successful cases are all either tied up with bleeding most often occurring in the reports. Instead of doing the right thing, in post-trial motions or on appeal to the gastrointestinal tract or brain. Xarelto has Johnson & Johnson ignored this employee state’s Superior Court. been linked to gastrointestinal bleeds, and refused to make any changes in its The Plaintiffs are represented by Tom brain bleeds and bleeding deaths, and, adverse event reporting system. The Kline and Christopher Gomez of Kline & unlike warfarin, there is currently no anti- employee then decided to contact our law Specter PC, and Jason Itkin, Kelly Woods, dote to reverse the blood thinning qualities firm. We called the whistleblower to the Cesar Tavares, Cory Itkin and Santana of Xarelto in the event of a bleeding emer- stand as a rebuttal witness in our case. McMurrey of Arnold & Itkin LLP. The cases gency. Xarelto carries many black box Johnson & Johnson tried to prevent the are N.F. et al. v. Janssen Pharmaceuticals warnings, the most serious kind issued by jury from hearing any testimony from the Inc. et al. and C.W. et al. v Janssen Phar- the U.S. Food and Drug Administra- whistleblower witness who said the maceuticals et al. both before the Court of tion (FDA). company instructed her to alter Baby Common Pleas of Philadelphia County, According to the Institute of Safe Medi- Powder adverse event reports. These Pennsylvania. cation Practices, data from the FDA shows reports are sometimes used by the U.S. Source: Law360.com that Xarelto accounted for the largest Food and Drug Administration (FDA) to number of reported cases of domestic, assess whether a product is associated serious injury among regularly monitored with a disease such as cancer. Needless to drugs in 2015. In 2015, there was a total of say, this testimony from a whistleblower is Xarelto Lawsuits On The Rise As The Next 10,674 reports involving patients on strong evidence of Johnson & Johnson’s MDL Bellwether Trial Date Nears Xarelto, including 1,121 patient deaths and continuing disregard for women’s health 4,508 injuries requiring hospitalization. and safety. To date, more than 15,680 lawsuits have The most frequent reports involved bleed- For questions about the Talc litigation been filed across the country against the ing on the brain and in the intestines. contact Ted Meadows at Ted.Meadows@ makers and distributors of Xarelto. Of For more information, you can contact beasleyallen.com. If you have questions those cases, more than 14,000 are pending Melissa Prickett, a lawyer in our firm’s about our Whistleblower Litigation Team, in New Orleans, La., in the multi-district Mass Torts Section, at 334-269-2343 or 800- contact Andrew Brashier, a lawyer in the litigation (MDL 2592) overseen by U.S. Dis- 898-2034, or email melissa.prickett@beas- firm’s Consumer Fraud & Commercial Liti- trict Court Judge Eldon Fallon. Beasley leyallen.com. gation Section, at Andrew.Brashier@beas- Allen lawyer Andy Birchfield serves as leyallen.com or by phone at 800-898-2034. Co-Lead Counsel for the Plaintiffs Steering Committee. There are also approximately 1,285 state court cases pending in the Phil- Wright Medical Technology Agrees To $240 adelphia Court of Common Pleas, Pennsyl- Million Hip Implant Settlement J&J Settlement Ends Latest Risperdal Case vania and additional state court cases Before Trial pending in Delaware, California and Wright Medical Technology has agreed Missouri. to a $240 million settlement to end about Johnson & Johnson has agreed to a set- On Sept. 21, 2016, the MDL Court 1,300 claims in consolidated litigation in tlement in order to avoid a trial that was entered Case Management Order No. 2A, Georgia federal court and California state slated to begin in Pennsylvania state court amending CMO No. 2 to reset bellwether court over its metal-on-metal hip implants. on Nov. 1 in the latest case over abnormal trial dates and deadlines. The first Xarelto This puts an end to the majority of the suits breast growth that adolescent boys have MDL Bellwether trial is scheduled to begin that were filed over the implants. Under suffered after taking the antipsychotic on March 13, 2017. In Pennsylvania state the terms of the settlement, 1,292 patients drug Risperdal. The case was filed by the court, Judge Arnold New (presiding over who had to go through revision surgery family of a boy (identified only as “N.F.”) the Philadelphia Court of Common Pleas) within eight years of their original Con- who allegedly began using Risperdal at age consolidated Xarelto litigation, and serve, Lineage or Dynasty hip implants are 6 to treat symptoms of Asperger’s syn- directed the parties to select 10 Bellwether eligible for the settlement. Those drome. The terms of the settlement are cases from the pool of more than 1,000 implanted with the Conserve Cup—the confidential. filed cases and get them ready for trial device with the most frequent failures— The case would have been the sixth case starting in the Summer of 2017. The out- can receive $170,000, while those who had to go to trial over claims that J&J subsid- comes of bellwether trials can provide the metal-liner Dynasty and Lineage iary Janssen Pharmaceuticals Inc. worked insight into how other juries might rule in devices can recoup $120,000, according to to obscure the risk of abnormal breast similar lawsuits, and potentially help bring a statement from the Plaintiffs’ leadership growth, a condition known as gynecomas- an entire litigation to resolution. counsel. Wright Medical CEO Robert Palm- tia, faced by young boys taking the power- Xarelto is a blood thinner manufactured isano said in a statement: ful antipsychotic medication. by German drug maker Bayer AG and dis- This settlement addresses approxi- This would have been the first case to go tributed in the U.S. by Janssen Pharmaceu- mately 85 percent of the known U.S. to trial since a jury hit J&J with a $70 ticals, a subsidiary of Johnson & Johnson. revision claims that do not have million verdict on behalf of a Risperdal Xarelto entered the U.S. market in July potential statute of limitations issues plaintiff in July. There are now more than 2011, and is currently approved for six indi- and removes a great deal of the 2,000 Risperdal-related cases pending as cations, including reducing the risk of uncertainty that has been associated part of a mass tort program in Philadel- stroke in patients with non-valvular atrial with this litigation. phia. The three other verdicts in Risperdal fibrillation; treating deep vein thrombosis cases tried in Philadelphia have resulted in and pulmonary embolism, and reducing As of September, there are about 600 $4.75 million in damages for Plaintiffs. In the recurrence of these conditions; and metal-on-metal hip implant revision claims another case, there was a win for J&J. A preventing blood clots in patients follow- that won’t be included in the settlement, as jury in that case found there was insuffi- ing knee or hip replacement surgery. well as 700 metal-on-metal hip implant

JereBeasleyReport.com 11 non-revision claims that are also included The Claims Administrator will begin ulcer, Gastroesophageal Reflux Disease in the settlement. The plaintiffs’ leadership evaluating Extraordinary Injury Fund (EIF) (GERD), NSAID-associated gastric ulcers, counsel said in a statement: claims in the coming weeks. The Master and pathological hypersecretory condi- Settlement Agreement provided for the EIF tions. They were later approved to treat fre- During the negotiations with Wright to provide additional compensation for quent heartburn. Medical, it was made clear that those claimants who had minor children Beginning in the 1990s, studies have claims for revised Wright metal-on- when they were diagnosed with bladder linked PPIs, including Nexium, Prevacid, metal hips that are not included in cancer, suffered economic damages of and Prilosec, to kidney problems, includ- this settlement will be part of subse- more than $200,000, or suffered other ing Acute Interstitial Nephritis (AIN). AIN quent settlement programs. extraordinary injuries that were not com- is a condition where the spaces between The first bellwether trial in the multidis- pensated by the settlement program. EIF the tubules of the kidney cells become trict litigation (MDL) in Georgia federal claims packages were due to be submitted inflamed. Later studies have shown that court ended in a $11 million verdict last on July 18, 2016. PPI users also have an increased risk of November for the Plaintiff, Robyn Chris- We expect to receive EIF payments and Chronic Kidney Disease (CKD). In Decem- tiansen. That verdict was later reduced by final settlement payments for the claims ber 2014, the labels of prescription PPIs the court to $2.1 million. lawyers in our firm’s Mass Torts Section were updated to include a warning about U.S. District Judge William S. Duffey left submitted on behalf of our clients during AIN. However, there is no such warning intact the $1 million in compensatory the first half of 2017. If you have any ques- for the over-the-counter versions of these damages the jury awarded to Christiansen tions about the terms of the settlement or medications. Neither prescription nor over- for complications arising from her Wright the status of a particular claim, contact Liz the-counter PPI medications warn of the Conserve Hip Implant System, but reduced Eiland or Roger Smith, lawyers in our Mass risk of CKD. the punitive damages award from $10 Torts Section, at 800-898-2034 or by email Lawyers in our firm’s Mass Torts Section million down to $1.1 million. The judge at [email protected] or Roger. are currently investigating cases involving concluded that while the company may [email protected]. PPI use and Acute Interstitial Nephritis have mislead doctors and consumers about (AIN), Acute Kidney Injury (AKI or Acute the safety of the hip system, at least part of Renal Failure), and Chronic Kidney Disease (CKD). If you would like more informa- its motivation was also to improve the The Proton Pump Inhibitors Litigation quality of life for active patients by provid- tion, contact Roger Smith or Liz Eiland, ing an innovative hip system at a time So far, 15 lawsuits have been filed in lawyers in the Section at 800-898-2034 or when the market was full of products that federal courts around the country alleging by email at [email protected] failed regularly. that a group of commonly-used heartburn or [email protected]. The MDL was established in February medications called proton pump inhibitors Sources: www.fda.gov and In re: Proton-Pump 2012. Ms. Christiansen—one of many (PPIs) caused Plaintiffs to develop kidney Inhibitor Products Liability Litigation, MDL No. 2757, recipients of the Wright Conserve Hip disease. Lawyers anticipate that as many Memorandum in Support of Plaintiffs’ Motion for as 100 more cases will be filed in the Transfer of Actions to the United States District Court Implant System, which allegedly causes for the Middle District of Louisiana Pursuant to 28 damage to soft tissue surrounding the coming weeks, with hundreds more to U.S.C. § 1407 and JPML Rule 7.2 for Coordinated and device—had her case selected by the court follow in 2017. Consolidated Pretrial Proceedings (Oct. 17, 2016) as the first bellwether trial. The Plaintiffs On Oct. 17, 2016, six of the federal-court leadership counsel is represented by Plaintiffs filed a Motion for Consolidation Michael L. McGlamry of Pope McGlamry; and Transfer, requesting that the U.S. Judi- Discovery Deadline Is Extended And Raymond P. Boucher of Boucher; Helen cial Panel on Multidistrict Litigation (JPML) Bellwether Trial Dates Set For Bard IVC Zukin of Kiesel Law, Peter Burg of Burg consolidate the PPI cases in the U.S. Dis- Simpson, Christopher Yuhl of Yuhl Carr; trict Court for the Middle District of Louisi- Filter Litigation Sean Jez of Fleming Nolen & Jez; and Ellen ana. A multidistrict litigation (MDL) In the Bard IVC Filters Products Liability Relkin of Weitz & Luxenberg. transfers all cases pending in federal court Litigation, multidistrict litigation (MDL) The cases are In re: Wright Medical to one venue for purposes of pre-trial dis- No. 2461, the Court conducted the sixth Technology Inc., Conserve Hip Implant covery. Consolidation serves the conve- case management conference with the Products Liability Litigation, case number nience of the parties, witnesses, counsel, parties on Oct. 14, 2016, to address matters 1:12-md-02329, in the U.S. District Court and the judicial system. relating to the production of additional for the Northern District of Georgia, and In An MDL can also promote fairness by documents and the need to adjust the dis- re: Wright Hip System Cases, Judicial avoiding the possibility of inconsistent pre- covery and trial schedule accordingly. The Council Coordination Proceeding No. trial rulings with respect to the scope of Court ordered April 21, 2017 as the new 4710, in the Superior Court of the State of discovery, causation, and other factual and deadline for selection of bellwether Plain- California, County of Los Angeles. legal issues. While this allows Plaintiffs to tiffs. The Court further noted its intention Source: Law360.com work together on issues of science and dis- covery, each Plaintiff maintains his or her to complete bellwether selection in early own action. May 2017 in time to hold the first bell- PPIs are a group of drugs that block the wether trial in the Fall of 2017. The Court Actos Settlement Update production of gastric acid. Currently, there noted that other bellwether trials may also are numerous drugs that fall into this cate- be possible before the end of 2017. The Claims Administrator has been very gory, including Nexium, Prilosec, and Pre- Retrievable IVC filters are wire devices busy reviewing the more than 10,000 vacid, with several options now available that are placed in the vena cava, the largest claims enrolled in the Actos Settlement over-the-counter. PPIs were initially vein in the body. They are designed to stop Program. Interim settlement payments approved for short-term use for the treat- blood clots from reaching the heart and began in late summer and continue as the ment and prevention of gastric acid related lungs, and are recommended for patients Claims Administrator works very hard to conditions, including active duodenal who cannot take blood thinners. The complete the review process. devices are made by 11 manufacturers,

12 BeasleyAllen.com including C.R. Bard, Cook Medical, and VIII. pean drug approval for the company’s Johnson & Johnson. Permanent IVC filters Esbriet medication, against the company’s have been used successfully in patients AN UPDATE ON policies and in violation of federal secu- since the 1960s. Retrievable IVC filters rities laws. were introduced in 2003 and promoted for SECURITIES Andrew Ceresney, director of the SEC’s use in patients undergoing bariatric, LITIGATION Division of Enforcement, said he was trauma and orthopedic surgery. pleased with the jury’s verdict. The jurors Since the retrievable IVC filters hit the found that Sabrdaran shared confidential market, hundreds of complications have information with his friend, who used it to Judge Approves The $175 Million BP been reported including migration, frac- earn $1 million in the stock market, ture, and perforation leading to embolism, Settlement In Class Action Lawsuit “trading at the expense of ordinary inves- organ damage, and death. In some cases, tors who played by the rules. Ceresney said A Texas federal judge has preliminarily pieces of the device or the entire device in a statement that “this jury verdict reaf- approved the $175 million settlement have punctured the heart or migrated into firms our commitment to aggressively root between BP PLC and a class of investors the spine. As a result, lawsuits are mount- out and prosecute insider trading schemes alleging the company downplayed the ing against manufacturers of these devices. in order to protect the integrity of our magnitude of the Deepwater Horizon oil To date, Cordis IVC Filter Litigation is markets.” spill in the weeks following the blowout. consolidated in California State Court, Bard The SEC’s case rested on the timing of U.S. District Judge Keith P. Ellison rejected IVC Filter Litigation is consolidated in Afsarpour’s bets, which often coincided a bid by 135 institutional investors to Arizona (MDL 2641), and Cook Medical with phone calls and text message modify the settlement opt-out procedures. IVC Filter Litigation is consolidated in exchanges with his friend. Afsarpour bet BP’s settlement resolves a certified class Indiana (MDL 2570). For more information, on the Esbriet drug’s approval in Decem- action alleging the company misrepre- contact Melissa Prickett or Liz Eiland, ber 2010, even though all public informa- sented the seriousness of the explosion lawyers in our firm’s Mass Torts Section, at tion and market analysis suggested the and its aftermath. As all of us now know, 800-898-2034 or email Melissa.Prickett@ decision wouldn’t come down until the 11 workers were killed and an estimated beasleyallen.com or Liz.Eiland@beasley- first quarter of the following year based on 4.9 million barrels of crude oil were spilled allen.com. the standard 210-day timeline for these into the Gulf of Mexico, causing tremen- applications. Sabrdaran knew the drug’s dous harm and damage. application was progressing so smoothly, The class covers anyone who purchased though, that InterMune had gotten FDA Launches New Site ADSs between April 20, 2010, when the approval to expedite the process. explosion occurred, and May 28, 2010, It was argued by the lawyers represent- On Oct. 21, the FDA unveiled a new when it became apparent that the oil flow ing the Defendants that those communica- portal on its website for reporting allega- from the broken well head was much tions between the two friends were based tions that a medical device manufacturer or higher than initially disclosed by BP. If that on personal matters. They also said that marketer is violating the law. The website, information had been available to the anyone who looked on the European called “Reporting Allegations of Regulatory market, the class alleged, the price of BP Union’s Committee for Medicinal Products Misconduct,” contains a short online form stock would have been lower when they for Human Use website would know that to submit reports of alleged wrongdoing. bought their shares. an earlier decision was possible, and An example would be marketing a device The Plaintiffs Steering Committee for argued Afsarpour bet cautiously, using without FDA approval. The complaints can the individual action is comprised of limit orders so his purchases would only be submitted by anyone and also can be Pomerantz; Spector Roseman Kodroff & go through if the stock dropped to a low anonymous. According to the FDA, it will Willis; Kessler Topaz Meltzer & Check; and price and a stop-loss order that reduced monitor each allegation along with other Kirby McInerney. The settlement class is risk by selling if the price dropped below a sources and decide if further investigation represented by lead counsel Cohen Mil- certain price once he’d bought it. At press is warranted. Further action could involve stein Sellers & Toll and Berman DeValerio. time, the judge had yet to rule on remedies. a warning letter to the company, an inspec- The MDL is In re: BP PLC Securities Litiga- The case is U.S. Securities and tion of the plant or a request for a recall of tion in the U.S. District Court for the Exchange Commission v. Sasan Sabrda- the device. You can access the website by Southern District of Texas. going to http://www.fda.gov/MedicalDe- ran et al. in the U.S. District Court for the Source: Law360.com vices/Safety/ReportingAllegationsofRegu- Northern District of California. latoryMisconduct/default. Source: Law360.com htm?source=govdelivery&utm_ medium=email&utm_source=govdelivery. A Victory For The SEC In Insider Trading Trial Of Former InterMune Director IX. A California federal jury found last month that a former InterMune director BUSINESS tipped off a friend about the pending Euro- LITIGATION pean approval of the pharmaceutical maker’s lung disease drug. Thus handed the U.S. Securities and Exchange Commis- sion (SEC) a win in its insider trading suit Judge Approves $38 Million Deutsche Bank against the two men. Dr. Sasan Sabrdaran, Silver Price-Fixing Settlement a former director at InterMune, was A New York federal judge has given pre- accused of giving his friend Farhang Afsar- liminary approval to the $38 million settle- pour confidential information about Euro- ment between Deutsche Bank AG and a

JereBeasleyReport.com 13 class of silver investors. The settlement settle price-fixing allegations by dealer- X. was in multidistrict litigation accusing the ships. U.S. District Judge Marianne O. German bank, along with other major Battani, who is overseeing the multidistrict INSURANCE AND banks, of conspiring to fix the price of litigation, said in her order that the agree- silver. U.S. District Judge Valerie Caproni ments, reached in litigation covering FINANCE UPDATE approved the settlement. Judge Caproni various individual auto parts, were fair, said that the settlement was a fair, reason- adequate and reasonable. Judge able and adequate end to the investors’ Battani said: Blue Cross Misstated Rates For Years To claims against the German bank. Judge Alabama Regulators Caproni said in her order: The settlements reflect both the strengths of the auto dealers’ claims State law requires insurance companies The court finds that the settlement and the risk that the settling defen- to file their rates with state regulators at agreement was entered into at arm’s dants may prevail on some or all of the Department of Insurance. In most length by experienced counsel and is their defenses. instances, though, the filing requirement sufficiently within the range of rea- actually creates a bar to litigation over Among the companies involved in the sonableness. exorbitant prices called the filed-rate doc- agreements are Denso Corp., Sumitomo trine. Unfortunately for them, Blue Cross In addition, Judge Caproni certified, for Electric Industries Ltd. and NSK Ltd. The Blue Shield of Alabama (BCBS-AL) had a the purposes of the settlement, a class of settlements cover litigation over car parts policy for years of charging rates different investors who participated in U.S.-related such as air conditioning systems, wire har- from those filed with state regulators, a trades of silver or silver derivatives dating nesses and heater control panels. The cases practice that violated state law. back to January 1999. Lowey Dannenberg are part of an MDL that followed the U.S. The policy resulted in both overcharges Cohen & Hart PC was named class counsel. Department of Justice’s launch of an and undercharges for different groups, The suit had alleged Deutsche Bank, HSBC ongoing investigation into the auto parts according to depositions. BCBS-AL’s prac- Holdings PLC and Bank of Nova Scotia col- industry. tice of not charging the rates it filed with luded to fix the price of silver futures to The government alleges that the manu- the Department of Insurance came to light ensure the banks received high returns as facturers, marketers and sellers of the parts after U.S. District Judge David Proctor part of The London Silver Market Fixing conspired to raise prices they charged unsealed depositions on Oct. 18 in a Ltd., which has set the price of physical automakers. So far, the investigation has massive antitrust case against 38 Blue silver since 1897. led to approximately $2.4 billion in crimi- Cross Blue Shield (BCBS) affiliates, includ- In October 2014, the U.S. Judicial Panel nal fines paid to the U.S. Department of ing BCBS-AL. on Multidistrict Litigation centralized the Justice. The price-fixing affected dozens of In earlier issues, we have discussed the litigation in the Southern District of New products that were sold to some of the basics of the BCBS multidistrict litigation York. UBS AG, which was also named in largest automobile manufacturers in the (MDL) and Beasley Allen’s role in that liti- the suit, already secured its exit from the U.S., including General Motors, Chrysler gation. The central issue in the case is dispute. The bank had argued in its own and Ford, according to the government. whether BCBS affiliates in different states motion that it should be removed from the A number of direct purchasers, dealer- conspired to limit competition in order to case because the plaintiffs admitted UBS ships and vehicle buyers subsequently charge higher rates to subscribers and had no role in the silver-pricing company brought lawsuits against companies named offer lower payments to medical providers. at the heart of the alleged scheme. UBS in the investigation. The lawsuits accuse The Alabama case is the first of the class said the allegations against it were inade- the companies of forcing the plaintiffs to actions consolidated in the MDL to move quate and implausible. Judge Caproni pay more for the automotive products than forward. Blue Cross Blue Shield of Alabama agreed early last month, dismissing the they would have paid if the illegal conduct dominates the market for health insurance claims against UBS on the grounds that the did not occur. This summer, Judge Battani in the state, with more than 93 percent of investors failed to state a claim against the granted final approval to $225 million in the market for large group policies, accord- Swiss bank. settlements between auto parts end payors ing to the Kaiser Family Foundation. The The plaintiffs are represented by Barbara and companies including Nippon Seiki Co. company has a virtual monopoly in J. Hart, Vincent Briganti, Geoffrey M. Horn, Ltd., Panasonic Corp., Hitachi Automotive Alabama. Next year, BCBS-AL will be the Raymond Girnys, Christian P. Levis and Systems Ltd. and Sumitomo. only company offering individual plans Michelle E. Conston of Lowey Dannenberg In September, the judge gave her initial through the marketplace set up under Cohen & Hart; and James J. Sabella, Robert approval to agreements that will see Aisin Obamacare. G. Eisler, Charles G. Caliendo, Peter A. Seiki Co., Schaeffler Group USA Inc. and “We believed and continue to believe Barile III of Grant & Eisenhofer. The case is Valeo Inc., among others, pay some $44 Blue Cross is understating the amount of In re: London Silver Fixing Ltd. Antitrust million to settle price-fixing allegations by the overcharging,” said Barry Ragsdale, a Litigation in the U.S. District Court for the end payors. lawyer representing subscribers and pro- Southern District of New York. Source: Law360.com viders. Lawyers at Beasley Allen are Source: Law360.com working closely with several other national firms on the provider side of the case. However, this issue affects subscribers— Judge Gives Final Approval To $125 Million individuals who purchase BCBS insurance. Settlements In Auto Parts MDL In a media response, a BCBS-AL spokes- woman said the policy actually saved A Michigan federal judge has granted $75 million for a vast majority of small final approval to a number of settlement group subscribers, which includes busi- agreements that will see car parts manu- nesses with 50 employees or less. The facturers pay about $125 million in total to statement read:

14 BeasleyAllen.com Despite the significant overall 2013 that Alabama had an ineffective rate company was violating their rights by savings, our research also revealed review system, but recently reversed that failing to protect their retirement plan. that a marginal portion of our small decision—giving the state power to The Washington-based hospital will pay business customers may not have approve rates for Affordable Care Act plans $50 million a year for the employees’ received the most favorable rate in 2017. Barry Ragsdale said the depart- benefit plan until it has paid $350 million, when renewing their health insur- ment’s failure to sanction the company for according to the terms of the proposed set- ance. This past summer, Blue Cross charging rates that differed from the filed tlement filed by the nurses leading the suit. self-reported this matter to our regu- rates shows that the state still does not The remaining $1.9 million will be paid to lator, the Alabama Department of have an effective system for policing big nonvested former plan participants. Insurance, and is fully cooperating insurance companies. Barry said: The nurses’ claims mirror those of other with the Department in its review. hospital chain workers who have fought all The Company will refund affected [BCBS-AL has] attempted to argue the way to the Supreme Court to sort out small employer groups upon the con- that they are immune from antitrust the issue of whether hospitals that claim a clusion of the Alabama Department law because they have their rates religious affiliation can extend that to relief of Insurance’s review. approved by the Department of from following ERISA’s requirements for Insurance and that is their get-out- retirement plans. Blue Cross has argued that affiliates’ of-jail-free card. What this [testi- There are several other cases addressing rates have been approved as reasonable by mony] does is knocks that leg out of the issue that the high court may take. One state regulators and shouldn’t be chal- their defense. It illustrates again that of the cases, Dignity Health, sought review lenged in court. Department of Insurance the Department of Insurance is from the high court of a similar decision in actuary Steven Ostlund and Blue Cross underfunded and ill-equipped to reg- the Ninth Circuit. In that case, filed by Blue Shield Chief Actuary Noel Carden ulate a market player with as much employees, it was contended that skirting both testified about the charged rates in power as Blue Cross Blue Shield. the rules has shorted their pension plan by the unsealed depositions. In his testimony, This case implicates concerted actions $1.2 billion. Dignity won a stay of the Ostlund said the department had not yet lower court’s order while it pursued its determined whether the company violated by all of the BCBS entities, but BCBS-AL is one of the worst players in the field with Supreme Court appeal. The company a law or rule by charging different rates. A claimed it would suffer irreparable harm if second deposition unsealed by Judge one of the highest market shares of both providers and subscribers. The big it had to convert its plan to fit ERISA rules Proctor, Carden of BCBS-AL, said the before the high court has a chance to policy of holding rates steady from year to problem for both groups of Plaintiffs is that BCBS absolutely controls what they charge weigh in. There are two other cases, Advo- year was intended to reduce the shock of cate Healthcare Network in Illinois and big rate increases. subscribers, and physicians have no say in determining the value of their own ser- Saint Peter’s Healthcare System in New However, it’s very significant that the Jersey, where the companies are request- company never told the Department of vices. Hopefully, this litigation will even things out by reducing prices charged to ing review of appellate decisions cutting Insurance about the policy, Ostlund testi- them out of the exemption. fied to that in his deposition. The company subscribers and increasing provider pay, as well. If you need more information, In those suits, the Seventh and Third cir- stopped holding rates in 2014, at the begin- cuits concluded the hospitals’ retirements ning of the Affordable Care Act. The dis- contact Rebecca Gilliland, a lawyer in our firm’s Consumer Fraud & Commercial Liti- plans aren’t excluded from ERISA as crepancy was discovered by Blue Cross “church plans.” But the hospitals argued in Blue Shield officials earlier this year, gation Section, at 800-898-2034 or by email at [email protected]. filings with the Supreme Court that the according to Ostlund’s testimony, a part of appellate court rulings run contrary to which reads as follows: Source: Law360.com and The Birmingham News “longstanding positions held by the IRS, Q. Right. But as early as March 2012, the U.S. Department of Labor and the you had put Mr. Carden on notice that Pension Benefit Guaranty Corp.” that the violation of the Trade Practices Act XI. organizations do not have to comply with was a violation of state law, correct? ERISA provisions, including fiduciary obli- EMPLOYMENT AND gations and minimum-funding rules. A. Correct. FLSA LITIGATION Source: Law360.com Q. Okay. Did you ask or were you told the dollar figures of the rates charged Wal-Mart Truckers Awarded $54 Million In by Blue Cross of Alabama that were Providence Health To Pay $352 Million To Wage Class Action Lawsuit different from the filed rates? Settle ERISA Suit A. They indicated that—current infor- Providence Health & Services has agreed A California federal court jury found that mation indicated that they had under- to pay nearly $352 million to settle a pro- Wal-Mart Stores Inc. intentionally violated charged thirty-five million to some posed class action accusing the nonprofit state wage laws by failing to pay a certified carriers—to some employers and over- hospital chain of trying to avoid Employee class of truckers for time spent on work- charged five million to others. Retirement Income Security Act (ERISA) related on-duty tasks. The jurors awarded class members more than $54 million in The depositions of Carden and Ostlund requirements by claiming it fits under an exemption for churches. Two longtime damages. The jury found the 839 truckers focus on how the Alabama Department of were entitled to back pay for some of the Insurance regulates health insurance rates nurses, Linda Griffith and Jeanette Wenzl, had sought to represent a class of more unpaid tasks named in the lawsuit, award- submitted by Blue Cross. To further com- ing damages for pre-trip and post-trip plicate the matter—and undermine the than 73,000 employees in their November 2014 complaint. They alleged that the inspections and California-required rest filed-rate doctrine as a defense for breaks. However, the jury rejected claims BCBS-AL—Federal officials declared in for washing trucks, fueling, weighing the

JereBeasleyReport.com 15 trucks’ load, waiting at vendor and store ber trial. The company and the govern- XIII. locations, performing adjustments, comply- ment came to an agreement that $20 ing with U.S. Department of Transporta- million is a “fair and reasonable” amount to WORKPLACE tion inspections, and meeting with driver repay funds spent by the federal govern- coordinators. ment under the Oil Pollution Act in the HAZARDS The jurors also found that drivers were aftermath of the collision. Nearly 300,000 under Wal-Mart’s control during federally gallons of oil were spilled into the Missis- mandated 10-hour layover breaks, during sippi River. The suit stems from a July 2008 Wife Of Electrocuted Worker Files which the truckers were required to stay accident in which a Laurin Maritime Inc. Wrongful Death Lawsuit with their trucks. The drivers had been tanker, the Tintomara, had collided with an paid $42 for the time, not the $67 to $90 ACL oil barge being towed by a tugboat, A lawsuit has been filed by the wife of a they would have earned had they been spilling the oil into the lower Missis- worker who was electrocuted at the Cohen paid minimum wage during the class sippi River. Recycling Center. Heather Garnett, the period. The jury awarded approximately In July 2016, ACL contested some spe- widow of Geoffrey S. Garnett, filed the $44.7 million to make up the difference. cific sets of claims in the case, including wrongful death lawsuit on the two-year At press time, liquidated damages and those that were submitted by businesses anniversary of her husband’s death. penalties had not been determined. In the whose docks and boats were not directly Garnett died on Oct. 16, 2014. The 33-year- event the trial judge finds Wal-Mart’s oiled by the spill, but who lost the use of old welder was electrocuted while helping defense was not carried out in good faith, the Mississippi River because the govern- employees replace a metal roof of an elec- the jury’s award would be doubled. The ment closed parts of it. The company also trical transformer substation. The Defen- jury found Wal-Mart intentionally failed to contested some reimbursement claims dants named in the suit are Metal pay class members for more than 100,000 from contractors that the company said Shredders Inc., Cohen Brothers Inc., DP&L pay periods. Each unpaid period can carry were inflated or not properly filed. In Sep- and Luke Huggins of Metal Shredders. a $250 fine, which would add approxi- tember, U.S. District Judge Ivan L.R. The Plaintiff’s complaint contains five mately $25 million to the total verdict. Lemelle rejected the company’s efforts to counts for the injuries and damages the The suit was said to hinge on the pay challenge those claims. worker sustained and pain and suffering he codes drivers input for certain activities, Judge Lemelle in January 2015 had experienced prior to his death. There is such as arriving on-site and hooking a granted the government’s motion for also a wrongful death claim for the benefit tractor to a trailer. The truckers had alleged summary judgment on liability, finding of the worker’s heirs at law and/or next of that other required tasks like pre-inspec- that ACL is the “responsible party” under kin who have or claim to have suffered tions and post-trip inspections had no asso- the Oil Pollution Act (OPA). At the time the damages arising out of and as a result of ciated activity code or compensation. judge also rejected ACL’s defense that a his death. Wal-Mart argued that the duties the manual third-party tugboat operator, DRD Towing The Occupational Safety and Health described were not exhaustive and that the Co. LLC, was solely at fault for the accident. Administration (OSHA) has announced allegedly unpaid tasks were included in The company’s argument that it was enti- citations for alleged safety violations it says other pay codes. Obviously, the jurors tled to limit its liability under the OPA was played a part in the worker’s death. Of the didn’t agree with that argument. also rejected by Judge Lemelle. According nine violations listed, eight were catego- The class is represented by Daniel M. to the joint stipulation filed with the court, rized as serious and one was originally Kopfman, Lawrence M. Artenian, Russel the settlement should not be interpreted as listed as willful. However, that one was Myrick and Angela E. Martinez of Wagner a waiver of the company’s right to chal- amended to a repeat offense. The initial Jones Kopfman & Artenian; Jacob M. Weis- lenge Judge Lemmelle’s January 2015 order. penalty amount of $115,000 was negotiated berg of the Law Offices of Jacob M. Weis- The company did agree to “forego any to $63,250, according to OSHA berg, and Stanley Saltzman of Marlin & appeal of any other orders of the district online records. Saltzman. The case is Ridgeway et al. v. court in this case.” OSHA also cited Cohen Brothers, Metal Wal-Mart Stores Inc. et al. in U.S. District According to the settlement, the $20 Shredders’ parent company, with three Court for the Northern District of million did not cover the government’s serious safety violations for failing to train California. natural resource damage claims from the employees in electrical safe work prac- Source: Law360.com incident, which were “unaffected” by the tices. The proposed penalties of $21,000 settlement and preserved. The case is U.S. for those violations was negotiated v. American Commercial Lines LLC et al. to $17,000. in the U.S. District Court for the Eastern The complaint filed by the widow XII. District of Louisiana. alleges that Garnett “contacted or came in Source: Law360.com proximity to an energized electrical line PREMISES causing him to sustain an electrical shock, LIABILITY UPDATE internal and external burns, and multiple other serious injuries that ultimately resulted in his death.” The lawsuit also alleges that inferior testing equipment may Shipper To Pay $20 Million For Oil Spill have played a role in the incident. It was Cleanup In Mississippi alleged that “(Garnett) was informed or made to believe that this electrical line had American Commercial Lines LLC has been properly tested to confirm it was de- agreed to pay the federal government $20 energized when in fact the live line tool million for removal costs and damages voltage tester used was approximately 15 from a 2008 oil spill caused by a barge col- lision on the Mississippi. This resolves claims that were headed toward a Novem-

16 BeasleyAllen.com years old and had not been removed from In recent years, a troubling trend has 898-2034 or by email at Evan.Allen@beas- service after two years as required.” emerged in the industrial work setting in leyallen.com. Source: Dayton Daily News Alabama. All too often, industrial plants and other labor intensive businesses are utilizing temporary work agencies, staffing Department Of Labor’s New Fiduciary Rules agencies and labor brokers to supply Facing Challenges Troubling Trend Of Temp Agencies In The workers. That is instead of hiring full time Industrial Work Setting employees. In such cases the employer Opponents to the new fiduciary Rule would not need to maintain workers’ com- promulgated recently by the Department On-the-job accidents are a common pensation coverage for the temporary cause of injuries that lawyers in our firm of Labor (DOL) believe they have a good workers. The companies are choosing to shot at overturning that rule. At least, if see on a regular basis. As most know, hire temporary labor through staffing workers injured on the job as a rule, are you ask them, they will tell you they have companies. made a strong case. The U.S. Chamber of entitled to workers’ compensation benefits. Typically, these workers are not given Workers’ compensation is referred to as an Commerce and the American Council of any benefits from the business where they Life Insurers (ACLI) were the lead Plaintiffs exclusive remedy, meaning that it is often are working. Instead, the temp agency an injured employee’s only option for in a Dallas lawsuit, heard by Judge Barbara maintains workers’ compensation for the M.G. Lynn, that is attempting to invalidate recovering damages as a result of their employees. The plant or business pays the accident. Simply put, an employee cannot the rule. staffing company and in turn that company Other Plaintiffs in the Northern District sue their employer for negligence if they pays the worker. The result of this practice are subject to worker’s compensation, lawsuit include the Indexed Annuity Lead- is troubling. Quite often these workers are ership Council, the National Association of which is a no-fault system. An injured placed in extremely dangerous jobs and employee will receive benefits for lost Insurance and Financial Advisors, the not adequately trained or supervised. Inevi- Financial Services Institute, Financial Ser- wages, medical care and rehabilitation, tably, these practices can lead to cata- under workers compensation even if the vices Roundtable, Greater Irving-Las strophic injuries. Colinas’ Chamber of Commerce, Insured worker plays some role in causing the Even though the plant or business where injuries. Retirement Institute, Lake Houston Area the employee works is not the injured Chamber of Commerce, Lubbock Chamber The no fault system provides a quick and worker’s employer and does not maintain easy remedy for minor on the job injuries. of Commerce, Security Industry and Finan- workers’ compensation on the worker, the cial Markets Association and the Texas In minor injury cases, or when the employee typically cannot sue for negli- employee may have contributed to their Association of Business. The lawsuit was gence or for fault of any kind. The dual consolidated from three separate com- accident, it is likely the best remedy and employment doctrine enables the indus- only available option. However, if the on- plaints filed in June. There are two main trial plant to claim the injured worker as issues in the cases: the-job injury is severe, workers’ compen- their employee after the fact. Despite con- sation benefits will not adequately tracts and documents clearly stating the • whether the rule implicates First Amend- compensate the injured employee. For this worker is only the employee of the staffing ment rights, and reason, it is important to investigate severe agency, in the eye of the law the injured on-the-job injuries and determine if there worker is an employee of both. • whether the DOL attempted to create a is a potential for any third party liability. Lawyers in our firm’s Personal Injury & right of action through rule-making. Unfortunately, a troubling trend in employ- Products Liability Section are seeing this Lawyers representing the U.S. Chamber ment relationships is illuminating a flaw in scenario time and time again. The injured and ACLI, respectively, made clear distinc- the system. worker receives workers’ compensation tions between their case and that of the Workers compensation is intended to from the staffing agency, however the busi- National Association for Fixed Annuities. benefit both the injured employee and the ness where the worker was injured gets off Though distinguishing the cases, the employer. In theory, the system works to the hook. In essence, industrial plants can speakers continually returned to the ruling the benefit of each party. The injured bring on temporary workers, provide no in the first court case filed opposing the worker is entitled to lost wages and benefits whatsoever, place the laborers in DOL rule. That ruling was issued in medical care until they are able to return the most dangerous of jobs, injure or kill November by Judge Randolph D. Moss in to work. Because the injured worker the employee, pay no workers compensa- District of Columbia District Court. Judge doesn’t have to prove fault, the employee tion benefits and maintain protection from Moss sided with the DOL in rejecting the receives the benefits quickly. In exchange, negligence law suits. National Association for Fixed Annuities’ employers are assured the injured The workers’ compensation system is request for a preliminary injunction. That employee will not sue them for negligence intended to be a give-and-take relationship. decision was not surprising as the judge’s and the only remedy is statutorily limited Unfortunately, as is so often the case, tough questioning of the Plaintiff’s lawyers and capped. working men and women get the short end was widely reported. Judge Lynn brought The employer must have workers’ com- of the stick on this bargain. The laborers up the decision by Judge Moss several pensation coverage or a self-insurance are getting nothing in return for losing times during the hearing and said she has fund. At the heart of the system is the their right to sue for wrongful conduct. read the 92-page ruling. employee-employer relationship. Workers’ Our lawyers continue to fight this trend at A main argument on behalf of the compensation should only apply to those every opportunity. Hopefully, we can Chamber and ACLI was on the free speech two parties who have agreed to this give create needed case law to close this count of the lawsuit. The argument was and take agreement. However, quite often loophole. that the DOL is “impermissibly regulating third parties that are not part of the If you need more information, contact speech.” The DOL argued that it couldn’t employer-employee relationship are Evan Allen, a lawyer in our firm’s Personal possibly regulate speech, that it is only reg- reaping the benefits of the workers’ com- Injury & Product Liability Section, at 800- pensation system. ulating the conduct of misleading advice. Judge Lynn didn’t agree on that and said

JereBeasleyReport.com 17 that the DOL rule does more than “regulate that the driver was speeding at the time From 2011 to 2015, fatalities involving misleading speech; it punishes it.” The and lost control of the bus. For some motor carriers have increased and the GAO DOL claims conflicts of interest are leading reason the bus was also on a road that was has recognized that interventions can play advisors to deliver inappropriate advice to not a designated bus route. a critical role in reversing that trend; inter- clients. The government contended that Durham School Services, a private ventions that range from warning letters to the fiduciary rule merely requires advisors company, owned the bus involved in the on-site comprehensive investigations. to act in the “best interest” of clients, dis- deadly wreck. The company had 142 While the FMCSA has transitioned to a close fees and accept only “reasonable crashes with injuries and three fatalities in range of more effective and efficient inter- compensation,” which were said to be the past 24 months, according to federal ventions, the GAO says “without improving “fundamental duties.” records. The records reveal at least 36 the quality of information that FMCSA uses The question before Judge Lynn is crashes with injuries and one wreck with a to evaluate its performance, the agency whether the Department of Labor has the fatality in Tennessee during that time. will continue to lack the information it right to establish a “private cause of action” There were two crashes with injuries in needs to determine the extent to which it with its fiduciary rule. Opponents claim Hamilton County this year. The Chatta- is achieving these fundamental program- only Congress can establish a private right nooga Police Department has confirmed matic improvements.” According to GAO, of action, or the right for people to sue, the driver of the bus was involved in a FMCSA did not consistently use a “compari- as individuals or as a class, under an school bus accident in September. son group design,” which considers out- existing law. Durham School Services, based in comes among carriers that did and did not In a 2001 Supreme Court decision, Alex- Warrenville, Ill., has more than 13,000 receive interventions, for its effectiveness ander v. Sandoval, the high court wrote: vehicles and 13,000 drivers, according to evaluations. “like substantive federal law itself, private the Federal Motor Carrier Safety Adminis- Under the Compliance, Safety, Account- rights of action to enforce federal law must tration (FMCSA). The company has con- ability program, FMCSA can select from a be created by Congress.” That case is cited tracts to operate school buses in several range of eight intervention types, giving in the lawsuits brought against the DOL. counties in Tennessee, including Shelby the agency flexibility in addressing motor However, the DOL denies that the rule and Hamilton. carriers’ specific safety problems. These “creates” a new private right of action. Durham is a large company, and it has an new intervention tools supplement the The case hinges on how the courts view overall satisfactory safety rating from the former compliance reviews and better the rule’s Best Interest Contract Exemp- federal administration, but the records utilize the agency’s limited resources. CSA tion, which enables advisors to receive show the company has more problems investigators are equipped to evaluate why commission-based compensation that the when it comes to driver fitness than its safety problems are occurring, recommend rule otherwise prohibits as long as they peers. The administration’s records on remedies, encourage corrective action and adhere to rigorous disclosure standards Durham state “93 percent of motor carriers invoke strong penalties or even issue out- and sign a contract with clients. Calling it a in the same safety event group have better of-service orders. “complicated case,” Judge Lynn conceded on-road performance than this motor The FMCSA used only one investigation that she was “having a hard time” deci- carrier.” A safety event group includes intervention type before the CSA program, phering the issue. It will be most interest- other similar bus and truck companies. the on-site compliance review. These com- ing to see how the judge rules in the case. Over the past 24 months, Durham has pliance reviews required investigators to Sources: insurancenewsnet.com and plansponsor. been involved in 346 crashes, 201 of which examine every part of a carrier’s operation com were towaway wrecks. That data was last and were very resource-intensive to updated in late October. In Tennessee, the conduct, therefore only about 3 percent of company has been involved in crashes in active carriers got investigated. The GAO three counties, according to federal statis- report recommended that FMCSA evaluate XIV. tics. In Shelby County, there were 31 inju- the effectiveness of individual intervention ries and one fatality as a result of 27 types, update cost estimates so that they TRANSPORTATION crashes involving the company. are current and representative of all states, Source: CBS News, Associated Press and establish complete performance mea- sures. The U.S. Department of Transporta- Deadly School Bus Crash In Tennessee tion concurred with the recommendations and is expected to provide a detailed The driver of an elementary school bus FMCSA Must Improve Its Evaluations Of response very soon. that crashed in Chattanooga, Tenn., killing High-Risk Carriers If you would like more information, 6 children, has been arrested and faces contact Chris Glover, a lawyer in our firm’s charges including vehicular homicide. The According to a new study published on Personal Injury & Products Liability 24-year-old bus driver, Johnthony Walker, Oct. 27, 2016, by the U.S. Government Section, at 800-898-2034 or by email at was charged with vehicular homicide. Accountability Office (GAO), the Federal [email protected]. Chris Walker was also charged with reckless Motor Carrier Safety Administration handles big truck litigation for the firm. driving and reckless endangerment. Inves- (FMCSA) must improve its evaluations of tigators are looking at speed “very, very high-risk motor carriers. The GAO is an strongly” as a factor in the crash. It appears independent, nonpartisan agency that Amtrak Settles Philadelphia Derailment that Walker had a bad driving record and works for Congress to investigate how the should have never been allowed to drive a federal government spends taxpayer Claims For $265 Million school bus. dollars. The GAO analyzed the agency’s A Pennsylvania federal judge has Six children were killed in the crash and data-driven Compliance, Safety, Account- approved a $265 million settlement for all several more are in the hospital, some in ability (CSA) program’s efforts from 2010 pending claims arising out of the 2015 critical condition. The National Transporta- to 2015 to identify and intervene with derailment of Amtrak train number 188 in tion Safety Board (NTSB) is in Chattanooga at-risk motor carriers in an attempt to Philadelphia, which caused eight deaths investigating the crash. Early indicators are prevent problems before crashes occur.

18 BeasleyAllen.com and more than 200 injuries. U.S. District Wrongful Death Suits Filed After Tour Bus • Vehicle factors, including the pre-crash Judge Legrome Davis signed off on the set- Crash That Killed 13 People condition of the bus and whether it was tlement that was negotiated by the Plain- safe to drive. tiffs Management Committee, made up of We wrote on the lack of regulation of seven lawyers, and Amtrak, saying it was the bus industry in another section of this • Motor carrier factors, including whether appropriate because of a $295 million cap issue and mentioned the crash of a tour bus USA Holiday was operating legally, and if on damages under federal law and the in California. That wreck resulted in 13 the bus had any onboard data-record- prospect of years of protracted litigation. deaths and brought a great deal of needed ing device. attention to the regulation problem. The Lawyers on the management committee The initial investigation revealed that families of two of the persons killed in the said that the $265 million amount was there were no skid marks on the road to crash have filed a wrongful death lawsuit equivalent to the present value of $295 indicate a sudden brake application by the against the bus company and its owner- million paid out in two and a half years, bus prior to the collision. USA Holiday is a driver who was among the fatalities. The the likely minimum amount of time it small tour bus that primarily provided families of 63-year-old Gustavo Garcia and would take to resolve more than 125 casino trips. This tragic incident points out 50-year-old Tony Mia, both of Los Angeles, remaining cases via litigation. Lawsuits the need for better regulation. against Amtrak, also known as National filed the lawsuit in Los Angeles Superior Railroad Passenger Corp., started to be Court against Alhambra-based USA Holiday Source: San Gabriela Valley Tribune filed shortly after the derailment. The and the estate of Teodulo Elias Vides, involved train “tumbled” off the tracks as it the driver. approached Frankford Junction in Philadel- The 1996 MCI bus crashed into the back Helicopter Emergency Medical Services phia on its way to New York in May 2015. of a tractor-trailer at 5:17 a.m. on a Sunday Increase Both Access And Danger All seven passenger cars derailed along along westbound Interstate 10. Traffic with the train’s locomotive, injuring nearly ahead of the bus had slowed, and the truck In March of this year, a pilot, flight nurse all of the train’s passengers. was only moving about 5 mph, according and flight medic answered the ultimate In October of last year, the U.S. Judicial to the California Highway Patrol. Survivors call of service as they boarded Haynes Panel on Multidistrict Litigation ordered included 31 bus passengers who were hurt. Ambulance LifeFlight medical helicopter at Judge Davis in the Eastern District of Penn- The victims were on their way home to Troy Regional Medical Center in Southeast sylvania to handle the lawsuits brought by Los Angeles after spending the night at the Alabama. The flight staff was on its way to victims of the crash. The settlement agree- Red Earth Casino in the Salton Sea-area assist an automobile accident victim who ment obligated all Plaintiffs to commit or town of Thermal. had a broken leg and was unconscious. The opt out of the settlement program by Nov. It is alleged in the complaint that Vides helicopter went to the crash site, picked up 21. Individuals who have yet to file law- and his company were negligent, reckless the victim and resumed its flight. They suits related to the derailment have until and legally responsible for the “accident were to transport him to a hospital in Jan. 31, 2017, which is also the last day and the carnage.” The claims include Montgomery. At 12:17 a.m., the helicopter Amtrak can agree to any settlements with “failing to travel at a safe rate of speed, was reported missing. The darkness, rain participating or nonparticipating Plaintiffs. failing to reduce speed (near) a construc- and fog hampered the search for the Amtrak must then turn over a lump sum tion zone, failing to keep a proper lookout downed flight, which wasn’t discovered payment to a trust account by Feb. 28, and apply the brakes when coming upon a for seven hours. Four lives were lost when 2017. This is estimated at $265 million, less parked or disabled vehicle, failing to follow the helicopter crashed in a heavily funds that have already been paid out for proper safety procedures (for maintaining) wooded area. medical and rehab expenses and settle- the tires on the vehicle, operating a bus Approximately four months following ments—along with estimates for damages that is not equipped with seat belts or the fatal LifeFlight crash in Alabama, four owed to unfiled passengers and those who safety restraint systems for passengers, and more lives were claimed when a Cal-Ore opt out of the settlement program. Two all other acts or omissions.” Life Flight crashed on a rural northern Cali- court-appointed masters will then review The tread on half of the eight bus tires fornia mountainside just after midnight. In the submissions from participating Plain- was too worn to pass a safety inspection, September, a North Memorial Health Care tiffs to determine the value of their according to federal crash investigators. helicopter crashed near Alexandria, Minn., damages, and will provide the court a National Transportation Safety Board just after 2 a.m., critically injuring the report by May 26, 2017. Victims and fami- (NTSB) member Earl Weener told a news three flight staff on board who were lies will then receive notice of their final conference that if the bus had undergone a returning to their base after transporting award by June 30, 2017, and could receive recent inspection with tires in that condi- three patients to a local hospital. payments shortly afterward. tion, it could have been taken out of These examples depict the significant The management committee is com- service. The cause of the accident remains risks helicopter emergency medical ser- posed of Tom Kline of Kline & Specter PC; under investigation. The possibly causes vices (HEMS) personnel face every time Judith Livingston, of Kramer Dillof Livings- will include: they respond to an emergency. The HEMS ton & Moore; Robert Mongeluzzi of Saltz industry dates back to World War I, and the Mongeluzzi Barrett & Bendesky PC; Fred- • Human factors, including the driver’s Journal of Emergency Medical Services eric Eisenberg of Eisenberg Rothweiler background, experience and licensing, (JEMS) reports that the industry has grown Winkler Eisenberg & Jeck PC; Ben Morelli and whether he was fatigued or had rapidly. By 2014, there were more than of the Morelli Law Firm; Denis Mitchell of been drinking. 1,500 helicopters in the industry, which is Stein Mitchell Cipollone Beato & Missner • Highway factors, including the roadway nearly double the amount of helicopters in LLP; and Timothy Loranger of Baum, configuration, the traffic flow, lighting service in 2008. JEMS estimates that HEMS Hedlund, Aristei & Goldman. The case is In and signage. transport more than 400,000 patients each Re: Amtrak Train Derailment before the year in the U.S. Although it has increased U.S. Panel on Multidistrict Litigation. access to emergency medical services, the Source: Law360.com industry’s growth has also outpaced its

JereBeasleyReport.com 19 ability to provide an infrastructure for with the financial incentives of an unregu- up 3.2 percent, from 9,943 in 2014 to acceptable safety regulations. lated and lucrative business. 10,265 in 2015. Nearly half of vehicle occu- Analyzing data from HEMS accidents in Dr. Morshedi urges HEMS flight staff to pants killed in 2015 weren’t wearing a seat the United States from 2006 to 2015, Aeros- critically evaluate the time advantage of belt. It’s significant that one in 10 traffic surance estimates that a HEMS crash the air transport versus ground transport. deaths involved distracted driving, such as occurred in the U.S. every 40 days for the The staff should also objectively evaluate using a smartphone to text while driving. last 10 years. A spike in the number of air the patient’s condition using evidence- In the 10 years prior to 2015, U.S. roads medical transport crashes in 2008 claimed based guidelines to determine the likeli- and highways were becoming progres- 29 lives in 12 crashes, including a midair hood of the services improving the sively safer, with the number of deaths collision. The tragic year prompted a four- patient’s condition. Dr. Morshedi advises falling an impressive 25 percent since day National Transportation and Safety that only the pilot should make the deci- 2005, when 42,708 people were killed in Board (NTSB) hearing in February 2009. sion to launch and, in order to remain traffic accidents. NHTSA attributes that sig- Robert Sumwalt, an NTSB Board Member, objective, the pilot should not have any nificant decline to a series of aggressive recalls that the agency issued 21 safety rec- knowledge of the patient’s condition. Addi- safety and awareness campaigns that ommendations based on hearing testimony tionally, Dr. Morshedi encourages: increased seat belt use and reduced and information from other sources high- impaired driving. Better safety technology lighting safety concerns of the HEMS • continuous pilot training; and other vehicle improvements, including industry. • increased funding for more FAA air bags and electronic stability control, In February 2014, the U.S. Department inspectors; also contributed to this decline. of Transportation (DOT) Federal Aviation So why the sudden surge in fatal traffic Administration (FAA) incorporated the • implementing “severe and stiff” conse- accidents? According to NHTSA, job NTSB’s recommendations in its new, quences for companies and operators growth and low fuel prices were two stricter flight regulations and procedures, who violate regulations; and factors that led to increased driving, which decades overdue, for the helicopter can translate into higher fatality rates to segment of aviation. Many of the new rules • regulating a fee structure that rewards some degree. U.S. motorists traveled 3.5 were aimed at addressing the major causes quality care and appropriate operation percent more miles in 2015 than in 2005— of HEMS accidents. The Air Medical Physi- of air ambulance services. the largest increase in 25 years. But this cian Association analyzed HEMS accidents doesn’t explain the full picture. The While the cost of implementing more that occurred over a 20-year period and bottom line is—in short—U.S. safety offi- life-saving regulations will likely be sub- determined the leading causes for most cials simply don’t have an answer. stantial, it cannot compare to the crashes accidents included the time of day, envi- The sudden increase in traffic deaths that are prevented or the lives saved. Maxi- ronmental factors (such as weather condi- prompted the Department of Transporta- mizing safety is important to the HEMS tions, flight altitude and geographic tion, NHTSA and the Obama Administra- flight crews as well as the patients who location) and time pressure due to the tion to issue an unprecedented call to entrust them with their lives. patient’s condition. action to involve state and local govern- If you need more information on this The new regulations required improved ment officials, data scientists, public health subject contact Mike Andrews at 800-898- pilot training, the collection and analysis of experts, students, researchers, and anyone 2034 or by email at Mike.Andrews@beas- flight, weather and safety data, and the use else to look at the data and share any leyallen.com. of dual pilots and autopilots. However, as insight they gain. Sources: Dothan Eagle, CNN, Twin Cities Pioneer Sumwalt surmises, more steps can and Sources: National Highway Traffic Safety Press, Journal of Emergency Medical Service must be taken, including: Administration and Mothers Against Drunk Driving (JEMS), Aerossurance, Propilot Magazine, and • requiring pilots to conduct more sce- emDocs, nario-based training in simulators or flight training devices; XV. Alarming Rise In U.S. Traffic Deaths • using night vision imaging systems; ENVIRONMENTAL There was an alarming increase in traffic • incorporating a safety manage- deaths on U.S. highways last year. The CONCERNS ment system; number of U.S. traffic accidents soared in • mandating that all helicopters be 2015. According to the National Highway equipped with autopilots and that all Traffic Safety Administration (NHTSA), West Virginia Chemical Lawsuit Is Settled pilots are trained to use the auto- 35,092 people died in traffic crashes on For $151 Million pilot; and U.S. highways last year—a rise of 7.2 percent from the number of deaths A West Virginia federal judge has given • developing a low-altitude airspace reported in 2014. preliminary approval to the $151 million infrastructure. The last time there was an increase of settlement reached by West Virginia Ameri- this magnitude from one year to another can Water Co. (WVAW) and Eastman Dallas Emergency Medicine resident, Dr. was in 1966. That was two years before Chemical Co. The settlement resolves class Brandon Morshedi, MD, DPT, NREMT, safety belts became mandatory standard claims resulting from a 2014 coal-process- offers even more practical recommenda- equipment in new cars. That year, the ing chemical spill that deprived 300,000 tions from his experience and work with number of traffic fatalities jumped 8.1. people of drinking water for days. HEMS and first responders. Dr. Morshedi percent over the previous year’s toll. West Virginia American Water Co., a sub- explains that pressure to fly, even when Pedestrian and bicycling fatalities have sidiary of American Water Works, will pay conditions are bad, is due to the nature of also increased to a level not seen in 20 $126 million while Eastman will pay $25 the industry (the desire to save the most years. Motorcyclist deaths increased more million. West Virginia American Water will critically ill or injured patients) coupled than 8 percent. Drunk driving deaths went waive a $4 million rate recovery from the

20 BeasleyAllen.com state’s Public Service Commission for costs Oil Giants Will Now Face Lawsuit Over The Department of Natural incurred in responding to the spill. Accord- Coastal Damages Resources’ assertion that it is ill- ing to the settlement term sheet, $50 equipped to review the permits in million of the $126 million from WVAW A state court judge in a Louisiana has this case is dubious at best, espe- has been set aside for claims-based reversed himself and revived parish’s suit cially considering it was the agency payments. against Exxon Mobil Corp., Chevron USA that issued the permits [allowing the The trial was scheduled to begin, but Holdings Inc. and seven other oil and gas exploration] and that it has a was continued to Dec. 1 by U.S. District companies over the loss of coastal wet- 40-year history of working with Judge John Copenhaver pending, finaliza- lands allegedly from decades of oil and gas industry to resolve its concerns. tion of the settlement. The class action was exploration activities. Judge Stephen prompted by a January 2014 incident in Enright found no good administrative Thus far, Louisiana has intervened in which a Freedom Industries coal-cleaning remedy to be available through the Louisi- more than 40 lawsuits against various oil mixture containing primarily 4-methylcy- ana Department of Natural and gas companies over the loss of coast- clohexane methanol (MCHM) leaked from Resources (DNR). line in five parishes, and with 15 parishes one of its storage tanks on the banks of the Judge Enright had dismissed Jefferson comprising Louisiana’s coastal zone, more Elk River, just upstream from a municipal Parish’s lawsuit in August, saying the lawsuits are expected in the near feature, drinking water intake. The spill left West action was premature because the Parish according to Donald Price, special counsel Virginia residents and businesses in a nine- first should have voiced its concerns with for the state’s DNR. Price told Law360 that county area without a potable water source the Louisiana DNR. The Parish, with that the state is suffering a “catastrophic from which to drink, bathe or wash their support from Louisiana Gov. John Bel land loss” problem, having lost a land area dishes for at least five days. We wrote Edwards and the DNR, then asked Judge the size of Rhode Island since 1930. about this incident previously. Enright to reconsider his decision. It was While the loss of land has many factors, Eastman failed to sufficiently warn resi- contended that there was no feasible way Price said the available science suggests oil dents about the danger of the MCHM it pro- that state regulators could realistically and gas exploration has contributed to a duced and sold to Freedom Industries, handle all of the allegations made by Jeffer- substantial part of that problem: American Water Works Co. Inc. and subsid- son Parish and other parishes bringing • canals used to access oil and gas wells iaries West Virginia American Water Co. similar litigation over wetlands loss. Judge have gone unfilled; and American Water Works Service Co. Enright wrote in a Nov. 7 ruling granting Inc. failed to take necessary precautions to the motions for a new trial: • pollution has killed off vegetation that protect a water source in the area. was holding the soil together; and Freedom Industries had been named as a Based on the Affidavit of the Secre- Defendant, but was dismissed as a party tary of the DNR, the DNR clearly • pumping up fossil fuels has led some after the company filed for bankruptcy. It lacks the ability to handle the neces- areas to sink. should be noted that Freedom Industries sary administrative actions in this Some of those activities were allowed by executives Dennis Farrell and Gary South- case. According to the Affidavit, the permits, according to Price, but he said the ern pled guilty to criminal charges related LDNR does not have the staff, suits allege that some oil and gas explora- to the spill and each contributed to the set- funding or capability to conduct the tion activities either violated their permits tlement. Southern will pay $350,000 and thousands of administrative enforce- or were conducted without obtain- Farrell $50,000. ment actions that would be neces- ing permits. In October 2015, Judge Copenhaver cer- sary to address the violations alleged Gov. Edwards has backed litigation tified a class of residents—individuals, in the parish lawsuits. against private companies as a way to help businesses and hourly workers—on the Judge Enright said there is no way the fund the state’s master plan for coastal res- issue of liability, but denied their request Louisiana DNR would be able to deal with toration. This plan will be renewed next to collect damages on a classwide basis. those actions while also doing its everyday year with a price tag “widely assumed” to The Judge had previously dismissed parent monitoring and enforcement activities. be somewhere between $70 billion and American Water Works Co. Inc. and John Carmouche, a Talbot Carmouche & $100 billion. Jefferson Parish is repre- unit American Water Works Service Co. Marcello lawyer representing the Parish, sented by Victor L. Marcello and John H. Inc. from the case and reduced Toxic told Law360: Carmouche of Talbot Carmouche & Mar- Substances Control Act claims cello. Louisiana and the LDNR are repre- against Eastman. We think the judge made the correct sented by Megan K. Terrell of the The Plaintiffs are represented by Kevin decision and look forward to pursu - Governor’s Office of Coastal Activities. The W. Thompson and David R. Barney of ing the claim and getting a trial date case is The Parish of Jefferson v. Atlantic Thompson Barney; by Van Bunch of and letting a jury decide if the coast th Richfield Co. et al. in the 24 Judicial Dis- Bonnett Fairbourn Friedman & Balint; and in Jefferson Parish can be restored to trict Court for the Parish of Jefferson. Stuart Calwell, Alex McLaughlin and D. its original condition. Christopher Hedges of the Calwell Prac- Source: Law360.com tice. The case is Good et al. v. American There are four other Louisiana parishes, Water Works Co. Inc. et al. in the U.S. Dis- which are the equivalent of counties in other states, that are suing various oil and trict Court for the Southern District of Princess Cruise Lines To Pay $40 Million gas companies over similar allegations. West Virginia. For Deliberate Oil Pollution Judge Enright’s ruling is not binding prece- Source: Law360.com dent on judges in other parishes. A joint Princess Cruise Lines has agreed to pay a Defense group that includes BP PLC, record $40 million settlement to end Chevron and Shell Oil Co. criticized the charges that it illegally dumped oil-contam- ruling in a joint statement: inated waste from a ship in U.K. and U.S. ports and tried to hide it from authorities.

JereBeasleyReport.com 21 The the Carnival Corp. subsidiary pled chart a new course for this company, determining that the CMS rule could not guilty to seven felony charges over the but for other companies as well. be enforced until further evidence illegal dumping of waste from its Carib- was taken. bean Princess cruise ship. The settlement The illegal practices on other ships were Judge Mills issued a 40-page Order, and is the largest-ever criminal penalty involv- uncovered as a result of this internal probe, in his Order, the judge determined that ing deliberate vessel pollution, according according to the company. Princess said there are concerns about whether a gov- to the DOJ. U.S. Attorney Wifredo that it has already increased training, ernment agency can ban arbitration agree- Ferrer said: upgraded equipment and restructured its ments where those agreements are fleet operation organization with new lead- otherwise permissible under the Federal The conduct being addressed today ership. The government is represented by Arbitration Act (FAA). Judge Mills deter- is particularly troubling because the John Cruden, Thomas Watts-Fitzgerald, mined that the CMS rule banning arbitra- Carnival family of companies has a Brendan Sullivan and Richard A. Udell of tion may conflict with the FAA, and in documented history of environmen- the U.S. Department of Justice. The case is doing so, a federal agency may be acting tal violations, including in the South- U.S. v. Princess Cruise Lines in the U.S. Dis- beyond its authority. While lawyers in our ern District of Florida. Our hope is trict Court for the Southern District firm are extremely disheartened by the that all companies abide by regula- of Florida. ruling, a couple of points can be taken tions that are in place to protect our Source: Law360.com away from this ruling: natural resources and prevent envi- ronmental harm. • First, it is unclear whether other federal courts will follow suit and apply the ban In addition to the $40 million penalty, XVI. in other jurisdictions and states. the plea agreement calls for a court-super- vised environmental compliance program UPDATE ON • Second, the issue will not be fully that will oversee cruise ships from eight resolved until the appellate courts, and Carnival companies, including Holland NURSING HOME perhaps even the United States Supreme America Line NV, Seabourn Cruise Line LITIGATION Court, weighs in on this issue. Ltd. and AIDA Cruises. The five-year program will include a court-appointed • Finally, Judge Mills correctly noted that monitor and independent audits, according nursing-home arbitration litigation is not Update On The New Rule Banning to the DOJ. at all time-saving or favorable to injured Arbitration In Nursing Homes The investigation was prompted by a patients or their families. In fact, Judge whistleblowing engineer on the Caribbean Mills expressed some of his personal We reported last month that the Centers Princess who alerted the British Maritime observation of cases that have come for Medicare and Medicaid Services (CMS) and Coastguard Agency to a “magic pipe” before his court, and noted in one case issued a new regulation, effective Nov. 28, on the ship that was used to illegally dis- that the delay from filing the suit until 2016, relating to nursing-home arbitration charge more than 4,000 gallons of oily resolution of the arbitration issue was as agreements. CMS found that arbitration waste 23 miles off the coast of England in much as three years. agreements in nursing homes were August 2013, according to the DOJ. The patently unfair to residents and their family Judge Mills also noted the concern of head engineers on the ship removed the members. It was determined by CMS that patient-advocates that more than half of all pipe and ordered subordinates to lie. any facility that receives Medicare and nursing home patients have dementia or Acting on the U.K. agency’s tip, the U.S. Medicaid may no longer enter into binding Alzheimer’s. Clearly, the patient and their Coast Guard examined the Caribbean Prin- arbitration agreements with residents or families are not in equal bargaining posi- cess when it arrived in New York City in their family members after Nov. 28, 2016. tions with the nursing homes. Judge Mills September 2013. Prosecutors say the Carib- Advocates for patients and their families also seemed to express his thoughts that bean Princess made illegal discharges consider this ruling to be most significant. Congress might want to consider banning beginning in 2005, first with a different For all too long, when a family makes a arbitration in nursing home settings. valve and then with the magic pipe. In decision to place their loved one in a long- Regardless of the outcome, we will con- addition, U.S. authorities discovered that term care facility, they have been com- tinue to fight arbitration. We believe the Caribbean Princess and four other Prin- pelled by the facility to sign an alternative strongly that CMS, which oversees the pro- cess ships were illegally opening a salt dispute resolution agreement. Most resi- vision of federal funds to nursing homes, water valve when processing bilge waste dents and their family members have no acted within its authority. If a nursing to prevent the oil content monitor from idea that they are potentially signing away home wishes to receive federal funds, then stopping the illegal overboard discharge. their right to a trial by jury. In other words, it should take the high road and avoid The ships also failed to properly process most families are completely surprised to having patients or their family members to oily bilge water and did not record the find out that they cannot file a lawsuit sign arbitration agreements. practices truthfully, according to the DOJ. when the nursing home staff injures or If you need additional information on Assistant U.S. Attorney General kills their loved one. the arbitration issue or Nursing Home liti- Cruden said: The pro-nursing home advocacy groups gation generally, contact Ben Locklar, a This involved more than just bad wasted no time in challenging the new lawyer in our firm’s Personal Injury and actors on one ship and took the CMS ruling. In Mississippi and in other Products liability Section, at 800-898-2034 company to task on its culture and places, nursing home advocacy groups or by email [email protected]. management. This is a company that have asked federal judges to stay enforce- Ben handles nursing home litigation for knew better and should have done ment of the new rule. The first such order our firm. better. Hopefully the outcome of this was issued by Judge Michael P. Mills, a case has the potential not just to United States District Judge from the Northern District of Mississippi. Judge Mills entered a preliminary injunction,

22 BeasleyAllen.com XVII. Garrett J. Bradley, Michael P. Thornton and market. However, in March 2013, the Michael A. Lesser of Thornton Law Firm; Second Circuit Court of Appeals directed An Update On and Daniel P. Chiplock of Lieff Cabraser the lower court to follow the circuit’s 2012 Heimann & Bernstein. The case is Arkan- decision in NECA-IBEW Health & Welfare Class Action sas Teacher Retirement System v. State Fund v. Goldman Sachs & Co. Under the Litigation Street Bank & Trust Co. in the U.S. District precedent of that decision, when a bank Court for the District of Massachusetts. issues multiple securities under the same Source: Law360.com shelf registration statement, an investor that purchased at least some of the securi- Federal Judge Approves The $530 Million ties can serve as the lead Plaintiff, so long State Street Settlement as all the claims in the suit raise the same A Class Is Certified In The NovaStar MBS set of concerns. A federal judge in Boston has given final Buyers Class Action Lawsuit Judge Batts ruled in February of last year approval to a $300 million settlement that the Plaintiffs could file a third between State Street Corp. and a class of A New York federal judge has certified a amended complaint, which is now the investors over its foreign exchange prac- class of investors to pursue fraud claims operative complaint in the suit. The case is tices. This has resulted in other settlements against Deutsche Bank, RBS and Wells stayed as to NovaStar, as its successor filed with federal regulators valued at $230 Fargo for underwriting $7.7 billion of Nova- for Chapter 11 protection in July, and the million. The settlement is the largest in the Star mortgage-backed securities (MBS). underwriter banks and investors have history of Massachusetts’ unfair practices U.S. District Judge Deborah A. Batts ruled since been in conflict over whether discov- law, Chapter 93A. The settlement would the fundamental question of whether the ery can proceed in the remainder of the also be the third-largest “nonsecurities banks lied ties the investors’ claims suit. The Plaintiffs are represented by Joel class settlement” in the First Circuit Court together. In her ruling, Judge Batts granted P. Laitman, Michael B. Eisenkraft and Chris- of Appeals. the motion filed by the New Jersey Carpen- topher Lometti of Cohen Milstein Sellers & The State Street case had been filed ters Health Fund, the named Plaintiff, to Toll PLLC. The case is New Jersey Carpen- before a similar one against the Bank of certify a class of investors. They had ters Health Fund v. Royal Bank of Scot- New York Mellon Corp. Meanwhile, State invested in now-defunct subprime lender land Group PLC et al. in the U.S. District Street’s separate settlements with the U.S. NovaStar Mortgage Inc.’s mortgage-backed Court for the Southern District Department of Labor (DOL), U.S. Securities securities. of New York. and Exchange Commission (SEC) and U.S. The claims were that Deutsche Bank Department of Justice (DOJ) are also set to Securities Inc., RBS Securities Inc. and Source: Law360.com be resolved with the approval by U.S. Dis- Wachovia Capital Markets LLC, now Wells trict Senior Judge Mark L. Wolf. State Street Fargo Advisors LLC, lied in the offering had insisted on interlocking settlements so documents that accompanied the securi- The $50 Million Settlement In TCPA Suit its agreements with the federal govern- ties. Judge Batts held that the common Against US Coachways Is Approved ment would go through only if Judge Wolf question of whether the banks made mate- signed off on the class settlement. rial false or misleading statements in the An Illinois federal court has approved a It was alleged in the private suit that offering documents for the securities at $49.9 million class action settlement in a State Street, over the course of a decade, issue will predominate over the individual suit claiming US Coachways Inc.’s text mes- swindled millions of dollars a year from its issues in the class. saging blasts to potential customers vio- custody clients on their indirect foreign The dispute stems from 2006, when lated the Telephone Consumer Protection exchange trades. State Street allegedly NovaStar issued six securities tied to resi- Act (TCPA). Most of the settlement will be misled its clients about the exchange rates dential MBS. The securities, which pursued by the class against the company’s that were charged on the trades, and together held more than $7.7 billion in insurer. US Coachways, the national applied hidden markups that had no basis assets, were underwritten by Deutsche charter bus and bus rental company, was in market rates. Bank, RBS and Wachovia. By June 2009, accused of sending a “staggering” amount None of the class members—after the more than half the mortgages behind the of text messages beginning in 2011 to cus- settlement got initial approval—objected securities had defaulted amid the housing tomers who had booked past trips as well to or opted out of the settlement. The collapse, causing massive investor losses. as people who had requested a quote, but named Plaintiff, the Arkansas Teacher The fund filed the suit in June 2008. didn’t book with the company, in efforts to Retirement System, will receive a $25,000 The fund, which had invested $100,000 secure new business. The company is incentive award, and six other plans will in one of the securities, filed suit against alleged to have sent the estimated 391,459 get $10,000 each. Three categories of subprime lender NovaStar, the underwrit- text messages to about 85,000 individuals’ investors will participate in the settlement. ing banks, and ratings agency Defendants cellphones using a marketing platform The recovery of the class members will such as Moody’s and Standard & Poor’s. called “Gold Mobile.” The company agreed depend on the volume of investments. The The ratings agencies were dismissed from to settle the TCPA suit for $49.9 million categories are: the suit in April 2011. The class action this year. alleged that offering documents filed when Unable to satisfy the judgment, US • Employee Retirement Income Security the securities were issued failed to disclose Coachways turned to its insurer, Illinois Act (ERISA) plans; that NovaStar had abandoned its under- Union Insurance Co., to pay for the settle- • mutual funds; and writing standards to increase the number ment. The insurer declined coverage. This of mortgages it could originate. led to an agreement in which US Coach- • a third category of miscellaneous In March 2012, Judge Batts dismissed the ways will assign its rights against Illinois investors. suit, saying that the complaint lacked spe- Union to the Plaintiffs and contribute The Plaintiffs are represented by David J. cific examples of underwriting fraud and $50,000 toward the settlement amount. A Goldsmith, Lawrence A. Sucharow and that the investors had been adequately motion seeking final approval of the settle- Michael H. Rogers of Labaton Sucharow; warned of risks tied to the mortgage ment stated:

JereBeasleyReport.com 23 Plaintiff and his counsel will next product when you rinse it off, it just executives sold millions of their personal pursue an action against Illinois becomes impacted in your Wells Fargo stock at inflated prices, Union seeking to collect on that judg- hair follicle. earning hundreds of millions of dollars, ment. In the event of recovery, the while failing to take corrective action to funds from such an action will be In an attempt to justify their position in protect Plan Participants. deposited into a settlement fund, view of the settlement, Wen released As a result of this, as well as other con- with distributions from the settle- this statement flicts of interest and fraud, these Defen- ment fund to be approved by Wen by Chaz Dean is safe and we dants violated their fiduciary duties to the this court. continue to provide our hundreds of Plan participants in violation of ERISA, causing no less than hundreds of millions U.S. District Judge Rebecca R. Pallmeyer thousands of customers with the Wen by Chaz Dean products that of dollars in damages to the Plan. Lawyers entered judgment against the charter bus at Beasley Allen will be working with company for $49.9 million, saying “no just they know and love. Since the process of litigation is time consum- lawyers from five other national firms to reason exists for delay in entering this final resolve these claims on behalf of the Wells approval order and judgment.” ing and costly, we made a business decision to pursue a settlement and Fargo 401(k) plan participants. More will James Bull, the named Plaintiff, filed his be said about Wells Fargo below. If you suit alleging violation of the TCPA in July put this behind us so that we can focus on delivering quality products. need more information concerning this 2014. The Ohio resident alleged that over case, contact Dee Miles, the leader of the the course of three years, he received more However, the problems may not be over team of lawyers from Beasley Allen than 20 unsolicited text message ads from for the company. I understand the Food working on this case, at 800-898-2034 or US Coachways. The TCPA prohibits com- and Drug Administration (FDA) is still by email at [email protected]. puter-generated telemarketing calls to cell- investigating. The FDA said it received 127 phones without that user’s express prior consumer complaints, which is the largest consent. US Coachways’ violation of the number of reports ever associated with any Wells Fargo’s Mess Grows And Gets Much law was not limited to interactions with cosmetic hair cleansing product. That Worse prior customers, but also to individuals, number is in addition to the 21,000 com- such as the plaintiff, who had never actu- plaints reported directly to Chaz Dean and ally entered into a transaction with US The Consumer Financial Protection the marketing company, according Bureau (CFPB) announced in September Coachways, but merely obtained a quote. to the FDA. The Plaintiff is represented by Anthony that Wells Fargo had agreed to pay a $185 Paronich and Edward A. Broderick of Brod- Source: CBSLA.com million fine for its fraudulent practices that erick Law; Brian Kevin Murphy of Murray led to the opening of millions of unauthor- Murphy Moul Basil; Matthew McCue and ized accounts. Because of its significance Lauren E. Snyder. US Coachways is repre- and ramifications, we are going to write in sented by Angelo John Kappas; Craig J. XVIII. some detail about Well Fargo’s messy situa- Mariam; Eulalio J. Garcia and Paul Gamboa THE CONSUMER tion. The announcement of the fine was of Gordon & Rees; and Elliot R. Schiff of just the beginning of a mountain of trou- Schiff Gorman. The case is James Bull v. CORNER bles on the horizon for Wells Fargo. US Coachways Inc. in the U.S. District Court for the Northern District of Illinois. Investigations Increase Source: Law360.com Court Appoints Leadership In The Wells The latest of these troubles finds Wells Fargo Litigation Fargo at the center of a Securities and Exchange Commission (SEC) investi- We are pleased to announce that Beasley gation about its practices. The SEC is The Wen Hair Products Class-Action Allen lawyer Dee Miles, along with other Lawsuit Gets Preliminary Settlement investigating whether Wells Fargo vio- lawyers in our firm’s Consumer Fraud & lated rules relating to investor disclo- Approval Commercial Litigation Section, have been sures and whistleblower protections, appointed to the Executive Committee by among others. Members of the Senate A federal judge in Los Angeles has given the judge handling the Wells Fargo litiga- preliminary approval to a $26.3 million set- Banking Committee previously called tion. This is the litigation brought on on the SEC to investigate Wells Fargo’s tlement for a class-action lawsuit against behalf of participants in the Wells Fargo celebrity stylist Chaz Dean and marketer Sarbanes-Oxley reports and to deter- employee 401(k) pension plan. The mine whether the bank committed Guthy-Renker over Wen hair care products. company and its senior executives know- That ruling means some six million people securities fraud by failing to disclose ingly and intentionally withheld non-public problems of unauthorized accounts may be eligible for an award of up to information from pension plan participants $20,000. The judge must still give final while promoting its “cross-selling” and the public at large about the criminal strategy to investors. approval of the settlement. The lawsuit epidemic at Wells Fargo that has recently alleged Dean’s line of Wen shampoos and come to light. In addition to the SEC, numerous conditioners caused hair loss and scalp irri- This epidemic was created by Wells other entities launched investigations tation. Amy Davis, a lawyer for the class Fargo’s senior executives, including its into Wells Fargo, including the Depart- Plaintiffs, made this observation: CEO and Chairman, through an incentive ment of Justice (DOJ), the Department From what we understand about the structure that encouraged and caused of Labor (DOL), several Congressional product and how it causes hair loss employees to sign up customers, without committees, and state attorneys is it contains virtually no cleanser. their approval, for unauthorized and general and prosecutors’ offices. Cali- It’s like using lotion to wash your unwanted accounts and other banking fornia’s Attorney General launched a hair. So instead of removing the products to generate inflated share price criminal investigation into Wells Fargo growth. At the same time, these senior over allegations of false imprisonment

24 BeasleyAllen.com and identity theft related to the unau- and claims they should be held warned Tolstedt of “gaming in thorized account scheme. “As govern- responsible for incentivizing the mis- opening new accounts” and instances ment authorities examine Wells Fargo, conduct and failing to monitor sales where employees applied for loans far it is likely they will find abuses in practices. greater than what the customer actu- other parts of the bank beyond retail ally requested. His letter further customers,” said Harvey Pitt, former Wells Fargo recently found itself out explained that upper management chairman of the SEC. If Wells Fargo tens of millions of dollars to settle was aware of the misconduct. Not stays on this course, the SEC investiga- additional, unrelated matters as well. long after the date of this letter, Tolst- tion likely will not be the last. In September, Wells Fargo also agreed edt became head of Wells Fargo Com- to settle a class action accusing the munity Banking. Cases Cumulate bank of violating the Telephone Con- sumer Protection Act (TCPA). Wells Better Business Bureau Backs Out Investigations are not the only woes Fargo agreed to pay $16.3 million to Wells Fargo faces in response to the resolve allegations that it violated the Adding to the list of troubles, the CFPB announcement. Lawsuits are TCPA by contacting consumers’ cellu- Better Business Bureau (BBB) pulled piling up against the bank as well. lar phones without their prior express Wells Fargo’s accreditation in October. Even in 2015, before the CFPB consent. On Oct. 31, Wells Fargo The CEO of Better Business Bureau of announced the $185 million fine, a agreed to pay $50 million to hundreds Southern Piedmont stated, “Nobody class action was filed on behalf of con- of thousands of members of a class can recall a company of this size, this sumers against Wells Fargo for action to settle claims alleging the scope, losing their accreditation.” The opening unauthorized accounts, and bank improperly marked up fees for BBB now lists Wells Fargo as “not BBB the Los Angeles City Attorney filed a third-party appraisals. The class accredited” with a grade of “C-.” The complaint as well. After the CFPB alleged that Wells Fargo could pass BBB’s website lists “Government announcement, another class action through the costs of getting broker actions against the business” as the was filed in Utah District Court on price opinions (BPOs) (a type of infor- reason for accreditation loss. Wells behalf of consumers who were mal home appraisal prepared by a real Fargo can apply for accreditation again victims of the Wells Fargo scheme. estate broker that a lender will typi- in three years, which is how long the The 2015 cases settled, but the con- cally demand once a borrower actions stay on its BBB files. sumer case in Utah is still ongoing. defaults) from third-party real estate brokers, but Wells Fargo secretly States Sever Services Wells Fargo employees also join in the charged class members more for the mix of lawsuits. Lawyers at Beasley BPOs than it actually paid for them. Some states decided it was time to Allen are involved in a suit on behalf take a break from Wells Fargo after of Wells Fargo employees claiming Also in October, Wells Fargo agreed to finding out about its rampant miscon- that the fake-account scandal is jeop- pay $4.1 million to resolve allegations duct. California, Illinois, and Ohio ardizing their retirement accounts. that it improperly repossessed vehi- announced that they will stop doing Wells Fargo employees have seen the cles owned by members of the mili- business with Wells Fargo for the time value of their 401(k) retirement plan tary. The Servicemembers Civil Relief being. California Treasurer John plunge during this disaster because Act (SCRA) requires Wells Fargo to Chiang announced suspension of state the plan is heavily invested in obtain a court order before repossess- business with Wells Fargo for at least a the bank. ing the vehicles, a step which it alleg- year, citing the bank’s “venal abuse of edly failed to follow. In a related its customers.” Ohio Governor John In fact, Wells Fargo’s matching funds action, the Office of the Comptroller Kasich said the state will take a one- are in the form of Wells Fargo stock. of the Currency assessed $20 million year break from allowing Wells Fargo The lawsuit alleges Wells Fargo hid in penalties and restitution for alleged to partake in new state debt offerings the truth from its employees and vio- violations of the SCRA. and financial services contracts initi- lated fiduciary duties owed to the plan ated by state agencies under his participants. Another set of cases Details Develop authority. Gov. Kasich is also asking to brought by Wells Fargo employees exclude the bank from participating in deal with employees who were fired The CFPB announcement outlined the debt offerings initiated by the Ohio or demoted over the last 10 years for millions of unauthorized accounts and Public Facilities Commission. Like- refusing to open bogus accounts to the high-pressure sales tactics under- wise, Illinois Treasurer Michael Fre- meet Wells Fargo’s aggressive lying the fraud, but since that richs announced his office is sales goals. announcement more devastating suspending its annual $30 billion in details have developed about what Wells Fargo shareholders have also investment activity with Wells Fargo those at Wells Fargo knew and when for at least one year. brought actions since the CFPB they knew it. Details emerging from announcement. A shareholder suit former employees and various docu- Supervisors Shuffle filed in California alleges Wells Fargo ments indicate that the fraudulent misled investors about its financial activity has likely been occurring at In wake of the scandal, Wells Fargo performance and the success of its Wells Fargo for nearly a decade, maybe leadership changed. Tolstedt is one of sales strategies causing stock to trade longer. As early as 2006, a Wells Fargo the key players at the heart of the at inflated prices. The suit alleges vio- branch manager tried to warn leader- scheme. As head of retail banking lations of the 1934 Securities and ship about unauthorized accounts by operations, she touted the cross-sell Exchange Act, including allegations of sending a letter to Carrie Tolstedt, strategy and used sales volume as the insider trading. Another shareholder who was head of Wells Fargo’s ultimate measure of performance. suit filed in California names numer- regional banking at the time. He Prior to the unauthorized account ous Wells Fargo directors and officers

JereBeasleyReport.com 25 debacle becoming public, Tolstedt In fact, the announcement of Sloan as Arbitration proceedings overwhelm- announced that she would retire at CEO expressly stated that he “knows ingly favor corporations over consum- the end of 2016. In her July retirement Wells Fargo’s operations deeply.” Con- ers. Arbitrators are not required to announcement, not one word was gresswoman Maxine Waters, ranking follow precedent, can make decisions mentioned about the unauthorized member of the House Committee on without a hearing, and their income accounts that would soon top the Financial Services, had this to say: depends on being rehired by the com- headlines. Tolstedt ultimately left panies. The proceedings are kept Wells Fargo in late September. I remain concerned that incom- secret, which allows a company, like ing CEO Tim Sloan is also culpa- Wells Fargo, to keep a scandal away Following Tolstedt’s exit, John Stumpf ble in the recent scandal, from the public for years. During the announced his departure as Wells serving in a central role in the Senate Banking Committee hearing, Fargo’s CEO around Oct. 12, 2016. chain of command that ought to Senators asked Stumpf whether he Stumpf had been CEO of Wells Fargo have stopped this misconduct planned to cease enforcement of the since 2007 and worked for the bank from happening. arbitration clause for unauthorized for nearly 34 years. Stumpf’s accounts. Not surprisingly, the then- announcement came soon after he CEO, stated that he would have to Arbitration Accentuates Abuses was grilled by Congress about the “talk to [his] legal team.” “Ending fraudulent account scheme. During The Wells Fargo fiasco also shed some forced arbitration would not only help Congressional hearings, Stumpf apolo- light on the unfairness of binding arbi- the victims of this Wells Fargo gized yet failed to take any responsi- tration. Wells Fargo includes a binding scandal, it may prevent the next one,” bility for the misconduct. This drew arbitration clause in its contracts with wrote Alliance for Justice. criticism from lawmakers. Stumpf also consumers that requires any dispute resigned from his Board of Directors At press time we learned that Wells to be handled in arbitration instead of positions at Chevron and Target. Fargo is attempting to have a class in the courts. Paul Bland, a lawyer at action lawsuit filed by customers dis Public Justice, has called Wells Fargo’s - The Wells Fargo Board of Directors missed. The bank says that the cus- named another insider, Timothy Sloan, arbitration clause “one of the most anti-consumer, egregious” clauses in tomers’ claims must go to arbitration. as the new CEO. Sloan, however, is far With all of its problems and so many from an innocent bystander in the the industry. Adding insult to injury, Wells Fargo has unapologetically used folks hurt, this move is beyond bad. It fake-account fiasco. He has spent shows Wells Fargo has no compassion its arbitration clause to throw out con- nearly 29 years with Wells Fargo, and for their victims. he was present in leadership through- sumers’ lawsuits about its fake- account scheme. Worse, courts have out the past decade when the Wells Now, What’s Next? Fargo culture allowed fraudulent allowed it. Considering the factual sit- conduct to fester. Sloan has held uation, this should shock even our After all is said and done, the fraudulent numerous leadership positions at most conservative readers. scheme is expected to cost Wells Fargo $99 Wells Fargo, including Senior Execu- Judges have ruled that the arbitration billion in lost deposits and $4 billion in lost tive Vice President, Chief Financial clauses customers signed when revenue over the next 18 months. Before Officer, head of the Wholesale opening their legitimate accounts the scandal broke, Wells Fargo was worth Banking Group, and he was named prevent them from suing Wells Fargo an estimated $240 billion—a value that Chief Operating Officer in Novem - over separate, fraudulent accounts will be negatively impacted over the ber of 2015. that were opened without the cus- coming months. It remains to be seen how the bank will bounce back from this U.S. Senators Elizabeth Warren and tomer’s knowledge. A federal judge recently ruled that a case over unau- scandal and how it will rebuild its worth, Robert Menendez sent a letter to the reputation, and trust with its customers. In Wells Fargo Board asking how it thorized accounts must go before an arbitrator, noting that Wells Fargo’s my opinion, Wells Fargo has a very steep decided to choose Sloan; whether he hill to climb—stay tuned! was questioned about his knowledge arbitration clause is broad enough to of the creation of unauthorized cus- cover “any unresolved disagreement Sources: Law360, Wall Street Journal, The between or among you and the bank.” Consumerist, CNBC, Los Angeles Times, Alliance for tomer accounts; and any actions he Justice might have taken in response. They Does this shock you? also asked if the Board conducted “an Interestingly, the very question of independent investigation of whether whether a dispute is subject to arbitra- Mr. Sloan knew about or took appro- Deciphering the Economic Loss Doctrine tion was itself an issue for the arbitra- priate actions to prevent this scandal” tor (who gets paid by the case) to and if so, what that investigation The lawyers in our Consumer Fraud & determine. In fact, that’s really more showed. The Senators said in Commercial Litigation Section felt that we than just “interesting.” The consumers their letter: should write this month on the often mis- appealed that case to the Ninth Circuit understood “Economic Loss Doctrine,” It is difficult to believe that he but settled before any ruling was herein after referred to as ELD. This is had no knowledge of or bears made. As the Los Angeles Times noted, something they have to deal with quite no responsibility for the actions “Theoretically speaking, if Wells often. For those who are not familiar with of thousands of Wells Fargo [Fargo] tried to take your first-born the ELD, it is a court-developed doctrine employees creating fake child in settlement of an overdraft, it that has been adopted by the majority of accounts under his and other would be up to an arbitrator to split the states in the U.S. In general, the doc- top executives’ watch. the baby.” trine prohibits a plaintiff from recovering economic damages in tort where a product defect or failure causes damage to the

26 BeasleyAllen.com product itself, resulting in economic loss, things, breach of contract, warranty, and oppose arbitration unless both sides but does not cause personal injury or negligence against various parties, includ- agree to it. damage to any other property. ing the architect and a supplier of a multi- Consumers will find arbitration agree- The purpose of the doctrine is to main- story, multi-tenant subsidized housing ments in practically every single contract tain the difference between tort law and development in Milwaukee, Wis. they sign these days. We have come to contract law. It encourages parties to allo- Plaintiff’s lawyers argued that, under expect them with the purchase of nearly cate economic risk through contract, typi- Wisconsin law, the court could not apply every consumer product. There are still cally by negotiating warranties and other the ELD and that parties to construction some surprises, however, when arbitration contract remedies. contracts, like the local housing authority, clauses pop up unexpectedly. The public policy behind the doctrine is could pursue tort claims for purely eco- One such instance involved Gretchen that the purchaser is in the best position to nomic losses. It was further argued that it Carlson. When she filed a lawsuit in July weigh the risk of economic loss and then was against Wisconsin public policy to alleging sexual harassment during her act accordingly through warranties and allow a contractor to attempt to limit or tenure at Fox News, Ms. Carlson became insurance. The fear is that if manufacturers eliminate its tort liability. part of a disturbing statistic. At least 25 were forced to bear the risk of economic The lawyers for the Defendant supplier, percent of American women say they have loss themselves they would raise prices which filed for summary judgment seeking experienced sexual harassment in the accordingly to compensate for the risk. to dismiss the negligence claim asserted workplace, according to a 2016 report This would place the entire cost of eco- against it, argued that the Wisconsin from the Equal Employment Opportunity nomic losses—for those failing to bargain statute at issue merely provided that Commission (EEOC). Ms. Carlson also for contract remedies—upon the consum- parties could not contract away tort liabil- faced a surprising obstacle that blocks an ing public as a whole. ity and that “nothing in the language of the untold lot of them—there was an arbitra- One way to combat the ELD defense is to statute added to, subtracted from, or tion clause in her employment contract. argue that the loss was not purely eco- revised the elements of tort liability, includ- From a consumer advocate standpoint, nomic. Pure economic loss, as it relates to ing when, where, or how the ELD would one major issue is that there is no reliable the ELD, is either damage to the product be applied.” The court ultimately con- data on how many Americans have given itself or a monetary loss caused by the cluded that the Wisconsin statute at issue up a constitutional right to a court hearing defective product where no other property could run parallel with the ELD. through arbitration clauses. With tradi- was damaged and no person was injured. This is just one example of how one tional consumer transactions, the assump- For example, if a front-end loader caught state has had to reconcile the application tion today is almost always that an fire because of a new heated seat the Plain- of the ELD with its other statutes in a par- arbitration clause is in play. Employment tiff bought and had installed on the tractor, ticular case. Because each state is different, law, however, is a different beast—arbitra- the Plaintiff could possibly recover the it would be worthwhile to examine your tion in employment cases is only recently damages in tort from the manufacturer of state’s statutes and case law precedent to gaining attention. the heated seat if the seat was found to be determine how to best approach an ELD One academic study estimates, using defective. This would be possible because defense in your state. projections based on narrow data sets, that the destruction of the front-end loader If you have any questions on the ELD, as many as a quarter of nonunionized would be considered “damage to other contact Claire Burns, a lawyer in our firm’s American workers may be subject to the property” and, thus, not purely economic. Consumer Fraud & Commercial Litigation restrictions. Arbitration clauses are found However, if the Plaintiff ordered the Section, at 800-898-2034 or by email at not only in multimillion-dollar contracts front-end loader with a heated seat already [email protected]. like that of Ms. Carlson’s but also in the installed, the heated seat would then be Sources: “Unraveling the Applications of most mundane hiring materials—form con- part of the product and the tort action the Economic Loss Doctrine, Law360, tracts, even employee handbooks—that against the manufacturer would likely be http://www.law360.com/articles/858374/ have been given to employees at Anheuser- barred by the ELD. unraveling-the-applications-of-the-eco- Busch or Applebee’s or some The most important thing to remember nomic-loss-doctrine editors at TIME. is that states differ on how they approach Ms. Carlson cleverly navigated her own and apply the ELD. For instance, Alabama clause: she sued Roger Ailes, the co- provides a fraudulent inducement excep- founder, CEO and chairman of Fox, not the Surprise! You Signed An Arbitration tion to the ELD defense. See e.g., Ford company itself. Her suit alleged that Ailes Agreement Motor Co. v. Rice, 726 So. 2d 626, 631 (Ala. “unlawfully retaliated” against her and 1998). Other states have promulgated It has become quite evident that the arbi- “sabotaged her career because she refused product liability statutes that explain how tration system has expanded in scope over his sexual advances and complained about the ELD shall apply and in what types of the past decade. While many argue this severe and pervasive sexual harassment.” circumstances. As more states expand the expansion is for good reasons, I strongly As soon as the case was public, Ailes’ application of the ELD, however, the law’s disagree. Huge corporations often claim lawyers tried to move it into arbitration, potential intersection with other statutes that circumventing the court system arguing that Ms. Carlson had broken the increases. reduces litigation costs, allows more terms of her contract. Her contract, accord- For example, the question about limited discovery and yields a swifter ing to Ailes, said that any legal disputes had whether and how general construction result for both parties. I don’t believe they to be brought in an arbitration proceeding. statutes could co-exist with the ELD came can prove those statements to be true. Ailes denied wrongdoing, and he and Ms. up in a recent summary judgment decision Mandatory, forced arbitration favors large Carlson agreed on a confidential in Wisconsin. In Housing Authority of the corporations and is very much anti-con- settlement. City of Milwaukee et. al. v. Zimmerman sumer. The deck is stacked against individ- This August, in response to Ms. Carlson’s Design Group, et al., Milwaukee County uals when they face huge corporations in case, three U.S. Senators, Richard Blumen- Case No. 12-CV-11532, the local housing arbitration and that’s exactly why I strongly thal, Al Franken and Dick Durbin, wrote to authority asserted claims for, among other four major arbitration businesses, request-

JereBeasleyReport.com 27 ing information on employment disputes companies said they agreed to by virtue of Education proposed to protect students and cases involving sexual harassment that accepting employment at the company. from arbitration clauses buried in enroll- have been heard in secret by arbitrators. Even at-will employees can be compelled ment agreements. Questions included how many sexual- into arbitration through clauses in While these rulings are all steps in the harassment lawsuits have been referred to employee materials. right direction, none of them are the cure binding arbitration through their organiza- Research by Katherine Stone, a law pro- for arbitration that consumers and employ- tions, and how many cases involved confi- fessor at UCLA, and Cornell law professor ees badly need. On the other hand, slow dentiality clauses similar to Carlson’s, Alexander Colvin shows that payouts in progress is better than no progress. regardless of the cause of action. arbitration are much smaller than the However, the battle must continue. Three of the four arbitration organiza- damages Plaintiffs might receive in court— Source: Time Magazine tions responded. The American Arbitration so small that most lawyers are reluctant to Association, one of the largest businesses take the cases. Ms. Carlson’s reported $20 (and a not-for-profit), noted that its data million settlement is far more than most was not comprehensive and added that persons could ever hope to win. Because Coffee Maker Importer Held Liable For Not only 4 percent of employment-plan cases of the confidentiality in most cases, statis- Reporting Defect in 2014 involved sexual-harassment issues. tics are hard to come by. But a 2007 Chi- For Sen. Blumenthal, that information was cago-wide survey put median A Wisconsin federal judge gave the Con- not adequate. He stated: sexual-harassment settlements at about sumer Product Safety Commission (CPSC) $30,000. Also, a national study from a a win, finding importer Spectrum Brands The responses give us no informative researcher at Columbia University in 2006 Inc. to be liable for taking years to report a or comprehensive view of how prev- found employees who take their cases to defect in a Black & Decker-branded coffee alent the problem is. It could be very trial win on average $217,000. maker. While declining to issue summary substantial with illegal or dangerous Despite the difference in relief, it may be judgment on penalties, U.S. District Judge activity going unreported or getting harder for employees to take sex- William Conley did find that Spectrum underreported. ual-harassment complaints to court. “Anec- Brands and Applica Consumer Products dotally speaking, the use of arbitration Inc.—which it bought in 2010 and merged Last year, Sen. Franken reintroduced the with in 2014—failed to report dangerous Arbitration Fairness Act, which would agreements from our perspective is increasing,” says Peggy Mastroianni, legal defects in the carafes of the imported invalidate current arbitration clauses in coffee makers. The judge also dismissed employment, consumer, civil rights and counsel at the EEOC. That is not good news for employees. claims by Spectrum that the reporting stan- antitrust claims. Under this measure, a dards were too vague and that its due claimant alleging sexual harassment who is Arbitration in employment contracts is gaining traction and most people don’t process rights had been violated. Judge subject to an arbitration mandate could not Conley said in his opinion: be forced to resolve the dispute that way. think a second thought about signing an This year, Sen. Patrick Leahy followed it up agreement—even assuming they notice it Under the facts alleged, defendant with the Restoring Statutory Rights Act, is there. Professor Stone stated: engaged in knowing, arguably outra- which says no arbitration agreement can When you take a job, you don’t think geous, conduct by failing to notify make you waive a statutory right. Sen. you are going to end up suing your the CPSC about substantiated com- Blumenthal, who refers to Ms. Carlson’s employer. Any employer that is big plaints that carafes were breaking case as a teaching moment for the enough will be advised to put an due to design defects and harming nation, observed: arbitration clause into their employ- individuals for over two years. Fur- ment materials, and employees will thermore, even after issuing a recall Clearly these clauses can be misused, notice for those defective carafes, and silence can be a means for not be able to bring a class-action suit. It’d basically be malpractice not Applica sold more of them, necessi- abusers to conceal misconduct. If Ms. tating another recall. Carlson had adhered strictly to the to advise that. terms of her employment contract, On the other hand, “[t]he EEOC’s stance According to the government, from 2008 her case would have remained a has always been that mandatory arbitration to 2012, Spectrum and Applica imported secret forever. of employment discrimination is bad: the and distributed more than 159,000 Black & secrecy, the lack of precedent,” says Ms. Decker SpaceMaker Under-the-Cabinet Cof- Arbitration Clauses are very easy to miss feemaker products. The product had “an in a document—you probably have agreed Mastroianni. She added: “We litigated this issue in a number of cases that we lost.” obvious and potentially dangerous defect to one at some point, whether at your job whereby the handles on the coffee makers’ or at your bank. They can be just a few Despite the increasing uses of arbitration agreements, the trend in forcing cases into glass carafes would suddenly break or short words, but their impact is vast. These detach while the carafe was full of scald- clauses push disputes between parties to a confidential arbitration suits is deeply trou- bling and rightfully so. The Obama Admin- ing-hot coffee,” the government said. In system in which an arbitrator (sometimes a late 2008, the company began receiving retired judge) is hired to adjudicate the istration has tried to curb the arbitration boom without involving Congress. what would add up to more than 1,600 matter. Some contracts prohibit claimants consumer complaints, including more than from speaking about the claims, which in Recently, a Department of Health and Human Services agency barred nursing 65 reports of burns, the government said. harassment cases could leave other victims In March and April 2009, the company in the dark. homes that receive federal funding from mandating that residents resolve disputes analyzed the defect, prompting the import You don’t necessarily have to sign on a of a redesigned carafe, but continued dis- dotted line to agree to arbitration—Netflix in arbitration. In May, the Consumer Finan- cial Protection Bureau (CFPB) proposed a tributing its entire inventory of the defec- subscribers agree to arbitration in the tive coffee maker. The company did not terms of use before picking a movie; rule to prevent banks and credit-card com- panies from using arbitration clauses with report the defect to the CPSC until April workers at Macy’s and Raymour & Flanigan 2012, after it was served with a class action have sued over arbitration clauses that the consumers. In June, the Department of

28 BeasleyAllen.com complaint about the defective carafe toy, the toy burst into flames again, setting scribed today than ever before, “so we now handles. Even after issuing a recall on the their “real truck” on fire. The cause of the have opioids in millions of American coffee makers that year, the government fire has not been disclosed. homes, and children and teens are exposed contends that Spectrum knowingly and According to the company’s website, the to them more frequently,” says lead Yale unlawfully sold roughly 640 more of the toy was sold exclusively through Toys R Us. researcher Julie Gaither, a postdoctoral coffee makers. Judge Conley wrote, refer- Big enough for two children, the Tonka fellow in biostatistics. ring to Section 15 of the Consumer Product Truck had a working dump truck bed in Federal agencies are calling on doctors Safety Act: the back and could get up to four miles per to only prescribe the medicationss if no hour. It was powered by a 12-volt recharge- other therapy options are suitable. This has Even at the time Spectrum finally able battery, according to a product helped curb access to the painkillers, but it filed its Section 15 report in April of description. As widely reported, problems is also driving the cost of opioids up, which 2012, the CPSC was still not told that with consumer products spontaneously has made teens turn to heroin, which is Applica had changed the design of catching fire have afflicted other manufac- cheaper and more readily available. the carafes in 2009 in an attempt to turers in recent months. Samsung, with its Sources: CBS News and RightingInjustice.com remedy the defect, nor that Spectrum now-defunct Galaxy Note7 smartphone, had voluntarily recalled the carafes has definitely been in the news. Samsung in March of 2012!” issued a mass recall of 2.5 million Galaxy Beware Of Holiday Scams Judge Conley also said the fact that the Note7 phones over reports that a defect in its lithium ion battery had caused at least CPSC did not have a formal, recorded delib- As the holiday season gets underway, an 35 phones to catch fire. eration of the evidence before referring the overall feeling of cheer and kindness seems case for prosecution was not a due process Source: Law360.com to take hold of many people, which is a violation, saying there was no statutory very good thing. This time of year involves requirement. Judge Conley declined a gov- gatherings, parties and a time for reflection ernment motion for summary judgment Study Finds Dramatic Increase In Child and accounting of all the past year’s bless- imposing injunctive relief and financial Opioid Poisonings ings. Unfortunately, there are many “scam- penalties. Instead, the judge set a schedul- mers” who seek to ruin all the compassion ing conference for the penalty phase of the The number of children hospitalized due and goodwill by tricking people into false case. Scott Wolfson, director of communi- to accidental opioid poisoning has jumped schemes and promotions. Don’t let the cations for the CPSC, said the agency threefold in recent years. This has caused Grinch steal your joy; be wary of these regarded the ruling as “very positive,” par- public health experts to call for initiatives popular holiday scams: ticularly in regard to notice and the statute to address the overprescribing of the drugs of limitations. He said: and to raise awareness of the importance • Free gift cards and coupons — Many of safe storage of the powerful prescription websites will offer these goodies to get This ruling is a very clear message to painkillers. you to input your personal information. the regulated community of what the According to a Yale School of Public They can then take this information and laws are and how this pertains to Health study published in the journal raid your online accounts. how the CPSC pursues civil penalties. JAMA Pediatrics, the number of opioid • Postal failure delivery — taking advan- The government is represented by poisonings in children aged 1 to 4 tage of the fact that more people are Thomas Ross and Alan Phelps of the U.S. increased 205 percent from 1997 to 2012. shipping gifts this time of year, these Department of Justice and Harriet Kerwin Poisonings among teenagers 15 to 19 email notifications generally provide a of the CPSC. The case is U.S. v. Spectrum increased 176 percent. Overall, there was a link for you to click on to correct the Brands Inc. in the U.S. District Court for 165 percent increase in opioid poisonings alleged delivery problem. The email the Western District of Wisconsin. among children and young adults ages 19 often looks like an official notification and younger. Source: Law360.com from a popular carrier, i.e., U.S. Postal Most of the poisonings among children Service, UPS, FedEx, etc. Once you click younger than 10 years of age were acciden- on the link, it will then ask you to input tal. Lead researcher Julie Gaither said chil- personal data that can be used to steal Toys R Us Pulls Battery-Powered Toy dren are “eating them like candy.” Most your identity and hack your accounts. Truck After Fire Report poisonings among teenagers were acciden- tal overdoses, though some were suicide • Ransomware — many people will Toys R Us has pulled a Tonka toy truck attempts. The most common culprits were receive an email asking that a ransom be from the market after reports that one painkillers such as OxyContin, Percocet paid, or the person’s computer will be caught fire in Washington state while and Vicodin. targeted by a hacker. Unfortunately, this being taken home from a local store by a For the study, researchers analyzed data has become more prevalent in recent pair of grandparents who bought one as from children’s hospitals from 1997 to 2012 years and has caused millions of dollars a present. in three-year intervals. More than 13,000 in damages to individuals and A spokeswoman for Toys R Us said that records of children and teens hospitalized businesses. the ride-on toy has been pulled from stores for opioid poisonings were identified, as and its website out of “an abundance of well as records of heroin poisonings • Local vendor deals — Many people will caution.” A Tonka 12V Ride-On Dump among teens. Just more than 1 percent of receive notifications from alleged busi- Truck, made by California-based Dyna- children died during hospitalization. ness that operate in your area and craft, caught on fire twice last month The prescription drug epidemic has appear to be legitimate. They may adver- while being taken home by a Washington become a growing concern in the United tise free tickets to movies, coupons or couple. Delmond Harden and his wife States, with opioids being the most even preferred pricing. Again, they stopped to put out the fire, but on the way misused and abused prescription drug in usually ask you to enter your personal back to the Toys R Us store to return the the country. They are more widely pre-

JereBeasleyReport.com 29 data to qualify. Just another ploy to get Toyota Recalling 744,000 Minivans Over part, but in 2013 the company learned of a information to hack your accounts. Sliding Door Glitch car fire caused by the pump failure. “FHI attempted to investigate; however, this was • Charity tricksters — These solicitations Toyota Motor North America Inc. is not possible as the fire department col- can be sent through email or via regular recalling about 744,000 of its popular lected the affected parts,” NHTSA docu- postal delivery. They almost always play Sienna minivans over an issue with the ments said. on your emotions and pray for you to vehicles’ sliding doors, which can open After another pump fire was reported in help those less fortunate during this while driving. The issue lies with the 2015, another investigation was opened, holiday season. They may even use the motor circuit in the sliding door for Sienna and ultimately the company decided to names of legitimate charities but provide vans of model year 2011 to 2016, which recall all of the potentially affected parts in a different link or address. “under certain limited conditions” can the U.S. The air pump recall comes not The best way to avoid those “Scrooges” become overloaded and open the motor’s long after NHTSA announced that Subaru who would prey on your kindness and fuse, allowing the opportunity for the door would be recalling about 593,000 vehicles goodwill toward others is to be critical of to become unlatched and open, even while over faulty windshield wiper motors that those seeking things from you. You don’t the car is running and being driven. Toyota can malfunction and, again, in some cases have to lose your compassion, just double is “currently developing the remedy for start a fire. That recall also covers certain check the people you are dealing with this condition,” and all owners of possibly 2010-14 Outback and Legacy models. In its before you click on that link, fill out that affected vehicles will be notified of recall recall report to the NHTSA, Subaru said the form or write that check. We don’t want procedures by mid-January. issue comes as a result of poor manufactur- you having to say, “Bah humbug” during The automaker has had a busy year for ing of the bottom cover for the wiper this holiday season! recalls, mainly due to its longtime use of motor installed in front windshields, which Source: http://www.cutimes.com/2015/11/13/the-12- airbags manufactured by Takata Corp. could cause interference between two scams-of-christmas Since the defect became known last year, motor components. Toyota has recalled millions of vehicles in the U.S. and elsewhere, announcing another round of recalls at the end of BMW Recalls 136,000 Vehicles Over XIX. October that will affect close to 6 million Possible Engine Stalling RECALLS UPDATE vehicles worldwide. BMW of North America LLC is set to recall more than 136,000 vehicles over a Once again we are reporting a large Subaru Recalling 100,000 Vehicles Over possible wiring defect with in-tank fuel number of safety-related recalls. It should Air Pump Fire Risk pumps that can cause engines to suddenly be noted, however, that we aren’t includ- stall. The recall is expected to begin Dec. 5 ing all recalls. We have included some of Subaru of America Inc. is set to recall and will include a range of BMW X5 the more significant recalls that were more than 100,000 of its popular Outback, models released between 2007 and 2011, issued in November. If more information is Legacy, Forester and Impreza models over several X6 models released between 2006 needed on any of the recalls, readers are a potential defect that can cause a part in and 2011 and about 15 other sedan, coupe encouraged to contact Shanna Malone, the the air pump to melt and catch fire. In doc- and convertible models released between Executive Editor of the Report. We would uments posted by the National Highway 2011 and 2012, all of which are equipped also like to know if we have missed any Traffic Safety Administration (NHTSA), a with in-tank fuel pumps that may have safety recalls that should have been relay in a secondary air injection pump “insufficiently crimped wire contacts.” included in this issue. was pointed to as being prone to continu- “The loose wires may cause the connector ous running, leading the part to overheat to melt, resulting in a fuel leak,” the and in some instances melt and cause inter- National Highway Traffic Safety Adminis- Toyota Recalls Nearly 1.5 Million Cars In nal fire. However, the check engine light tration (NHTSA) said. “Additionally, the Europe Over Takata Airbags does go on when the pump fails, and no fuel pump may stop working, possibly injuries have been reported due to causing an engine stall and increase the Toyota Motor Corp. has recalled about the defect. risk of a crash.” 5.8 million cars over potentially faulty The recall will cover 2007-09 model year With the recall, drivers will have their airbag inflators made by Takata Corp. The Legacys and Outbacks, 2008-14 Imprezas vehicle’s fuel pump replaced free of recall affects about 1.47 million vehicles and 2009-13 Foresters totaling 100,127 charge. In an investigation report of the sold in Europe, about 820,000 cars sold in vehicles, all equipped with turbocharged defect, BMW said it had not received any China and 1.16 million cars in the Japanese engines, according to NHTSA records. reports and was otherwise unaware of any market. The action also extends to Central Subaru will replace the pump and relay injuries stemming from the issue. and South America, Africa, the Near and without cost to drivers, but a start date for Middle East and Singapore. Affected the recall has not been set. Subaru’s parent models include the Corolla compact car, company, Fuji Heavy Industries (FHI), Fuel Leaks And Wiper Issues Prompt FCA one of the world’s best-selling models, the received an initial technical report in April Recall Of 83,000 Vehicles Yaris/Vitz subcompact, the Hilux pickup 2011 that noted the check engine light was and the Etios line of sedans and hatch- coming on because the secondary air Fiat Chrysler will recall more than backs. The recall covers driver-side and pump was failing. The company investi- 83,000 vehicles in two campaigns relating passenger-side airbags installed in cars pro- gated and found the cause was “insuffi- to potential fuel leaks in Dodge Durango duced between May 2000 and November cient contact point pressure of the relay.” and Jeep Grand Cherokee vehicles and 2001, and April 2006 and December 2014. according to court documents. Fuji told the faulty windshield wiper electronics in supplier of the part to make changes to the certain Dodge Dart sedans. The largest of pressure mechanism and inspect every the two recalls by FCA US LLC covers

30 BeasleyAllen.com 53,155 model year 2016 Dart vehicles, the National Highway Traffic Safety Admin- Both defective parts were made by Denso which could experience voltage spikes in istration (NHTSA). The recalled vehicles, Corp., the filings said. The company said the circuits of the front windshield wipers which include RX-8s from the 2004 that it hadn’t yet set a date on when it will caused by a fault in the windshield washer through 2008 models, have fuel pump notify consumers, but it must do so within pump. “Pumps with this condition may be rings that might deteriorate from engine 60 days of notifying U.S. regulators. The subject to short-circuit, which, if one and exhaust pipe heat, meaning there is a Outlander and Outlander Sport are Mitsubi- occurs, could disable windshield wiper risk of fuel leakage that in the presence of shi’s top models in the North American function,” FCA said in a statement. “FCA US an ignition source can start a fiery blaze, market, making up nearly 60 percent of the is unaware of any related injuries or the recall notice said. Mazda was first made company’s sales here in all of 2015 and the accidents.” aware of the defect in September 2013 and first half of 2016. According to the FCA, the company dis- subsequently started an investigation, the covered the defect after launching an company said in an October recall report investigation based on findings from war- to the NHTSA. Kia Recalls 72,000 Cars Due To Fire Risk ranty data. FCA and the supplier of the At the time, the automaker had con- pumps worked together to discover electri- cluded bad maintenance was the cause of Kia Motors Corp. is recalling 72,000 cal connections that were out of compli- the fuel pump failure, and closed the inves- Sportages because of concerns relating to ance with the automaker’s specifications. tigation. Mazda began a second investiga- electrical fires. The South Korean car The company believes that approximately tion a year later, after receiving a second maker told highway safety regulators that 4 percent of the recalled vehicles are expe- field report about cracking pumps. After road salt could corrode wire harness con- riencing the voltage spike issue. To fix the closely monitoring seal deterioration in the nector pins in the hydraulic electronic problem, the FCA will replace the defec- field, Mazda said, it decided to recall the control unit assembly, which is part of the tive windshield washer pumps at no cost to RX-8 vehicles last month. Mazda will appar- brake system. The company said that the Dart owners. The FCA said it will begin to ently notify owners of the problem, and issue does not affect brake performance, notify dealers and owners starting dealers are instructed to replace the but could cause short circuits, leading to around Dec. 19. sealing ring and add a thermal insulation engine compartment fires in 2008 and The second recall covers 30,180 SUVs in pad to the fuel tank for no charge. Remedy 2009 model years. The issue could arise the U.S., but the FCA says it believes only parts are not yet available, but the auto- due to improper sealing of the unit, allow- 30 vehicles are affected by what it called a maker will send out a second notice once ing salt water from road salt to get into the “manufacturing anomaly” that caused fuel the parts come in. No timeline has been system, the company said. rail tubes in 2016 Dodge Durango and Jeep specified. The vehicles were manufactured Owners can bring the vehicles to Grand Cherokee models to become in Mazda’s Hiroshima plant in Japan. dealers, who will inspect the connector damaged. According to the FCA, the pins for corrosion and replace the connec- damage was caused by inadvertent contact tor cover with a new one if none is found. during assembly between the manifold fas- Mitsubishi Recalls Up To 195,000 Vehicles Dealers will replace the whole assembly if tener and the fuel rail. When the rail is Over Wiper Problem corrosion is found. The first report of a fire exposed to pressure pulsation and thermal was in April, in California. Kia learned that cycling, the FCA said it is possible for a fuel Japanese automaker Mitsubishi will a 2008 model year Sportage caught fire in a leak to develop along the damaged area. recall up to 195,000 vehicles in the U.S. to driveway. Kia was able to identify nine This leak in turn results in a higher poten- fix a problem with their windshield other instances of “thermal events.” The tial for fires. The vehicles subject to recall wipers. The automaker doesn’t believe the Sportage is a small-size SUV. The recall was all contain engines manufactured over an problem has caused any injuries, according set to begin on Nov. 28. 11-week period at the Saltillo Engine Plant to regulatory filings posted online. Mitsubi- in the state of Coahuila, Mexico. The recall shi Motors North America Inc. notified stems from an FCA investigation launched federal officials that it expects to recall up BRP Recalls Side-By-Side Off-Road after an employee at the plant reported a to 100,000 Outlander sport utility vehicles Vehicles fuel leak in a single vehicle. for the model years 2007 through 2013 and The Durango and Grand Cherokee recall more than 94,000 Outlander Sport SUVs BRP U.S. of Sturtevant, Wis., is recalling also includes 2,534 vehicles in Canada, 489 for the model years 2011 and 2012. Differ- in Mexico and 1,427 outside the North about 2,380 side-by-side off-road vehicles. ent parts of the models’ windshield wiper The steering rack and pinion assembly can American Free Trade Agreement (NAFTA) assemblies will be replaced free of charge, region. The campaign only covers vehicles have an improper amount of grease and the company said. The automaker said that result in a loss of steering control, posing a with 3.6-liter V-6 engines. FCA will inspect it found that a rubber component where all recalled vehicles and will replace the crash hazard. The firm has received 33 the hood meets the windshield of Out- incident reports, including reports of inter- fuel rails and lower intake manifolds if lander windshield wipers could degrade needed, free of charge. As with the Dart mittent or complete steering lock. No inju- over time, eventually creating an opening ries are reported. This recall involves recall, the FCA will begin to notify owners for water to wear out a metal joint. Accord- and dealers beginning around Dec. 19. model year 2017 Can-Am Maverick X3 side- ing to documents filed with the National by-side vehicles. The vehicles came in Highway Traffic Safety Administration various colors. The model name and (NHTSA), only 11 such incidents have been Vehicle Identification Number (VIN) is Mazda Recalls Thousands Of Sports Cars reported worldwide since 2010. printed on a label under the glove box. To Over Gas Leak Risk In the Outlander Sport models, the determine if your vehicle is included in the company said that water could seep into recall, have your VIN (Vehicle identifica- Mazda North America is recalling nearly wiper motors and break them. Mitsubishi tion Number) ready and contact your 70,000 of its RX-8 sports cars because they didn’t say how often the problem was authorized Can-Am side-by-side dealer or are prone to possible fuel leaks that carry reported, but it said it hadn’t received any BRP. Recalled models include: 2017 the potential to spark fires, according to injury claims related to either problem. Can-Am Maverick X3 STD, 2017 Can-Am

JereBeasleyReport.com 31 Maverick X3 XDS and 2017 Can-Am Maver- Trek Recalls Farley Bicycles Due To Fall The bikes were sold at KTM and ick X3 XRS. The vehicles, manufactured in Hazard Husqvarna Motorcycles authorized dealers Mexico, were sold at Can-Am dealers nationwide from June 2016 to August 2016 nationwide from August 2016, through Trek Bicycle Corp., of Waterloo, Wis., for between $8,000 and $11,000. Consum- November 2016, for between $23,000 has recalled about 2,600 Trek Farley bicy- ers should immediately stop using the and $27,000. cles and framesets. The fork can separate recalled motorcycles and contact an autho- Consumers should immediately stop from the steer tube, posing a fall hazard to rized KTM or Husqvarna Motorcycles using the recalled vehicles and contact a the rider. This recall involves model year dealer to schedule a free repair. Contact BRP Can-Am side-by-side dealer to sched- 2014 Trek Farley bicycles and framesets KTM North America/Husqvarna Motorcy- ule an appointment for a free repair. BRP is and 2015 Trek Farley 6 bicycles and frame- cles North America toll-free at 888-985- notifying registered consumers directly sets. The 2014 Trek Farley is black with 6090 from 8 a.m. to 5 p.m. ET Monday about this recall. Consumers may contact green decals with an aluminum frame and through Friday or online at www.ktmusa. BRP toll-free at 888-272-9222 from 8 a.m. fork. The 2014 frameset is sky blue with com or www.husqvarna-motorcycles.com to 8 p.m. (ET) Monday through Sunday or orange decals. The 2015 Trek Farley 6 is and click on “Service” then “Safety” for online at www.can-am.brp.com and click black with blue decals with an aluminum more information. Photos available at: on “Owner Center” and then “Recall Infor- frame and fork. Both bicycle models were https://cpsc.gov/Recalls/2017/KTM-North- mation” for more information. sold in 14.5 through 21.5 inch sizes. “Trek” America-Recalls-Closed-Course-Competi- is printed across the bicycle frame. The tion-Off-Road-Motorcycles company has received five reports of the bicycle fork separating from the steer tube. Peg Perego Recalls Children’s Ride-On No injuries have been reported. Vehicles Due To Fire And Burn Hazards GoPro Recalls About 2,500 Karma Drones The bikes were sold at bicycle stores Peg Perego has recalled Children’s nationwide from September 2013 through GoPro recalled about 2,500 of its Karma ride-on vehicles. The company has August 2016 for between $1,700 and drones just two weeks after they were put received three reports of the children’s $2,600. Consumers should immediately on the market. Customers were told to ride-on toy vehicles overheating, including stop using the recalled bicycles and frame- immediately stop using the product. It was one report of a burn. The company says a sets and return the bicycles to a Trek discovered that some units lost power relay on the circuit board can fail causing retailer for a free inspection and repair. while flying. In a notice announcing the the vehicle’s motor to overheat and ignite. Contact Trek at 800-373-4594 from 8 a.m. recall on its website, GoPro warned cus- The toy vehicles have been sold at online to 6 p.m. CT Monday through Friday or tomers not to continue operating the retailers including Amazon.com, Cabelas. online at www.trekbikes.com and click on drones even if they appear to be working com, Target.com, ToysRUs.com and Wal- Safety & Recalls at the bottom of the page fine, urging consumers to send back the Mart.com from October 2014 through May for more information. At press time, photos devices for a full refund. The company is 2015 for between $500 and $600. The were available at https://cpsc.gov/ not offering replacement units. A very recall involves Peg Perego’s 850 Polaris Recalls/2017/Trek-Recalls-Farley-Bicycles. small number of Karma owners have Sportsman ride-on, 24-volt battery oper- reported incidents of power failure during ated toy vehicles intended for children ages operation, according to GoPro. 5 to 7 years. The ATV-style vehicles for two KTM North America Recalls Closed- The recall does not apply to GoPro’s people are silver, red and black and have Course/Competition Off-Road Motorcycles HERO5 Black and Karma Grip devices, four wheels, a flip-up backrest for the back Due To Crash Hazard although those who purchased a bundle passenger and a front and rear luggage package containing all three must return rack. The date code is found underneath About 1,200 Closed-course/competition all the items to get a full refund, the the vehicle seat. Sportsman Twin and 850 off-road motorcycles have been recalled by company said. The U.S. Consumer Prod- EFI appear on the side of the ride-on KTM North America, Inc., of Amherst, ucts Safety Commission (CPSC) had not vehicle and Polaris appears on the side of Ohio. The front brake master cylinder can issued a recall notice for the product as the vehicle’s seat. malfunction, posing a crash hazard. This of Nov. 9. You can get a list of the recalled vehicles recall involves model year 2017 KTM brand by email at [email protected] or and Husqvarna motorcycles brand closed- online at http://us.pegperego.com and course/competition only motorcycles. Five Fox Factory Recalls Mountain Bike Shock click on Customer Service and then on KTM models are being recalled: 150 XC-W, Absorbers Due To Fall And Injury Hazards Recalls for more information. Consumers 250 XC-W, 300 XC-W, 350 SX-F and 450 should immediately stop children from XC-F. Three Husqvarna models are being Fox Factory, Watsonville, Calif., has using the recalled toy vehicles and contact recalled: TC 250, TX 300 and FC 350. recalled about 6,100 Mountain bike rear Peg Perego to receive a free replacement Recalled KTM motorcycles are orange and shock absorbers. The bicycle’s rear shock circuit board with instructions, including black with the KTM logo and engine size absorber outer sleeve can rupture, allow- shipping. Consumers can also access the on both sides of the shrouds covering the ing the sleeve to come in contact with installation instructions on the company’s fuel tank. Recalled Husqvarna motorcycles other bicycle parts or the rider, posing a website. Peg Perego is contacting known are white with blue and yellow markings fall and injury hazard. This recall involves customers directly. and the Husqvarna logo on both sides of all model year 2016 and some 2017 FLOAT the shrouds covering the fuel tank. The X2 bicycle rear shock absorbers sold both engine size is located on both sides of the individually and installed on YT, Giant, rear fender below the rear of the seat. Pivot, Intense, Ibis, Scott, Trek, GT, Knolly, Model year 2017 motorcycles have a letter th Norco, Rocky Mountain, Diamondback, “H” in the 10 position of the vehicle iden- Morpheus, Foes Racing, Orbea and Canyon tification number (VIN), located on the full-suspension mountain bikes and frames. right side of the steering head.

32 BeasleyAllen.com The solid black or black and gold FLOAT return them to any Pier 1 Imports store for tures measure about 1, 2 or 4 feet long and X2 shocks have an air sleeve construction. a full refund or merchandise credit. 1, 1.5 or 2 feet wide. Only non-sensor lumi- FLOAT X2 is printed on the external reser- Contact Pier 1 Imports toll-free at 855-513- naires with a manufacture date from voir connected to the blue compression 5140 from 8 a.m. to 7 p.m. CT Monday October 2015 through August 2016 are and red rebound adjusters that have X2 through Friday, 9 a.m. to 5 p.m. CT Satur- included in this recall. Lithonia Lighting, and RVS laser etched on them. Recalled day or 10 a.m. to 6 p.m. CT Sunday, or the model and date of manufacture can be shocks do not have a “250 psi max” label online at www.pier1.com and click on found on a label attached to the fixture’s directly under the air fill boss on the outer “Product Notes & Recalls” at the bottom of housing and on the product packaging. sleeve of the shock. Recalled shocks and the page for more information. Pictures The date code on the fixture’s housing’s bike models can be identified at http:// available at: https://cpsc.gov/Recalls/2017/ label is in a MM/DD/YY format. The date ridefox.com/recall. The company has Pier-1-Imports-Recalls-Glass-Knobs code on the packaging is in a YYYY/MM/ received seven reports of the shock DD format. The company has received 107 absorber outer sleeve rupturing. No inju- reports of plastic lenses falling from the ries have been reported. luminaire. No injuries have been reported. Skidders Footwear Recalls Children’s The shocks were sold at Independent The luminaries were sold at lighting and Shoes Due To Laceration Hazard bike stores nationwide, online at Jenson electrical supply distributors nationwide USA, Pro Bike Supply, Universal Cycles, About 5,500 Children’s shoes have been and online at 1000Bulbs.com, Amazon. Go-ride.com and other online bike retailers recalled by Skidders Footwear Inc., of New com, ATGStores.com, Build.com, HD.com, from March 2015 through September 2016. York. The rivets on the shoes have sharp ShineRetrofits.com, and Wayfair.com from The shocks were installed as original edges, posing a laceration hazard. This October 2015 through August 2016 for equipment on full-suspension mountain recall involves Skidders Footwear chil- between $150 and $250. Consumers should bikes and frames sold for between about dren’s canvas tennis shoes sold in three remove the lens and contact Lithonia Light- $2,700 to $10,000 and sold individually as sizes: 12M, 18M and 24M. The shoes have ing to receive a free repair kit to secure the an aftermarket accessory for about $600. white rubber bottoms and come in three original lens. Consumers should prevent Consumers should immediately stop using different colors: navy blue fabric with people from going into the immediate area bicycles with the recalled rear shock orange rivets and laces, gray fabric with under the fixtures until the lenses are absorbers and return them to the place of green rivets and laces, and denim colored removed or the luminaires are repaired. A purchase for a free repair. Consumers fabric with pink rivets and laces. The video showing proper lens removal and unable to return their bicycles should company has received three reports of the installation of the repair kit is available at contact Fox for instructions on receiving a rivets scratching the feet of the wearer. No the firm’s website at www.lithonia.com/ free repair. Contact Fox toll-free at 855- injuries have been reported. bltvideo. Contact Lithonia Lighting toll-free 360-3488 from 8 a.m. to 5 p.m. PT Monday The shoes were sold exclusively at at 844-675-2339 from 8 a.m. to 5 p.m. ET through Friday, email at recall@ridefox. Meijer stores located in Michigan, Indiana, Monday through Friday or online at www. com or online at http://ridefox.com/recall Illinois, Ohio, Kentucky, and Wisconsin, lithonia.com and click on BLT Recall on the and click on the recall link for more infor- from August 2016 through October 2016 left side of the page for more information. mation. Pictures available here: https:// for about $10. Consumers should immedi- Photos available here: https://www.cpsc. cpsc.gov/Recalls/2017/Fox-Factory-Recalls- ately take the recalled shoes away from gov/Recalls/2017/Lithonia-Lighting- Mountain-Bike-Shock-Absorbers-Due-to- children and contact Skidders Footwear to Recalls-Commercial-Luminaires. Fall-and-Injury-Hazards receive a full refund. Contact Skidders Footwear toll-free at 866-636-1221 between 9 a.m. and 5 p.m. ET Monday Dehumidifiers Made By Midea Are Recalled Pier 1 Imports Recalls Glass Knobs Due To through Friday or online at www.skidders. Due To Serious Fire And Burn Hazards Laceration Hazard com and click on “Safety Notice” at the bottom of the page for more information. About 3.4 million Dehumidifiers have About 140,000 Glass knobs have been Photos available at https://www.cpsc.gov/ been recalled by GD Midea Air Condition- recalled by Pier 1 Imports, of Fort Worth, Recalls/2017/Skidders-Footwear-Recalls- ing Equipment Ltd., of China. The dehu- Texas. The glass knobs can break while in Childrens-Shoes midifiers can overheat, smoke and catch use, posing a risk of laceration to users fire, posing serious fire and burn hazards. from broken glass pieces. This recall This recall involves 25, 30, 40, 50, 60, 65, involves Pier 1 Imports Basic, Kira and 70, and 75-pint dehumidifiers with the fol- Lithonia Lighting Recalls Commercial Facets glass knobs commonly used with lowing brand names: Airworks, Alen, Arc- Luminaires Due To Risk Of Injury dressers, cabinets and small drawers. The ticaire, Arctic King, Beaumark, Coolworks, glass knobs have a metal stem affixed to Lithonia Lighting, a division of Acuity ComfortAire, Comfort Star, Continental one side and were sold in seven colors: Brands Lighting, Inc., of Conyers, Ga., Electic, Crosley, Daewoo, Danby, Danby & clear, teal, pink, green, aquamarine, cham- Acuity Brands Lighting, Inc. of Conyers, Designer, Dayton, Degree, Diplomat, Edge- pagne and silver. No other decorative Ga., has recalled about 398,000 BLT series star, Excell, Fellini, Forest Air, Frigidaire, knobs are included in this recall. Pier 1 commercial luminaires. The plastic lens on GE, Grunaire, Hanover, Honeywell, Home- Imports has received seven reports of inju- the luminaire can detach and fall unex- styles, Hyundai, Ideal Air, Kenmore, Key- ries as a result of glass knobs breaking pectedly, posing a risk of injury from stone, Kul, Midea, Nantucket, Ocean during installation or while in use. impact. This recall involves Lithonia Light- Breeze, Pelonis, Perfect Aire, Perfect The glass knobs were sold exclusively at ing BLT series luminaires intended for use Home, Polar Wind, Premiere, Professional Pier 1 Imports stores nationwide and in indoor, commercial applications, such as Series, Royal Sovereign, Simplicity, online at www.pier1.com from September office buildings, schools and stores. The Sunbeam, SPT, Sylvania, TGM, Touch Point, 2011 through October 2016 for between low-profile, recessed LED luminaire is a Trutemp, Uberhaus, Westpointe, Winix, $6 and $7. Consumers should immediately metal light fixture in a white finish with a and Winixl. The brand name, model stop using the recalled glass knobs and rounded or square plastic lens. The fix- number, pint capacity and manufacture

JereBeasleyReport.com 33 date are printed on the nameplate sticker and stands for a full refund. Contact Kik- machine chassis. Contact Samsung toll-free on the back of the dehumidifier. To deter- kerland at 800-727-7151 from 9 a.m. to 5 at 866-264-5636 from 8 a.m. to 10 p.m. ET, mine if your dehumidifier has been p.m. ET Monday through Friday or online or online at www.Samsung.com and click recalled, enter the model number at at www.kikkerland.com and click on the on the recall notice at the top of the page https://www.recallrtr.com/dehumidifier “Recall” link for more information. Pic- for more information. Midea has received 38 reports of smoke tures available here: https://cpsc.gov/ and fire. About $4.8 million property Recalls/2017/Kikkerland-Design-Recalls- damage has been reported. No injuries Teapots-with-Stands-Due-to-Fire-Hazard Kichler Lighting Recalls Chandeliers Due have been reported. To Injury Hazard The dehumidifiers were sold at Lowes, Menards, PC Richard and other stores Samsung Recalls Top-Load Washing The L.D. Kichler Co., of Cleveland, Ohio, nationwide from January 2003 through Machines Due To Risk Of Impact Injuries has recalled about 48,900 Aztec Light December 2013 for between $100 Chandeliers. The chandelier’s fixture loop and $300. About 2.8 million Samsung top-load that connects the hanging chain to the Consumers should immediately turn off washing machines have been recalled by lamp can fail during use causing the chan- and unplug the dehumidifiers and contact Samsung Electronics America Inc., of delier to fall from the ceiling and injure GD Midea for either a replacement unit or a Ridgefield Park, N.J. The washing machine bystanders. This recall involves Aztec nine- partial refund. Consumers whose dehu- top can unexpectedly detach from the light chandeliers sold at Lowe’s stores midifiers were manufactured before Oct. washing machine chassis during use, under the PORTFOLIO brand name. The 1, 2008, will receive a partial refund, not a posing a risk of injury from impact. This chandeliers are metal with an olde bronze replacement. The manufacturing dates can recall involves 34 models of Samsung top- finish and measure about 31-inches wide be found on back of units. Contact GD load washing machines. The washing and 31-inches high. They come with Midea at 800-600-3055 from 7 a.m. to 6 machines have mid-controls or rear-con- etched amber glass shades and a decorative p.m. CT Monday through Friday or online trols. Model numbers and serial informa- faux marble ball in the center. The upper at www.midea.com/us/ and click on tion can be found on two labels affixed to arms of the fixture are single long curves Product Recall for more information. At the back of the machine. Consumers and the lower arms of the fixture are “S” press time, photos were available at should check with Samsung to see if their shaped. “Aztec” and model number 34330 https://cpsc.gov/Recalls/2017/Dehumidifi- washer is recalled. Models can be found at are printed on a sticker located inside the ers-Made-by-Midea-Recalled. www.cpsc.gov/Recalls/2017/Samsung- ceiling canopy at the top of the chandelier. Recalls-Top-Load-Washing-Machines. Kichler Lighting has received six reports of Samsung has received 733 reports of the chandeliers falling from the ceiling. No Kikkerland Design Recalls Teapots With washing machines experiencing excessive injuries have been reported. Approxi- Stands Due To Fire Hazard vibration or the top detaching from the mately $6,000 in property damage has washing machine chassis. There are nine been reported. About 7,300 Kikkerland and Cost Plus related reports of injuries, including a The light fixtures were sold at Lowe’s World Market brand teapots with bamboo broken jaw, injured shoulder, and other stores nationwide and at www.lowes.com stands have been recalled by Kikkerland impact or fall-related injuries. from July 2006 through August 2011 for Design Inc., of New York. The bamboo The machines were sold at Best Buy, The about $240. Consumers should prevent votive stand can catch fire, posing a fire Home Depot, Lowes, Sears and other home people from going into the immediate area hazard to consumers. This recall involves appliance stores nationwide from March under the chandeliers and contact Kichler Kikkerland and Cost Plus World Market 2011 to November 2016 for between $450 for information on how to obtain a free brand teapots with bamboo stands. The and $1,500. Consumers should contact repair kit or replacement for chandeliers 30-ounce glass teapots have a removable Samsung immediately to receive one of the that have fallen. Contact Kichler Lighting’s glass tea infuser sold with a votive-candle following remedy options. Consumers can Home Center Division (“Aztec”); at 800- holder inside the bamboo stand. The Kik- choose (1) a free in-home repair that 554-6504, from 9 a.m. to 5 p.m. ET Monday kerland teapots have model number TP02 includes reinforcement of the washer’s top through Friday, or online at www.kichler. printed on the packaging next to the UPC and a free one-year extension of the manu- com and click on “Aztec” and then on code. The Cost Plus World Market teapots facturer’s warranty; (2) a rebate to be “Model No. 34330 Safety Information” for have a white sticker with number applied towards the purchase of a new more information. 25024784 printed on the packaging. No Samsung or other brand washing machine, votive candles were included with the along with free installation of the new unit teapots. The firm has received six reports and removal of old unit; or (3) a full refund IKEA Recalls 29 Million MALM And Other of the votive stands burning. No injuries for consumers who purchased their Models Of Chests And Dressers Due To have been reported. washing machine within the past 30 days Serious Tip-Over Hazard The stands were sold at Amazon retail- of the recall announcement. ers, Cost Plus World Market, Uncommon All known consumers will also receive a The U.S. Consumer Product Safety Com- Goods and Urban Outfitters and online at Home Label Kit that includes a control mission (CPSC), in cooperation with IKEA www.Amazon.com from March 2014 panel guide and additional safety instruc- North America, of Conshohocken, Pa., is through September 2016 for between $40 tions in the mail. Until they have received recalling all chests and dressers that do not and $70. Consumers should immediately and installed a Home Label Kit, consumers comply with the performance require- stop using the recalled teapots and stands should only use the delicate or waterproof ments of the U.S. voluntary industry stan- and contact the firm for return instruc- cycles when washing bedding, water-resis- dard (ASTM F2057-14). The recalled tions. Consumers who purchased online tant and bulky items. The lower spin speed children’s chests and dressers are taller will be mailed instructions on how to in the delicate or waterproof cycles lessens than 23.5 inches and adult chests and receive a refund. Consumers who bought the risk of the washing machine top unex- dressers are taller than 29.5 inches. The 29 the teapots at stores can return the teapots pectedly detaching from the washing million units of recalled chests and dress-

34 BeasleyAllen.com ers include: MALM 3-drawer, 4-drawer, Recalls-29-Million-MALM-and-Other-Mod- plastic air valve to a plastic mask, places it 5-drawer and three 6-drawer models and els-of-Chests-and-Dressers/. over the dummy’s mouth and blows other children’s and adult chests and dress- through the valve to fill the dummy’s lungs ers. The recalled chests and dressers are • IKEA also received 41 reports of tip- with air. “WNL Products” is printed in unstable if they are not properly anchored overs involving chests and dressers white on the valves. This recall only to the wall, posing a serious tip-over and other than MALMs, resulting in the involves valves in Lot 3197. “Lot 3197” is entrapment hazard that can result in death deaths of three children and 19 injuries printed on the packaging. The valves or serious injuries to children. On July 22, to children: measure 2.75 inches long by 1 inch wide 2015, CPSC and IKEA announced a repair • In July 1989, a 20-month-old girl from and are disposable. The firm has received program for the chests and dressers that Mt. Vernon, Va., died after an unan- three reports of the end-caps of the valves included a free wall-anchoring repair kit chored GUTE 4-drawer chest tipped detaching from the Practi-Valve into con- for the MALM chests and dressers and over and pinned her against the foot- sumers’ mouths or throats during other IKEA chests and dressers. CPSC and board of a youth bed. CPR training. IKEA were aware of two tragic fatalities The valves were sold at online at involving MALM chests and dressers that • In March 2002, a 2½-year-old boy from Amazon.com and wnlproducts.com and in occurred prior to the announcement of the Cranford, N.J., died after an unanchored the following catalogs: Channing Bete repair program: RAKKE 5-drawer chest tipped over and Company, CPR Savers & First Aid Supply, fatally pinned him to the floor. Emergency Medical Products, MCR Medical • In February 2014, a 2-year-old boy from Supply, NASCO, School Health Company, West Chester, Pa. died after a 6-drawer • In October 2007, a 3-year-old girl from School Nurse Supply and World Point ECC MALM chest tipped over and fatally Chula Vista, Calif., died after a KURS from July 2016 through September 2016 for pinned him against his bed. 3-drawer chest tipped over and fatally about $12 for a 10 pack of valves and about pinned her to the floor. It is unknown as • In June 2014, a 23-month-old boy from $50 for a 50 pack of valves. The valves to whether the dresser was were sold separately from the mask. Con- Snohomish, Wash., died after he became anchored or not. trapped beneath a 3-drawer MALM chest sumers should immediately stop using the recalled valves and contact Work ‘N that tipped over. Most of the non-MALM chests and dress- Leisure to return the valves for free ers included in this recall are listed on the replacements. Consumer Contact: Work ‘N Subsequent to the July 2015 announce- IKEA website at www.IKEA-USA.com/ Leisure at 800-884-9629 from 9 a.m. to 5 ment, CPSC and IKEA learned of additional recallchestsanddressers. Since 1996, IKEA p.m. ET Monday through Friday, email at tip-over incidents, including a February chests and dressers have been labeled to [email protected] or online at www. 2016 incident in which a 22-month-old boy identify IKEA, the model name and the wnlproducts.com and click on “Practi- from Apple Valley, Minn., died when a manufacturing date. CPSC and IKEA are VALVE Recall” at the bottom of the page for MALM 6-drawer chest fell on top of him. urging consumers to inspect their recalled more information. Photos available here: Most recently, CPSC has identified and pro- IKEA chests and dressers to ensure that https://cpsc.gov/Recalls/2017/Work-N-Lei- vided to IKEA a fourth report of a fatality they are properly anchored to the wall. sure-Recalls-Air-Valves-Used-in- that reportedly occurred in September Chests and dressers should be properly CPR-Training 2011. A 2-year-old boy from Woodbridge, anchored to the wall whether or not they Va., died after an unanchored MALM meet the ASTM standard. Consumers 3-drawer chest tipped over, and trapped should move any unanchored chests and the child between the dresser drawers. dressers into storage or other areas where Human Touch Recalls Reclining Chairs Due None of the chests or dressers in the they cannot be accessed by children until To Fall Hazard above-listed incidents had been anchored the chests and dressers are properly to the wall. In addition to the three deaths, anchored to the wall or removed from the Human Touch LLC, of Calif., has recalled IKEA received reports of 41 tip-over inci- home. To receive a refund or free wall- about 1,100 perfect power recliner chairs. dents involving the MALM chests and anchoring kit for IKEA chests and dressers The chair’s joystick reclining mechanism dressers, resulting in 17 injuries to chil- listed above, visit an IKEA retail store, go can malfunction and allow the chair to dren between the ages of 19 months and to www.IKEA-USA.com/recallchestsand- continue moving, posing a fall hazard to 10 years old. The MALM chests and dress- dressers, or call 866-856-4532 anytime. A consumers. This recall involves Human ers are constructed of particleboard or child dies every two weeks and a child is Touch’s Perfect Chair®, model PC-610 with fiberboard and are white, birch (veneer), injured every 24 minutes in the U.S. from serial numbers between B613315034 and medium brown, black-brown, white furniture or TVs tipping over, according to B614215154. The power reclining chair stained oak (veneer), oak (veneer), pink, CPSC data. was sold in a walnut, dark walnut or chest- turquoise, grey, grey-turquoise, lilac, nut wood finish base with a leather pad set green, brown stained ash (veneer), and that came in 33 different colors. The chair black. A 5-digit supplier number, 4-digit measure about 43 inches long, 31 inches Work ‘N Leisure Recalls Air Valves Used In date stamp, IKEA logo, country of origin wide and 47 inches high and has a head and “MALM” are printed on the underside CPR Training Due To Choking Hazard pillow at the top and a joystick controller of the top panel or inside the side panel. on the left armrest. The words “Human About 10,000 Practi-VALVE training Since 1996, IKEA chests and dressers have Touch” and “Perfect Chair” and the model valves have been recalled by Work ‘N been labeled to identify IKEA, the model and serial number can be found on the Leisure Products Inc., of Holliston, Mass. name and the manufacturing date. cross bar connecting the rear legs of the The end-cap of the valves can detach in a The recalled MALM chests were sold chair. The firm has received one report of person’s mouth while being used during from 2002 through June 2016 for between the chair’s joystick mechanism malfunc- CPR training, posing a choking hazard. $70 and $200. VIEW RECALLED MALM tioning. No injuries have been reported. This recall involves Practi-VALVES that are CHESTS AND DRESSERS HERE: http:// The chairs were sold at furniture and used to practice mouth-to-mouth resuscita- www.cpsc.gov/en/Recalls/2016/IKEA- specialty stores nationwide including tion/CPR. The trainee connects the blue

JereBeasleyReport.com 35 Healthy Back, Human Touch, Relax in information. Photos available here: https:// SUSAN BAKER Comfort, Relax The Back and The Better cpsc.gov/Recalls/2017/Six-Brands-of-Dry- Susan Baker, a Legal Assistant in the Back Store and online atebay.com and vital- Carpet-Cleaning-Powder-Recalled- firm’s Mass Torts section, has been ityweb.com for between $3,000 and by-Milliken working with our firm for more than 20 $3,500. Consumers should immediately years. She was fortunate enough to attend stop using the recalled chairs, and take Once again there have been a large Troy University on a full academic scholar- them to the store where purchased for a number of recalls since the last issue. ship prior to coming to work with the firm. full refund or contact Human Touch to While we weren’t able to include all of After beginning her career with Beasley receive a free repair kit (including ship- them in this issue, we included those of Allen in our Fraud section, she was trans- ping) or to arrange for free repair. Con- the highest importance and urgency. If you ferred to the Oil & Gas litigation team in sumer Contact: Human Touch at need more information on any of the our Commercial Litigation division of the 800-355-2762 from 6 a.m. to 5 p.m. PT recalls listed above, visit our firm’s web section. She then spent 13 years focusing Monday through Friday, via email at site at www.BeasleyAllen.com or www. her efforts mainly on defective tire cases in [email protected] or online at RightingInjustice.com. We would also like our Products Liability & Personal Injury www.humantouch.com and click on to know if we have missed any significant Section prior to moving to Mass Torts in Support and then on Recall for more infor- recall that involves a safety issue. If so, January 2015. Susan is now working on liti- mation. Photos available here: https://cpsc. please let us know. As indicated at the gation involving women who have been gov/Recalls/2017/Human-Touch-Recalls- outset, you can contact Shanna Malone at diagnosed with ovarian cancer after using Reclining-Chairs. [email protected] for more talcum powder products. recall information or to supply us with Susan will have been married to her information on recalls. husband Phil for 30 years this upcoming February. She says they have been blessed Six Brands Of Dry Carpet Cleaning Powder with three amazing children, as well one Recalled By Milliken Due To Risk Of “fur baby.” Jessica, their oldest child, Exposure To Bacteria XX. received her undergraduate degree in Envi- About 550,000 Dry carpet cleaners have FIRM ACTIVITIES ronmental Science from the University of been recalled by Milliken & Company, of West Alabama, as well as her Masters from Spartanburg, S.C. The dry carpet cleaning RYAN BEATTIE Auburn University in Aquaculture and Fish- powder can contain harmful bacteria. Ryan Beattie, a lawyer in our firm’s Mass eries. She has spent the past two years Exposure to bacteria poses a risk of respi- Torts Section, is primarily working on the working from May until October as a biolo- ratory and other infections in immunocom- talc litigation at present. Ryan graduated gist with the Grand Teton National Park promised individuals. Consumers with from college and law school at the Univer- Service in Moose, Wyo. Callie received her healthy immune systems are generally not sity of Nebraska before joining Beasley undergrad degree in Biomedical Science affected by the bacteria. This recall Allen in January of 2016. Ryan says he from Troy University and graduated from involves Arm & Hammer, Capture, Healthy became fascinated at the prospect of Auburn University’s Harrison School of Home, Oreck, Resista and Riccar brands of becoming a lawyer at a very young age. Pharmacy in May 2016. She and her dry carpet cleaners. The powder can be The desire to be a lawyer continued right husband Bryan live in Auburn where she sprinkled on carpets and rugs to clean and up to his admission to law school. During works as a pharmacist. Joshua, the young- deodorize them. The dry carpet cleaner law school, Ryan was able to clerk for est of the three, attends Troy University was sold in various sizes and lot numbers. Ralph Chapman and Scot Spragins, two where he is pursuing a teaching degree. The lot number is printed on stickers on Mississippi lawyers. This gave Ryan an Last but certainly not least, Lacey is the each container marked with a letter fol- opportunity to witness how the single family’s spunky 10-year-old “dapple lowed by the five-digit lot number. Capture lawyer, or group of lawyers, can make a dachshund.” and Resista brand dry carpet cleaners were real difference in countless lives. In Susan’s spare time, she enjoys reading, sold individually and as part of a cleaning According to Ryan, the best thing about traveling and going to antique auctions. kit including a pre-mist spray and a brush. being a trial lawyer is the feeling of truly Susan is a very good, hard-working View table here: https://cpsc.gov/ making a difference in a person’s life. He employee, who enjoys her work and the Recalls/2017/Six-Brands-of-Dry-Carpet- remembers celebrating the talcum powder clients she helps. We are fortunate to have Cleaning-Powder-Recalled-by-Milliken verdicts with our clients and the experi- Susan with us. The cleaners were sold at Home Depot, ence of helping to win an important case TRE BAMBERG Lowes, Menards, Oreck, Walmart and spe- against one of the most powerful compa- nies in the world. Tre Bamberg, a Staff Assistant in Mass cialty carpet and vacuum stores nation- Torts, has been employed by Beasley Allen wide from July 2015 through September Ryan also says he has found that our firm maintains a sense of moral and ethical since April 2014. She serves as part of the 2016 for between $5 and $40 for the indi- talcum powder/ovarian cancer litigation vidual bottles or between $20 and $50 for a goodness that is led from the top down through faith in a higher power. Ryan says team, specializing in work on filed cases. kit. Consumers should immediately stop She recently experienced her first talc trial using the recalled dry carpet cleaner and the firm practices what it preaches by doing what is right. That’s good to hear in October of this year. contact Milliken to receive a free replace- As a graduate of Auburn University Mont- ment. Consumer Contact: Milliken toll-free from one of our young lawyers. Ryan is a hard worker and is learning the gomery, Tre earned her Bachelor of Science at 888-770-7142 from 9 a.m. to 5 p.m. CT degree in Psychology back in 2005. While Monday through Friday or online at www. real importance of being a trial lawyer. He is an important member of our Mass Torts she was at AUM, Tre was president of the captureclean.com and click on “Capture Psychology Club and a member of the Psi Carpet and Rug Dry Cleaner has issued a Section. We are blessed to have Ryan with the firm. Chi International Honor Society of Recall” at the top of the page or at www. Psychology. milliken.com and click on “Carpet Cleaner Tre and her husband Danny, a brain Recall” at the bottom of the page for more tumor survivor, have been married for 10

36 BeasleyAllen.com years. While the couple are not raising any been deployed to Afghanistan on three Holmes Excavation II and the children, they do own two dogs, two occasions. Beasley Allen Law Firm for giving horses and one cat—all of which keep Charles suffered severe injuries, includ- me this opportunity. Roll Tide! them very busy. Some of Tre’s hobbies ing a severe head injury, in a motor vehicle include horse-riding, trail-riding, hunting, accident in 1990. The accident left him in a Grant, a native of Fairhope, Ala., was the fishing, singing, traveling, reading and coma for more than three weeks. However, first-ever ARCA Racing Series national simply being outdoors. She also spends Charles now lives as a brain damage survi- champion from the State of Alabama. He won the title in October 2015 at Kansas time pursuing photography, as she enjoys vor and continues to inspire others strug- rd capturing special moments on film. Tre is gling from similar situations to do the Speedway, becoming the 33 different another hard-working employee who is same. In his free time, Charles enjoys ARCA national champion in 63 consecutive dedicated to the welfare of the clients she watching Alabama football, doing yard seasons. Grant led 792 laps over the 2015 works with. We are fortunate to have Tre work and being involved with activities season and won the Menards Pole Award with the firm. and support groups at Christ Community presented by Ansell year-end honors. He Church in Montgomery. Charles is a most also won the Hoosier Tire Most Victories ANN BURKS valuable employee who works hard and award for the 2015 season, in which he After joining Beasley Allen as a tempo- gets the job done each day. I can say won six races including Daytona, Mobile, rary worker in January of 2013, Ann Burks without reservation that he is an inspira- Nashville, Berlin, Springfield and Salem. stayed on for more than a year and was tion to all of us at Beasley Allen. We are Greg Allen, the Lead Products Liability then hired on a permanent basis in August blessed to have Charles with us. lawyer at Beasley Allen, had this to say: 2014. She now works as the Legal Secretary We are incredibly proud of Grant to John Tomlinson in the Toxic Torts and this monumental achievement Section of the firm. Ann holds several certi- in his career. I’ve seen Grant pursue fications for her work experience, includ- XXI. his dreams first-hand and I know he ing a Strategic Planning certification, a HR has what it takes to race. No one has Compliance certification, a Talent Sourcing SPECIAL worked harder to achieve his level of certification and many more. RECOGNITIONS success. He is as talented as Ann, a resident of Macon County, lives they come. on approximately 224 acres of land with her husband Robby Burks. She has two Grant Enfinger Scores First NASCAR Win My hope and prayer is that Grant will sons—Nick, who is 22 years old, and Cody, continue to advance in his chosen line of At Talladega In Beasley Allen Car who is 18 years old. The family has 60 head work. Based on his history, Grant is a good of cattle and three dogs—Hooch, Loretta BeasleyAllen.com racecar driver Grant as any driver. and Bo-Diddle. When she is not at work, Enfinger claimed his first NASCAR Ann and Robby can often be found Camping World Truck Series victory on working on their farm. Oct 22 at the Talladega Superspeedway. When Ann has free time, she enjoys Beasley Allen Lawyers Recognized For Pro Grant led the most laps of the Fred’s 250, taking time to express herself creatively Bono Work many of which required him to use his through writing and drawing. From 2008 mirror to dictate his racing lane at more through 2012, she self-published a series of Beasley Allen Lawyers James Lampkin, than 190 mph—a dangerous, but overall children’s books about “Beetle Pea,” a char- Evan Allen, Liz Eiland, and Aigner Kolom successful strategy. He stayed in front of acter based on her own childhood. While were recognized recently for their work on the pack for 120 of the race’s 250 miles. the series is currently unavailable on behalf of low-income residents in need of As Grant’s first sponsor, Beasley Allen Amazon, Ann is in the process of editing legal assistance in civil matters. The helped him move from late model racing to and reworking the books for future re- Beasley Allen Law Firm also was recog- an ARCA Championship to the NASCAR release. I know this may sound like a nized for its outstanding participation in level. Grant raced at Talladega as part of broken record, but Ann is a very hard the Montgomery County Bar Foundation the GMS Racing team, edging out team- worker whose dedication to her work and Volunteer Lawyers Program. mate Spencer Gallagher to take the check- clients is quite apparent. We are fortunate James Lampkin was honored for his tire- ered flag. That gave GMS its first one-two to have Ann with us. less pro bono work by the Alabama Access win at Talladega. to Justice Commission. The AAJC was CHARLES MYRICK In an interview from Victory Lane after created by the Supreme Court of Alabama Charles Myrick has worked for the firm the race, Grant noted that he and his in 2007 to serve as a coordinating entity as a mail clerk for 15 years. His responsibili- father, Floyd Enfinger, along with race for the legally underserved, legal commu- ties vary from distributing mail, including enthusiasts Greg Allen and Bobby Mozingo nity, social service providers and the Fed-Ex and UPS, and posting mail for com- from Beasley Allen, began coming to the private and public sectors. pany-wide pickup. Because of the firm’s track as fans. From there, Grant said he The Montgomery County Bar Foundation growing size and the large amount of mail embarked on a racing career spanning two Volunteer Lawyers Program held its inau- coming in and going out each day, Charles decades. Grant said: gural Pro Bono Recognition Luncheon on Oct. 25 to recognize those law firms and and his co-worker, Fred Gamble, work Getting this win means the world to under challenging conditions each day. individual lawyers who have provided free me. I have worked so hard to get to legal assistance to low-income Montgom- Their job is very important. where I am today and I wouldn’t be Charles has been married for 14 years to ery County residents facing civil here without all of my supporters legal issues. his wife Sheila, who works as a neo-natal and the guys that have worked nurse in the intensive care unit at Baptist Beasley Allen was one of three firms in countless hours by my side. Thank Montgomery to receive the highest level of Hospital South. He has one stepson, Keith, you to GMS Racing, Plugfones, who serves in the National Guard and has recognition, the Gold Medallion award, Champion Power Equipment, based on the number of case referrals

JereBeasleyReport.com 37 taken, the number of advice and counsel Spirit of truth, whom the world the people around you, and see if clinics attended, and the number of hours cannot receive, because it nether sees you notice anything different. of free legal assistance rendered. In addi- Him nor knows Him: but you know tion, three Beasley Allen Lawyers were pre- Him. For He dwells with you and will Do not merely look out for your own sented with the Medal of the Samaritan in be in you. John14:16-17 personal interests, but look out for recognition of their outstanding participa- the interests of others. Phi- tion and hours of pro bono service—Evan Coy Morgan, one of the Law Clerks at lippians 2:4 Allen, Liz Eiland, Aigner Kolom. Tom our firm, furnished one verse for this issue. He says that as a young law student and Ann Easley, a legal secretary in our firm, Methvin, who is our Managing Attorney, sent in two verses this month. Ann says had this to say: future lawyer, James 3:13 has called him to live the good life through service, humility, these verses help her to remember the At Beasley Allen we work day in and and wisdom. majesty and power of the God who created day out representing those who need all of us. our help the most. It is no surprise Who is wise and understanding among you? Let them show it by The whole earth is filled with awe at that James, Evan, Liz, and Aigner your wonders; where morning were recognized for their work. their good life, by deeds done in the humility that comes from wisdom. dawns, where evening fades, you call For more information about the Alabama — James 3:13 forth songs of joy. Psalm 65:8 Access to Justice Commission visit www. Kimberly Baker, the Director of Develop- The Lord is my light and my salva- alabamaatj.org. For information on the tion—whom shall I fear? The Lord is Montgomery County Bar Foundation Vol- ment for Valiant Cross Academy, a Mont- gomery Boys school, and also the wife of the stronghold of my life—of whom unteer Lawyers Program, which is run by shall I be afraid? Psalm 27:1 Mike Morgan, visit www.montgom- Ben Baker, one of our lawyers, sent in a eryvlp.org. verse this month. Kimberly says she had a hard time narrowing down her favorite, but Phil 2:4 sums up her life perspective. I want you to read what Kimberly had to say: XXIII. XXII. It is natural in our society for all of CLOSING FAVORITE BIBLE us to put our own personal interests OBSERVATIONS and what is best for our lives and the VERSES people directly in our lives first. However, what if we were to step Cole Portis Is Serving The State As Bar back and take a good look at the Willa Carpenter, who is our firm’s President Human Resources Liaison, supplied two world away from our natural sur- verses this month. She had this to say: roundings. I imagine we would see Cole Portis is the 141st President of the things quite a bit differently. Such a Alabama State Bar. Cole, the Section Head We will soon celebrate Christmas— simple concept, but sometimes of the Product Liability & Personal Injury the birth of Jesus, God with us! After extremely difficult to accomplish. We Section for Beasley Allen, is using his a few months, we will celebrate get so caught up in the “me” and the 13-month tenure as President of the bar to Easter — the crucifixion and resur- “I” of life, that sometimes we do not serve our profession and also the state. He rection of our Lord and Savior Jesus even notice the challenges that many is starting programs that will help lawyers Christ. But though He was resur- people face daily. to be more effective in their work and rected and walked among men service to the state. before and after the resurrection, He I believe it is our responsibility from God to not only notice the challenges Cole is opening the lines of communica- left this earth. He ascended to tion and visiting more than 60 local bar heaven. But we can take great joy in many struggle with, but be willing to help and serve those who are strug- associations so that he and others can His fulfilled promise that the Holy listen to what members want and need. He Spirit will come to abide with us gling. My personal relationship with Christ was strengthened through is inviting leaders of those associations to forever. He will not only dwell with Montgomery for conversations about us but He will be in us as a guide, community service. I began to see and understand people differently. what’s happening within the bar. To sup- teacher, counselor, and one who will plement those meetings, he helped develop reveal the will of the Father to every- Over time, I have filled my life with serving others. I have worked with a portal that lawyers can access through one who will believe. This next year alabar.org so that any member can offer can be the very best year of our lives families who are hungry, abused, neglected and underserved. suggestions about benefits and address if we would trust and rely upon the other bar matters. Holy Spirit to be our Helper—to be If you have ever held the hand of a Cole is familiar with service, being the God with us! mom who could not feed her chil- father of nine children ages 6 to 22. Cole Behold a virgin shall be with child, dren, or consoled a child after he and his wife, Joy, adopted six of their chil- and shall bring forth a son, and they was just told by a family member dren and are strong advocates for adoption. shall call his name Emmanuel, that he was worthless; I guarantee They founded “Love 100 Ministry,” which which being interpreted, God with you see things differently. I love assists Alabama families with adoption us. Mathew 1:23 serving others and ministering to the costs, and have fostered many children. needy (in my own way) as I imagine Cole believes that children in Alabama And I will pray the Father, and He Christ’s followers did so many years who are in the foster care system must be will give you another Helper, that He ago. Next time you are out, take a taken care of and that all lawyers have a may abide with you forever-the look at the world around you, and responsibility to help these children.

38 BeasleyAllen.com Cole’s calling to serve resonates through- like to promote becoming a lawyer to upon our dispositions, and not upon out his practice. He represents those who college students, emphasizing there are our circumstances. have lost someone or have been injured. several roads they can take that end at the While he knows that legal professionals are same destination. “He really seeks to make Martha Washington (1732 — 1802) often referred to as lawyers and attorneys, a difference in everything that he does, not he said he feels like he is a “counselor of just this,” Monet said. “He really has a heart The only title in our Democracy law,” someone who counsels individuals toward service. Listening to what he’s pas- superior to that of President is the through their grief. Cole and his staff have sionate about is just exciting to me.” title of Citizen. successfully handled more than 100 cases Under his leadership, the Alabama State that were tried or resolved for more than Bar also will promote the legal profession Louis Brandeis, 1937 $1 million. Cole was nominated, along by advocating for the public and volunteer- U.S. Supreme Court Justice with his colleagues, for the 2014 Public ing to represent those who cannot afford Justice Trial Lawyer of the Year Award for legal representation, increase foster care The dictionary is the only place that leading the first lawsuit to go to trial among lawyers and issue a call to all success comes before work. Hard against Toyota involving the sudden unin- lawyers to be engaged in public service, work is the price we must pay for tended acceleration issue. including the Alabama Legislature, because success. I think you can accomplish Cole is a highly successful lawyer at trial, lawyers understand how to be analytical anything if you’re willing to pay but he is also very successful in managing and solve problems. Having known Cole the price. an entire section with more than 14 since he was in high school, and having lawyers and approximately 30 support worked with him as a lawyer, I believe he Vincent Lombardi staff in his section. will accomplish all of his goals in 13 Helping others is also the common short months. thread running through Portis’s Alabama We are honored to have Cole serve as State Bar agenda. While the Alabama Bar Bar President and I am confident he will be has the Alabama Lawyer Assistance outstanding in that role. XXIV. Program, which provides help to lawyers, PARTING WORDS judges and law students who are addicted and have mental health disorders, Cole is Our Monthly Reminders starting a wellness initiative that will help Thanksgiving Day was a great time to lawyers take care of themselves before look back over the year and to count our concerns become problems. If my people, who are called by my many blessings. Each of us has so much to The initiative will primarily deal with name, will humble themselves and be thankful for. At this time of year it’s mind, body and spirit, and provide pray and seek my face and turn appropriate to put our focus on Thanksgiv- resources for stress, nutrition and faith. from their wicked ways, then will I ing and on how good God really is. We Cole is focusing on the practice of law and hear from heaven and will forgive should thank God daily for all we enjoy. I is designing a program that will help their sin and will heal their land. am eternally grateful to be a part of the lawyers tap into educational opportunities family of the One true God. Words alone involved in the practice of law as well as 2 Chron 7:14 are insufficient to say how thankful and new areas of law. eternally grateful I am for all of my many With technology evolving on a daily All that is necessary for the triumph blessings. basis, Cole wants to show lawyers the tech- of evil is that good men do nothing. All too often, I have taken God’s grace, nology that is available to help them in mercy and love for granted. I find it neces- their practice and introduce them to Edmund Burke sary to slow down occasionally, sit down, emerging technology. He notes that and take stock of things in my life. When I lawyers do not go to school to learn how to Woe to those who decree unrighteous do that all things around me fall into focus. run businesses, but law offices are busi- decrees, Who write misfortune, God will provide for us and will sustain us nesses. To help lawyers become more effi- Which they have prescribed. To rob in all things and under any circumstances. cient, he wants the Alabama State Bar to the needy of justice, And to take what That’s a message I take from Thanksgiving provide lawyers with the tools for running is right from the poor of My people, and one that I pass on to you. effective businesses, including founda- That widows may be their prey, And We must learn to trust God and realize tional principles and marketing. that they may rob the fatherless. that He will supply and fulfill our needs. It Cole asked Monet Gaines, Assistant took me a while to fully understand and Attorney General in the Opinions Division, Isaiah 10:1-2 comprehend that I can do all things, but to be his Vice President, and she didn’t hes- only through Jesus Christ, who guides, directs and strengthens me. Once I fully itate to help him accomplish his goals. I am still determined to be cheerful recognized that, my life was changed Monet has agreed to help Cole increase and happy, in whatever situation I forever. I thank God for all of my blessings. interest in the legal profession and boost may be; for I have also learned from My prayer today is for God to truly bless minority participation in the bar. The bar experience that the greater part of America and to heal our land! has a successful program aimed at attract- our happiness or misery depends ing high school students, and Cole would

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Jere L. Beasley, Principal & Founder of the law firm Beasley, Allen, Crow, Methvin, Portis & Miles, P.C. is one of the most successful litigators of all time, with the best track record of verdicts of any lawyer in America. Beasley’s law firm, established in 1979 with the mission of “helping those who need it most,” now employs over 75 lawyers and more than 175 support staff. Jere Beasley has always been an advocate for victims of wrongdoing and has been helping those who need it most for over 35 years. Jere Locke Beasley , founding shareholder of the law firm Beasley, Allen, Crow, Methvin, Portis & Miles, P.C., is one of the most successful litigators of all time, with the best track record of verdicts of any lawyer in America. Beasley’s law firm, established in 1979 with the mission of “helping those who need it most,” now

employs 44 lawyersNo representation and more is made than that the 200 quality support of services staff. to Jere Beasley has always been an advocatebe performed for victims is greater of than wrongdoing the quality of legal and services has been helping those who need it most for over 30performed years. by other lawyers.

No representation is made that the quality of services to be performed is greater than the quality of legal services performed by other lawyers.