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Jere Beasley Report August

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Jere Beasley Report August Powered By Docstoc
					                                         August 2012




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           www.BeasleyAllen.com
I.                                                This makes it possible for visitors to golf
                                                  across the entire state.
                                                                                                   which some believe to have become the
                                                                                                   most powerful force in American politics,
CAPITOL                                              Going hand-in-hand with the Trail is a        the data show that folks were sending the
OBSERVATIONS                                      series of world-class resorts located in
                                                  Montgomery, Hoover, Mobile, Point Clear,
                                                                                                   smallest portion of their income to the
                                                                                                   federal government since 1979. You may
                                                  Prattville, Opelika, and Florence, Alabama.      recall it was then that Republicans took
                                                  These resorts encourage golfers—and their        control of the U.S. House of Representa-
RSA HAS Been VeRy Good FoR AlABAmA                families—to stay, and shop, and eat, which       tives and the “no new taxes” message
                                                  all adds up to more dollars in the pockets       played a key role.
   Lots of folks in my state have taken for
                                                  of Alabama merchants and communities.               The average tax rate paid by all house-
granted the positive effect of the Retire-
                                                  The Resort Collection on the RTJ Golf            holds during President Obama’s first year
ment Systems of Alabama. In my opinion,
                                                  Trail, as it is known, and the properties’       in office fell to 17.4%, down from 19.9% in
the investments in Alabama by the RSA
                                                  respective restaurants, spas, meeting facili-    2007, according to the CBO. The 2009 rate
have been very good for our state and have
                                                  ties and other amenities, are a multimillion-    was significantly lower than the previous
benefited all Alabama citizens. The deci-
                                                  dollar operation for RSA. The hotel group is     low of 19.4% in 2003 and well below the
sion to invest approximately 10% of RSA’s
                                                  operated through RSA’s PCH Hotels &              30-year average of 21%. The CBO reported
assets in Alabama over two decades has
                                                  Resorts arm.                                     that the tax burden—which includes all
paid off extremely well.
                                                     The Trail also raises Alabama’s visibility    forms of federal levies, including income,
   Dr. David Bronner, Executive Director of
                                                  on the national and world map. The Mont-
RSA, said in the July 2012 Advisor that
                                                  gomery Business Journal reported RSA
investing in Alabama helps investment staff
                                                  has provided more than $670 million in
                                                                                                            I N TH I S I S S U E
members feel a personal connection to the
                                                  advertisement benefits, which contributed         I.       Capitol Observations. . . . . . . . . . . . . . . 2
choices they are making, because they
                                                  to growing the state’s tourism industry
know it will affect “their own backyard.”                                                           II.      A Report on The Gulf Coast Disaster. . . 3
                                                  from $1.8 billion to more than $9.5 billion.
He reports that 90% of RSA’s investments in
                                                  The Trail gives people a reason to stop in        III.     Drug Manufacturers Fraud Litigation . . 5
common stocks, international stocks, and
                                                  Alabama, instead of just passing through.
fixed income outperformed the benchmark
                                                  Not only does the RTJ Golf Trail bring visi-      Iv.      Purely Political News & views. . . . . . . . 7
in each year during the last ten years.
                                                  tors to the state and boost tourism revenue,
   The RSA commissioned two economic                                                                v.       Court Watch . . . . . . . . . . . . . . . . . . . . . 7
                                                  it also raises the profile of the state in the
impact studies that took a look at the
                                                  eyes of outsiders. The extra exposure helps       vI.      The National Scene . . . . . . . . . . . . . . . . 8
impact of RSA investments and the RSA
                                                  attract new businesses and industries to
itself on the State of Alabama. The studies
                                                  the state.                                        vII.     The Corporate World . . . . . . . . . . . . . . 8
were conducted by economists at Auburn
                                                     It’s quite obvious that the economic
University Montgomery and The University                                                            vIII.    Congressional Update . . . . . . . . . . . . . 13
                                                  impact of the RSA investments on Ala-
of Alabama. The bottom line is that RSA
                                                  bama’s economy has been tremendous. It’s          Ix.      Product Liability Update . . . . . . . . . . . 14
investments netted $28.0 billion of addi-
                                                  widely believed by folks who keep up with
tional GDP for the state, $14.3 billion of                                                          x.       Mass Torts Update . . . . . . . . . . . . . . . 14
                                                  that sort of thing that no pension fund in
earnings (payroll) for Alabamians, and
                                                  the country has done more to help its citi-
282,564 full-time equivalent jobs in the last                                                       xI.      Business Litigation . . . . . . . . . . . . . . . 17
                                                  zens or its home state than has the RSA.
22 years. The studies revealed for every $1
                                                  Dr. David Bronner and his excellent staff         xII.     An Update on Securities Litigation . . . 18
the RSA invested in Alabama, the state
                                                  are to be commended for all that they have
gained an additional return of $1.57. RSA-                                                          xIII.    Insurance and Finance Update . . . . . . 18
                                                  done for Alabama.
owned investments in the state accounted
for nearly 2% of the state’s GDP in 2007.                                                           xIv.     Employment and FLSA Litigation . . . . . 19
It’s significant that RSA assets total nearly
$30 billion.                                      AmeRicAnS PAid THe loweST TAx RATeS in            xv.      Predatory Lending . . . . . . . . . . . . . . . 19
   A key R SA econom ic development               30 yeARS To FedeRAl GoVeRnmenT
                                                                                                    xvI.     Premises Liability Update . . . . . . . . . . 20
engine in Alabama is the Robert Trent
Jones Golf Trail. The Trail is the largest golf      It has been reported that Americans paid       xvII.    Workplace Hazards . . . . . . . . . . . . . . 21
cou rse constr uction project ever                the lowest tax rates in 30 years to the
                                                  federal government in 2009. This is due in        xvIII. Transportation . . . . . . . . . . . . . . . . . . 22
attempted. It’s a collection of 468 holes of
championship golf on 11 different sites           part to the tax cuts President Obama
                                                                                                    xIx.     Environmental Concerns . . . . . . . . . . 23
across Alabama. I am told by some of my           sought to combat the Great Recession. This
buddies who are golfers that the courses          revelation comes from information released        xx.      The Consumer Corner . . . . . . . . . . . . 24
are notoriously challenging. In fact, the         by Congressional budget analysts. A sharp
                                                  decline in income—especially among the            xxI.     Recalls Update . . . . . . . . . . . . . . . . . . 27
Trail was called “some of the best public
golf on Earth” by the New York Times. The         wealthiest Americans, who pay the highest
                                                                                                    xxII.    Firm Activities. . . . . . . . . . . . . . . . . . . 34
courses have hosted nationally acclaimed          tax rates—also played a role, according to
tournaments. Dr. Bronner estimates the            the report by the nonpartisan Congressio-         xxIII. Special Recognitions . . . . . . . . . . . . . 35
Golf Trail alone generates about a $300,000       nal Budget Office.
                                                     Household income fell 12% on average           xxIv. Favorite Bible verses . . . . . . . . . . . . . 36
a month, or $3.6 million a year, return for
                                                  from 2007 to 2009, with income among the
RSA. It is important that all the courses are                                                       xxv.     Closing Observations . . . . . . . . . . . . . 37
located in close proximity to each other.         top 1% of earners decreasing by more than
                                                  a third. Interestingly, during the very time      xxvI. Parting Words. . . . . . . . . . . . . . . . . . . 38
                                                  the anti-tax movement was emerging,


2                                                 www.BeasleyAllen.com
payroll and corporate taxes—lightened for       Alabama newsletter, is very high on the list     Gulf Coast claimants have to receive com-
households across the board, the result in      of states in taxing poor folks. Based on         pensation for future uncertainty and to
par t of President Obama’s sig natu re          information from Charles B. Stockdale of         recoup past losses. Punitive damages will
“Making Work Pay” tax credit and other tax      the 24/7 Wall Street web site, Alabama col-      likely not be available to most businesses
cuts passed as part of the 2009 economic        lects an income tax of $548 annually from a      and individuals impacted by the spill, and
stimulus package. That’s something that         family of four living at the poverty line. In    proof of “future” losses or uncertainty asso-
has largely been ignored by the media and       fact, even a single-parent family of three in    ciated with the spill is an extremely diffi-
the cable talk-show hosts.                      Alabama making a mere $9,800 per year            cult burden in cases like this. The claims
   The lowest fifth of earners benefited the    would be subject to the state income tax.        process seeks to provide both.
most, according to the CBO, sending just           The RSA newsletter said that the 24/7            In addition to the amount of compensa-
1 percent of their before-tax income to the     Wall Street site, a non-partisan group based     tion claimants receive, the claims facility
federal government in 2009, compared            in Washington, collected the data on state       has already begun issuing determinations
with 5.1% in 2007. The top fifth of earners     taxes by examining a new report from the         on some claims. Given the Limitation Stay
paid 23.2%, compared with 24.7% in 2007.        Center on Budget and Policy Priorities.          on all lawsuits arising from the Deepwater
The average federal income tax rate also        That Washington-based group focuses on           Horizon explosion and spill pending a
reached a new low, settling at 7.2% in          issues affecting low-income Americans. Ala-      ruling from the court on liability, it is likely
2009—two points lower than in 2007, the         bama’s poverty rate is the nation’s seventh-     that claimants will not have their individual
CBO said. Although detailed data are avail-     highest, at just over 17% of its population,     cases set for individual resolution for at
able only through 2009, the CBO said more       according to the RSA. Most states steer          least the next two years. Timing certainly
recent estimates suggest that effective tax     away from taxes on the working poor, so as       favors the settlement for most qualifying
rates remained at historically low levels in    to help families try to climb out of poverty.    folks and their businesses.
2010 and 2011.                                     But 15 states continue to tax families           Lawyers in our firm continue to file
   Tax rates have never been lower than         with incomes at or below the official            claims on behalf of a variety of clients, and
under President Obama. But that doesn’t         federal poverty line of $23,018. It’s high       we have begun receiving determinations
mean the government doesn’t need more           time that Alabama reforms its tax code and       on those claims. We are pleased to report
revenue—it clearly does—and the need is         that reform must include changing our            that so far, the determinations we have
quite evident. We have fought two of the        policy of taxing poor people. The regres-        obtained from our clients have been
longest and most expensive wars in U.S.         sive tax structure in our state not only         encouraging. If you have any questions
history on borrowed money. Also, under          hurts the poor, it keeps Alabama from pro-       about the settlement process, please
the Bush Administration in 2003, Medicare       gressing both economically and socially.         contact Parker Miller, a lawyer in our firm,
Part D was passed by Congress, but with         Source: RSA Newsletter                           at Parker.Miller@beasleyallen.com, or by
no accompanying funding source to pay                                                            telephone at 800-898-2034.
for it. T hat created a $15.6 tr i l l ion
unfunded liability for the federal govern-
ment. This sort of thing was commonplace        II.                                              All GUlF coAST STATeS BUSineSSeS mAy
during that era. President Obama has
pledged to let the George W. Bush-era tax
                                                A REPORT ON THE                                  Be enTiTled To comPenSATion FRom BP
cuts expire for the roughly 2% of house-        GULF COAST                                          The new Deepwater Horizon Claims
holds that make more than $250,000 a
year. The President has urged lawmakers to
                                                DISASTER                                         Center, as explained above, has opened
                                                                                                 and is very busy processing claims. One
extend the cuts through 2013 for the vast                                                        thing many folks, including some lawyers,
majority of households and to do it now.                                                         don’t seem to know is that any business in
The cuts, enacted in 2001 and 2003, are         GRowinG conFidence in THe deePwATeR              any part of Alabama, Mississippi and Louisi-
scheduled to expire in January.                 HoRizon economic SeTTlemenT cenTeR               ana, or the west coast of Florida (all the
   The President has fought hard to cut                                                          way to Key West), may qualify for compen-
taxes for the middle class by a total of           Any fears that the Deepwater Horizon
                                                                                                 sation. Generally speaking, any private
$3,600 a year. Because Americans are still      Economic Settlement Center would not
                                                                                                 business in one of these areas which had
fighting to make ends meet, Congress            gain traction on the Gulf Coast have been
                                                                                                 an aggregate revenue decrease of 15% or
should do the right thing and extend the        put to rest. In just over a month since its
                                                                                                 more over a consecutive three-month time
tax rates for the middle class. Hopefully, a    open i ng, t he set t lement center had
                                                                                                 period between May and December 2010,
miracle will happen and the GOP leader-         received 35,498 claims. Of those claims,
                                                                                                 and had at least a 10% aggregate revenue
ship in Congress will act in a bi-partisan      the largest share of filings were attributed
                                                                                                 increase for the same three months in 2011,
manner, do the right thing on this critically   to individual economic loss (35%), with
                                                                                                 is entitled to compensation. You can get
important issue, and help the economic          business economic loss claims falling in
                                                                                                 more information on this subject by con-
outlook for all Americans. If they don’t, the   second place (19%). Filings are sure to
                                                                                                 tacting Sandra Walters at 800-898-2034 or
voters should remember it in November.          grow in the coming weeks, as 41,491 claim-
                                                                                                 by em a i l at Sa nd r a.Wa lter s @ bea sley
                                                ants had either registered to file claims, or
Source: Washington Post                                                                          allen.com.
                                                were in the process of registering to file
                                                claims. When you consider that many
                                                claimants have multiple claims they will
TAxinG THe VeRy PooR UnFAiRly iS An             likely submit, claim filings could easily        RePoRT SAyS BP HAd “mUlTiPle SAFeTy
oUTRAGe                                         swell over 100,000 by October based on           mAnAGemenT deFiciencieS”
                                                just the current claimants registered to file.
  Alabama, according to an article in the          For those who qualify, the settlement           The U.S. Chemical Safety Board has
July edition of the Retirement Systems of       facility will likely be the best opportunity     reported that oil giant BP needed to focus


                                          www.JereBeasleyReport.com                                                                            3
less on the routine personal safety of its           right thing and allowed the legislation to      using dispersants to break up oil spills.
employees and more on the potential                  pass and be sent to the President.              This is what BP did after the disastrous
hazards of deepwater drilling. According to             Now comes the next challenge and that’s      2010 spill in the Gulf of Mexico. The GAO
the Board’s report, released last month, BP          figuring out how to spend that money. Offi-     found that very little testing had been done
and Transocean, one of the partners in the           cials in the five states affected—Alabama,      on the dispersants before they were used
drilling project, “had multiple safety man-          Florida, Louisiana, Mississippi and Texas—      in the Gulf. The GAO was asked to investi-
agement system deficiencies that contrib-            have some time to weigh which projects          gate the use of dispersants following BP’s
uted to the Macondo incident.” That                  and programs will best help the Gulf Coast      catastrophic oil well blowout that killed 11
confirms what lawyers in our firm have               recover from the nation’s worst environ-        workers and caused the largest offshore
learned in the ongoing litigation against BP         mental disaster. The first payments from        spill in our nation’s history.
and other responsible parties.                       the fines imposed by the federal govern-           BP was allowed to spray dispersants on
   The report said the company was con-              ment, which could be as high as $20             the Gulf to break up the oil in an effort to
cerned, and rightly so, with personal safety         billion, aren’t expected until at least early   combat the spill. While the use of disper-
such as scaffolding, falls and labeling of           next year. If a settlement is reached before    sants has been controversial, most folks
tanks, but that BP needed to be more aware           the start of the trial, scheduled for Febru-    don’t know what was used, or how much.
of the potential risks inherent with deep-           ary of 2013, the money could arrive sooner.     The GAO report said 1.84 million gallons of
water drilling, particularly when partner-                                                           dispersants were used and 771,000 gallons
ing with other companies. The Board also               Thirty percent of the money will be           were sprayed deep underwater at the well-
faulted BP for its focus on “production per-           controlled by the 11-member Gulf              head. According to the report, federal agen-
formance without significant focus on                  Coast Ecosystem Restoration Council,          cies have spent more than $15.5 million on
major accident metrics.” It is quite clear             which will develop a comprehensive            research involving dispersants since 2000,
that BP’s primary goal was to get the well             restoration plan. Members include all         but that few of those studies looked at the
into production with far too little attention          five governors (or their designees), the      effects of using dispersants underwater or
being paid to safety. In fact several warn-            secretaries of the Agriculture, Com-          in the Arctic Ocean. The GAO Report said:
ings of impending doom were ignored.                   merce, Homeland Security and Inte-
                                                       rior departments, the secretary of the          Little or no prior testing had been
Source: AL.com
                                                       Army and the administrator of the               done on the effectiveness and poten-
                                                       Environmental Protection Agency.                tial adverse environmental conse-
                                                                                                       quences of a subsea dispersant use,
ReSToRe AcT BecomeS lAw                              •	 Sixty-five	percent	of	the	money	will	be	       let alone at those volumes.
                                                        controlled by state and local govern-
    The RESTORE Act, a major legislative                ments for such things as tourism, the          The report recommended conducting
initiative for the Alabama Gulf Coast, was              environment and the economy. Of that,        more research into the use of dispersants
signed into law by President Obama on                   35% will be distributed equally among        below the sea and in the Arctic environ-
July 6 th . This will provide for economic              the five states for economic and ecologi-    ment. Hopefully that will happen. We cer-
and environmental restoration in the Gulf               cal recovery. The rest will be distributed   tai n ly can’t depend on the giant oi l
Coastal states. Alabama Senator Richard                 to the states based on a formula that        companies to do the right thing. Neither
Shelby was a leading advocate for the                   takes into account factors such as miles     can we afford to have the weak regulation
plan that will divide 80 % of the Clean                 of beachfront and population.                of the industry that we have experienced
Water Act fines levied after the BP Deep-                                                            over the past ten years.
water Horizon oil spill to the five most             •	 The	remaining	5%	of	the	fine	money	will	
                                                                                                     Source: Claims Journal
a f fec ted s t ate s, i nclu d i ng A l ab a m a.      finance research, with half going to the
Senator Shelby and Mar y Landr ieu, a                   Gulf States Marine Fisheries Commission
Senator from Louisiana, worked hard to                  and half going to a “center of excellence”
                                                        in each state.                               STUdy SAyS GUlF oil SPill HAd dRAmATic
push this legislation through the Senate.
Rep. Jo Bonner, who represents the 1 st
                                                                                                     imPAcT on micRoScoPic liFe
                                                        The RESTORE Act had broad support
Congressional District in Alabama, also              from business interests, environmental             New research by an Auburn University
helped with this badly-needed legislation.           groups, the seafood industry and tourism        professor and other scientists found that sig-
Sen. Shelby had this to say:                         organizations in the Gulf Coastal states.       nificant changes on Alabama beaches have
    This agreement demonstrates the                  Passage of the RESTORE Act in its final         taken place in creatures too small to be seen
    conference committee’s commitment                form was an absolute necessity and it will      by the naked eye. According to Professor
    to restoring the Gulf Coast, one of              provide badly-needed funds to the five          Ken Halanych, those changes bear further
    our nation’s most valuable economic              states that were so seriously hurt by BP and    study and could have big impacts that might
    and ecological assets. Communities               the other responsible companies.                not become apparent for years. Even if there
    affected by the Deepwater Horizon                Source: AL.com                                  isn’t any oil visible on the beaches, the
    oil spill have waited long enough for                                                            researchers found a microscopic “commu-
    relief and should not be subject to the                                                          nity change” and hidden effects.
                                                                                                        Professor Halanych and scientists from
    whims of future Congresses.                      moRe ReSeARcH needed on oil SPill
                                                                                                     the University of New Hampshire, the Uni-
   Members of Congress in other parts of
                                                     diSPeRSAnTS
                                                                                                     versity of California Davis Genome Center,
the country had to be convinced that Con-              The Government Accountability Office is       and the University of Texas at San Antonio,
gress should change the law to allow those           absolutely correct when it says more            published their work in the scientific
Clean Water Act fines to go directly to the          research is needed on possible environ-         journal PLoS ONE. They wrote in the
five coastal states instead of going to the          mental problems that could result from          paper:
general U.S. Treasury. Finally, they did the

4                                                    www.BeasleyAllen.com
  Based on this community analysis,
  ou r d a t a s ug ge s t c o n s i d e ra b l e
                                                    III.                                               Besides California and New York, states
                                                                                                    covered in the settlement include Arkan-
  (hidden) initial impacts across Gulf              DRUG                                            sas, Colorado, Delaware, Florida, Georgia,
  beaches may be ongoing, despite the
  disappearance of visible surface oil
                                                    MANUFACTURERS                                   Idaho, Illinois, Indiana, Iowa, Maine, Michi-
                                                                                                    gan, Minnesota, Nebraska, Nevada, New
  in the region.                                    FRAUD LITIGATION                                Hampshire, New Jersey, New Mexico,
                                                                                                    North Carolina, North Dakota, Pennsylva-
   According to Professor Halanych, the                                                             nia, South Dakota, Tennessee, Texas,
long-term effects are unknown, but poten-                                                           Vermont, Washington, West Virginia and
tially dramatic. That’s because the organ-
                                                    mcKeSSon To PAy $151 million To
                                                    SeTTle dRUG-PRicinG SUiT                        Wyoming. The District of Columbia also
isms that lost ground after the spill form                                                          was covered. The wrongful and fraudulent
the base of the food chain. Professor                                                               conduct involving the overpricing of drugs
                                                       Twenty-nine states have reached a $151
Halanych pointed to the collapse of the                                                             is considered to be “fraud” by the courts in
                                                    million settlement in a lawsuit alleging one
herring population in Prince William                                                                all states with the lone exception of
                                                    of the country’s largest drug wholesalers
Sound after the Exxon Valdez oil spill in                                                           Alabama, which is very hard to understand.
                                                    inflated prices for hundreds of prescription
Alaska. That collapse, which did not occur
                                                    drugs. The agreement with San Francisco-        Source: Associated Press
until several years after the 1989 spill, has
                                                    based McKesson Corp. settles allegations
been traced to changes at the microscopic
                                                    that the company deliberately inflated drug
level. It was noted that “when you change
                                                    prices by as much as 25 percent, causing        GlAxoSmiTHKline AGReeS To PAy $3
the ecosystem, all these things have a
                                                    the states’ Medicaid programs to overpay        Billion in FRAUd SeTTlemenT
ripple effect. Some of these effects can take
                                                    millions of dollars in reimbursements. An
years to develop.” There was a vast differ-
                                                    investigation by state and federal agencies        GlaxoSmithKline (GSK) has agreed to
ence in the Valdez spill and the BP spill in
                                                    found that McKesson inflated the prices of      plead guilty to three criminal charges and
the Gulf, the latter being much worse.
                                                    more than 1,400 brand-name drugs, includ-       pay an unprecedented $3 billion in criminal
   Patricia Sobecky, the chairwoman of the
                                                    ing these commonly prescribed medica-           and civil fines arising from allegations of
Biological Sciences Department at the Uni-
                                                    tions such as Adderall, Allegra, Ambien,        illegal promotion of some of its drugs,
versity of Alabama, said the study sheds
                                                    Celexa, Lipitor, Neurontin, Prevacid,           failure to report safety data and alleged false
new light on a Gulf environment that many
                                                    Prozac and Ritalin.                             price reporting. According to prosecutors,
scientists contend has received too little
                                                       California, where the alleged overpay-       GSK illegally promoted Paxil for treating
attention. The work of Professor Halanych
                                                    ments went on from August 2001 to               depression in children, even though it was
and others is important for establishing a
                                                    December 2009, will receive about $24           not approved by the FDA for anyone under
baseline to track changes over time. While
                                                    million of the settlement. California Attor-    18. The company also promoted its drug
the presence of microorganisms attracted
                                                    ney General Kamala Harris announced the         Wellbutrin for weight loss, the treatment of
to hydrocarbons may have helped break
                                                    settlement. She had this to say:                sexual dysfunction, substance addictions
down the oil faster, the questions now
are—do those organisms remain and what                                                              and ADHD when it was only approved for
                                                      In these difficult budget times, it is
will the effect be? That’s much harder to                                                           major depressive disorder. In addition, GSK
                                                      crucial that California’s scarce public
tell, according to Dr. Sobecky.                                                                     allegedly failed to report safety data about
                                                      resources support the urgent needs of
   Other large-scale oil spills—like the                                                            the diabetes drug Avandia to the FDA. In
                                                      our state. We cannot allow dollars
Valdez—don’t offer a conclusive explana-                                                            addition to the fines, the company has
                                                      meant for patients to be diverted to
tion because the environments are so dif-                                                           agreed to be monitored for five years by
                                                      inflate corporate profits.
ferent from the Gulf. It will take time to                                                          government officials to attempt to ensure
find out if the referenced study is on target.         The settlement results from a 2005 whis-     the company’s compliance.
There is much more to learn about the               tleblower lawsuit that was filed under             The multi-billion settlement is the largest
short-term and long-term effects from the           federal and states’ false claims statutes. It   in U.S. history for healthcare fraud and
oil spill and there will have to be additional      was alleged that McKesson inflated average      adds to a string of other settlements with
studies to find out as much as possible             wholesale prices reported to First Data         pharmaceutical companies. Critics argue
about what the future holds for the Gulf            Bank, which many state Medicaid pro-            that these large fines are not enough to
Coastal states.                                     grams, including A labama, use to set           deter dr ug companies from unlawf ul
                                                    payment rates for pharmaceutical reim-          behavior. Since the penalties are consid-
Source: AL.com
                                                    bursement. The federal government settled       ered just part of their operating costs, com-
                                                    its portion of the lawsuit for more than        bined with their huge profits, the critics
                                                    $187 million in April of this year. Unfortu-    may be correct. Having dealt with the polit-
                                                    nately, the Alabama Supreme Court has           ically powerful drug industry, I can say
                                                    given the drug companies a “get-out-of-jail-    without reservation that the FDA must be
                                                    free pass” in the Medicaid fraud (AWP) liti-    given more authority to control the drug
                                                    gation. New York will receive $64 million       companies. If the American people knew
                                                    in restitution as part of this settlement.      how weak and ineffective regulation of the
                                                    New York Attorney General Eric Schneider-       drug industry really is, they would demand
                                                    man was correct when he said:                   that Congress make some badly-needed
                                                                                                    changes. But that would require “running
                                                      Pharmaceutical distribution compa-            over” the powerful drug industry lobby.
                                                      nies are not above the law. This set-         Sources: New York Times and USA Today
                                                      tlement holds McKesson accountable
                                                      for attempting to make millions of
                                                      dollars in illegal profits.

                                                www.JereBeasleyReport.com                                                                        5
THe AmeRicAn PeoPle ARe cATcHinG on              were responsible for a drop in Pharmacia’s        the recommended daily amounts of
To How THe dRUG indUSTRy oPeRATeS                stock value when the full results were            important vitamins and minerals.
                                                 revealed. After describing the decision to        But supplement manufacturers must
   It is my hope that the American people        use the limited results as “data massage,”        not mislead consumers into thinking
are starting to find out how the powerful        Dr. Arbe, a Pharmacia medical director,           that these pills will help ward off
drug manufacturing industry has played           wrote, “I wouldn’t feel too comfortable pre-      cancer.
fast and loose with the development and          senting a fudged version of the facts.”
marketing of their drugs. A New York               Is doubt and deception the way a drug           Pfizer said in a statement that it dis-
Times reporter, Katie Thomas, in a June          company should conduct business ? I             agrees with CSPI, but that the company
2012 article, exposed Pfizer documents           believe we all can agree it’s totally unac-     agreed to make the changes to resolve the
that reveal a culture of doubt and decep-        ceptable. But it doesn’t just hurt investors    matter. If the statements or the labels were
tion in the development and marketing of         in pension funds. It also affects costs of      actually true—and not false or mislead-
t h at compa ny’s d r ug s. M s. T hom a s       drugs to consumers. Citizens and govern-        ing—I have to wonder why Pfizer would
reported on how Pfizer and its partner,          ments are concerned about rising health-        make these very significant changes. What
Pharmacia, marketed Celebrex, its arthritis      care costs. How many billions have been         do you think?
drug, as being a safer alternative to other      spent on a drug that studies appear to          Source: ABC News
drugs in lowering risks of perforations,         suggest is no more effective than over-the-
ulcers and stomach bleeds.                       counter pain medications and may not
   After a study came out supporting the         reduce stomach adverse events as mar-           dRUG comPAnieS SHoUld noT Be
effectiveness of Celebrex, a research direc-     keted? It’s possible that health insurance      Allowed To AdVeRTiSe PReScRiPTion
tor at Pfizer wrote in an email to a col-        carriers have missed out on fraud claims        dRUGS
league that “They swallowed our story,           for paying for drugs that were improperly
hook, line and sinker.” That’s shocking to       marketed. But it’s highly probable that the        I have yet to hear anybody give a rational
say the least. But unfortunately it’s an indi-   consuming public has been badly hurt—           defense or even a good explanation for why
cation of how the drug industry operates.        because of high costs and also from a safety    drug makers are allowed to advertise their
Celebrex was no better at protecting the         perspective.                                    products on television in the U.S. All of us
stomach from serious complications than          Source: New York Times                          have seen the drug companies’ television
other drugs and Pfizer knew it. It appeared                                                      com mercials promoti ng prescr iption
to be better only because Pfizer and its                                                         drugs. We see folks in the ads enjoying life,
partner, Pharmacia, presented the results                                                        having taken a company’s drug, “proving”
                                                 PFizeR PUllS BReAST And colon HeAlTH
from the first six months of a year-long                                                         that this latest “miracle drug” has done its
study rather than the whole thing.
                                                 clAimS FRom cenTRUm lABelS
                                                                                                 work. And each ad ends with what adver-
   The research chief’s e-mail sent in 2000         Pfizer, after being accused of deceptive     tisers refer to as the “call to action,” a direc-
is among thousands of pages of internal          advertising, has agreed to remove the           tive to the viewer to “ask your doctor” for
documents and depositions unsealed by a          “breast health” and “colon health” claims       this drug. Even in the best of cases, it may
federal judge in a long-running securities       from the labels of Centrum vitamins. The        not be the healthiest nor safest idea to have
fraud case against Pfizer. Other docu-           Center for Science in the Public Interest       patients going to doctors asking for spe-
ments suggest that officials made a strate-      (CSPI), a consumer advocacy group, had          cific drugs. I don’t believe the old saying
gic decision during the early trial to be        threatened to sue Pfizer. CPSI said a news      that “the customer is always right,” applies
less than forthcoming about the drug’s           release that “those claims of breast and        when it comes to doctors prescribing drugs
safety. In one email, an associate medical       colon health implied that the supplements       for their patients. These are decisions that
director at Pharmacia (which was later           would prevent breast and colon cancer—          doctors must make. When the patient is
bought by Pfizer) disparaged the way the         disease prevention claims that supplement       calling the shots, it’s sort of like the tail
st udy wa s bei ng presented a s “d at a         manufacturers can’t legally make.” CSPI         wagging the dog!
massage,” for “no other reason than it           points out that “breast health” and “colon         When it comes to prescription medi-
happens to look better.”                         health” appear on different Centrum prod-       cine, there may be something more effec-
   In another, a medical director at Pfizer      ucts. Other Centrum vitamins have labels        tive, or less costly on the market. But the
described it as “cherry-picking the data”        claiming they promote “heart health,” as        drug companies spend all that money on
even as officials were publicly boasting of      well as having wording that implies the         advertising for a reason and I don’t believe
the study’s success. Dr. M. Michael Wolfe, a     vitamins provide an energy boost.               there is any doubt as to what that reason
gastroenterologist who at the outset had            Pfizer also agreed to change the wording     is. The commercials all show healthy,
cautiously praised the study in a medical        on the labels containing the heart and          active people who are really enjoying life
journal, said after reviewing the new docu-      energy claims. The company will add “Not        to the fullest. Unfortunately, we don’t
ments that he always tries to give “investi-     a replacement for cholesterol-lowering          really hear much on the slick commercials
gators the benefit of the doubt,” but that       dr ugs” along with the “hear t health”          about potentially harmful results—dangers
these “communications make it quite chal-        wording, and on packages with statements        that sometimes far outweigh any benefits
lenging” for him.                                about energy, there will be additional infor-   we may get from the drug. We just don’t
   The decision by Pfizer and Pharmacia to       mation to make it clear that the product        get past the visuals in the ad. The discus-
withhold cr ucial data became widely             does not boost energy. CSPI litigation direc-   sion of side effects is sparse and done in a
known in 2001. The withheld data also led        tor Steve Gardner said in a statement:          manner so that the viewer really doesn’t
to a lawsuit, filed in 2003, by several                                                          get that message.
pension funds that charged that by han-            For many consumers, a daily multi-
dling the results the way they did, Pfizer         vitamin is an expensive insurance
and Pharmacia had misled investors and             policy to make sure that one’s getting


6                                                www.BeasleyAllen.com
IV.                                             raiser was typical of similar events held by
                                                Gov. Romney. There is no doubt that bil-
                                                                                               may prove to be some of the most impor-
                                                                                               tant in the last few decades. Some political
PURELY POLITICAL                                lionaires like the Koch brothers and           pundits are predicting that the key issue in
NEWS & VIEWS                                    Sheldon Adelson intend to buy themselves
                                                a President. Unfortunately, unless ordinary
                                                                                               many of these Senatorial elections will be
                                                                                               the health care bill known as the Afford-
                                                folks wake up, they may be successful. But     able Care Act.
                                                I have to believe that the message from          The states that have Senate seats most in
An eARly looK AT THe 2014 elecTionS in          events like this one will eventually sink in   play, at the present time, appear to be Mas-
AlABAmA                                         to working men and women and retirees,         sachusetts, Missouri, Montana, Nevada,
                                                many of whom have been actually voting         North Dakota, Virginia and Wisconsin.
   Even though Robert Bentley is just in his    for candidates like Romney, and against        Those advocating for a Republican majority
second year as Alabama’s governor, it has       their own economic interests. When that        are campaigning primarily on a “repeal” of
become most evident there will a “Riley         message is heard and understood, I predict     what they call Obama Care. Under normal
candidate” for Governor in Alabama in           you will see the momentum swinging             Senate rules it would still require a 60 vote
2014. The question is—who will it be?           strongly in favor of President Obama.          super majority to override a filibuster and
Many political observers had believed that         Gov. Romney—even when dressed out in        repeal the Affordable Care Act. There are
former Gov. Bob Riley would be a candi-         his starched and obviously new blue jeans      some, however, who believe that the
date. But a recent poll revealed that Gov.      – simply doesn’t understand the problems       simple majority (51 votes) under a budget
Bentley wouldn’t just beat Riley in a poten-    and concerns of ordinary folks. His 1%         reconciliation maneuver could in fact
tial 2014 contest for the GOP’s gubernato-      agenda is driven by men like the Koch          repeal the health care bill in its entirety.
r ial nom i nation—he wou ld win by a           brothers and others and offers little—if       That would be a blow to ordinary folks in
landslide, or as the pollster put it, “by a     anything—to the vast majority of Ameri-        this country.
country mile.” The poll found that 49.5% of     cans. If the Obama campaign doesn’t sell         Of the 60 Democrats and Independents
Republican voters would choose Gov.             this message, it will be their own fault.      who voted to approve President Barack
Bentley compared to only 27.6% for Riley.       They have a golden opportunity to turn a       Obama’s Affordable Care Act, 15 are now
There were 23.9% who said they would            close election into one that won’t be that     up for re-election in November. Based on
either vote for another candidate or were       close but they must stay on a strong           some recent polling, Republican candi-
undecided. Perhaps the most interesting         message that turns loose the power of the      dates are leading in Missouri and Montana,
finding from the poll was Gov. Bentley’s        American people between now and elec-          whereas other states appeared to be a
76% favorable rating.                           tion day in November. I will take “people      “toss up.”
   While the results of the poll had to be      power” any ti me over the big money              Although it is too early to tell which
discouraging for the Riley camp, several        men who have to like the 1% Romney             party will have a majority in the U. S.
Capitol insiders don’t believe it will deter    agenda because they formulated it.             Senate, it is abundantly clear that the health
them in their efforts to make Bentley a one-       I don’t believe there will be many folks    care debate will be an issue. A recent poll
term Governor. They say the intense dislike     voting for President Obama who can afford      shows that 56% of Americans, and that
for the current Governor by some in the         to pay $50,000 for a meal with their candi-    includes this writer, are ready for the
Riley camp will almost certainly guarantee      date. But the candidate whose agenda           health care debate to be over and behind
him an opponent in 2014. But I suspect the      excludes 99 % of the American people           us, and for the country to move forward.
poll results aren’t the only reason the Riley   hasn’t had much trouble attracting those       But there will be a number of political con-
candidate won’t be Bob R i ley. From            who can afford to give millions and they       sultants, with Karl Rove topping the list,
reports, it appears the former Governor is      are pumping huge sums of money into the        who will direct campaigns designed to
making way too much money to give up his        Romney campaign and into the SuperPACs.        further divide our nation. But I hope reason
lobbying job. That leaves as potential          Any person who believes that the billion-      will prevail and the campaigns will focus
gubernatorial candidates Rob Riley, House       aires bankrolling Gov. Romney have any         on issues that will help—and not hurt—our
Speaker Mike Hubbard and former Senator         interest in helping the 99% who will be        nation and make it stronger. That should be
Bradley Byrne who lost a tough race to          left behind in the event Romney becomes        the prayer of all Americans.
Bentley in 2010.                                President will learn the hard way that they
   The same Capitol insiders tell me the        are badly mistaken. But unfortunately for
Riley camp has been working full time           them—and actually for the country—it
placing road blocks in the path of Bentley      will be too late to do anything to rectify     V.
administration programs. If that’s true,
shame on them. That sort of thing can’t be
                                                their mistake.                                 COURT WATCH
good for Alabamians. In any event, it will
be most interesting to watch things prog-
ress as the path in A labama to 2014            SPoTliGHT on UPcominG UniTed STATeS            SUPReme coURT RUleS on ARizonA’S
becomes clearer.                                SenATe RAceS                                   immiGRATion lAw
                                                  While most of the media attention has           It didn’t come as much of a surprise to
                                                focused on the Obama-Romney race, there        the lega l com mu n it y when the U.S.
THe one-PeRcenT FlocK To $50,000 PeR            will be a number of Congressional races        Supreme Court ruled that the federal gov-
PeRSon Romney FUndRAiSeRS                       that are extremely important. There are 33     ernment has the sole power to enforce the
                                                United States Senate races being contested     laws against illegal immigration. The High
  The Romney campaign last month held           in November. Currently, the Democratic
another of its fundraisers restricted to the                                                   Court struck down three key provisions of
                                                Party holds a 53 to 47 majority over the       Arizona’s first-in-the nation law designed to
Super-Rich at David Koch’s mansion in the       Republicans. The Senate races this year
Hamptons. The $50,000-per-plate fund-                                                          literally run all undocumented residents


                                          www.JereBeasleyReport.com                                                                        7
out of that state. The Justices did allow for   ing on elections, the work Public Citizen is      screen and monitor private security guards
state officials to begin enforcing a provi-     doing has taken the idea of a constitutional      at nine military installations.
sion in Arizona that calls on police, when      amendment from “doubtful” to “doable.”               The shooting was a factor in improved
making lawful stops, to check the immigra-      Momentum around the country appears to            screening of Afghan nationals hired to
tion status of people who may be in the         be growing daily. The more folks find out         provide security for U.S. and coalition
country illegally. While that’s not a bad       about the effect Citizens United has had on       forces. Among those killed was medic Rudy
thing, these status checks cannot “result in    the political scene, the more they dislike        Acosta, 19, of Santa Clarita, Calif., whose
prolonged detention,” according to the          what’s happening.                                 family filed the lawsuit along with three
Court. Justice Kennedy, writing for the            The fight to preserve democracy is being       survivors. Tundra failed to adhere to basic
majority, said: “Federal law makes a single     spearheaded by Public Citizen activists           duties in dealing with Ahmed, who was
sovereign responsible for maintaining a         around the country. While passage of the          first hired by the company in May 2010. It
comprehensive and unified system to keep        amendment in both the House and Senate            appears he was fired two months later after
track of aliens within the nation’s borders.”   is still considered an uphill fight, I believe    being accused of threatening to kill U.S.
    The opinion said that if Arizona could      Public Citizen and the American people            and coalition troops. But, in a bizarre move,
arrest and hold immigrants for not carry-       will prevail. Defending our nation from a         the firm rehired Ahmed in early 2011,
ing papers, “every state could give itself      hostile corporate takeover is too important       despite concerns by a Tundra manager.
i ndependent aut hor it y to prosecute          and I don’t believe the American people           Within days of being rehired, Ahmed
federal registration violations.” Chief         will let this effort fail. Unfortunately, there   opened fire on U.S. troops using an AK47
Justice John G. Roberts Jr. and Justices        are still too many folks in this country who      assault rifle furnished by Tundra.
Ruth Bader Ginsburg, Stephen G. Breyer,         don’t even know about Citizens United.               Security companies that hire Afghans are
and Sonia Sotomayor joined with Justice         Fortunately, the word is getting out and          required to vet an applicant by checking
Kennedy in this opinion that gives states       those folks are waking up.                        their identities, work history and other per-
little new authority to enforce immigra-           When one reads about the billions of           sonal information, as well as conducting
tion law on their own.                          dollars being raised by the SuperPACs in an       checks with police and taking fingerprints
    The Obama Administration went to            effort by the super rich to buy a President,      and iris scans. Contractors also have to
court and argued these state laws con-          the seriousness of the battle is put in per-      report individuals who turn out to be secu-
f licted with the federal government’s          spective. I believe the American people           rity risks. After the shooting, U.S. military
power to enforce the nation’s immigration       love their democracy too much to let it be        officials beefed up the process by doing
laws. Previously, a federal judge in Phoenix    bought or even leased by Cor porate               random checks of private security compa-
and the U.S. 9 th Circuit Court of Appeals      America or by the super rich who currently        nies, but they have warned the added safe-
had blocked four key parts of Arizona’s law     control the GOP. We will find out if I am         guards won’t eliminate the problem.
from going into effect. All other states with   correct when the voters elect a President            Michael Doyle, the lawyer who repre-
laws like Arizona’s have absolutely no          and members of the U.S. House and Senate          sents the Plaintiffs in the case, said the
chance of having their laws upheld.             in November. The decisions made then will         lawsuit was filed to hold military contrac-
Source: Los Angeles Times                       be the most important is a very long time         tors accountable for their role during
                                                and will determine whether the middle-            wartime. He is absolutely correct when he
                                                class will survive in our country.                says that “if there aren’t any consequences,
                                                                                                  it’s a continuing danger to the troops and
SUPReme coURT RUleS in monTAnA cASe
                                                                                                  that’s not acceptable.” This case, which
                                                                                                  should be successful, will be watched with
   The U.S. Supreme Court has issued
another ruling that allows huge corpora-
                                                VI.                                               great interest by the American people.
tions to spend as much money as they want       THE NATIONAL                                      Source: Associated Press
in their efforts to take over our democracy.
In summarily striking down a Montana law
                                                SCENE
that limited corporate electioneering in Big
Sky Country, the Supreme Court doubled                                                            VII.
down on its assertion in Citizens United v.     FAmily oF SoldieR SUeS SecURiTy FiRm              THE CORPORATE
Federal Election Commission that corpo-         oVeR HiS deATH
rations have a right to distort our elections                                                     WORLD
by spending without limit for the sake of          The family of a California soldier killed
securing the allegiance of politicians and      in Afghanistan has sued a military contrac-
policy makers.                                  tor for rehiring an Afghan national as a          FiGHTinG coRPoRATe FRAUd THRoUGH QUi
   It’s very clear that the make-up of the      security guard after he allegedly threat-         TAm AcTionS
current Supreme Court will not overturn         ened to attack U.S. troops and eventually
Citizens United. That is why people have        killed two service members and wounded              As most Americans are finding out, in
to overturn the Court. That’s where Public      four others. The wrongful death lawsuit,          recent years corporate fraud in the United
Citizen—and its hundreds of thousands of        filed in federal court, claims Tundra Strate-     States has reached unprecedented heights
supporters across the country—comes in.         gies failed to document threats made by           and devastated millions of lives. Given the
Public Citizen called for a constitutional      Shir Ahmed and failed to tell U.S. military       countless examples of corporations cheat-
amendment to overturn Citizens United           officials about the danger he posed before        ing individuals out of their life savings,
shortly after the High Court handed down        the March 2011 attack at Forward Operat-          there is good reason for the distress and
the opinion in January, 2010. Despite the       ing Base Frontenac. Tundra Strategies,            outrage felt by Americans. And to make
Supreme Court’s denial of reality when it       based in Ontario, Canada, was hired in            matters worse, consider the rising number
comes to the impact of independent spend-       November 2009 by the U.S. government to           of cases where corporations perpetrate


8                                               www.BeasleyAllen.com
fraud on our government—fraud against                          moRe on THe JPmoRGAn deBAcle                   Syncora sued Bank of America in 2009 to
every single U.S. taxpayer—which all too                                                                      recover losses on securities transactions
often goes undetected. Fortunately, the                           We wrote last month about some terrible     based on home loans made by Country-
justice system in this country provides                        and extremely risky business practices by      wide Financial, which was bought by Bank
ways to fight back, and one of our most                        JPMorgan. It appeared then that the losses     of America in 2008. According to Syncora,
powerful weapons is the qui tam action,                        incurred were slightly over $2 billion.        it was duped into insuring the mortgage-
which we have mentioned in prior issues.                       While that was bad, the worst was yet to       backed securities. Syncora, a unit of
   A qui tam action involves a private                         come. Now the losses, from what is being       Syncora Holdings Ltd., contended that
party, called a relator, who asserts claims                    described as “trading blunders,” may rise to   Countrywide misrepresented the quality of
on behalf of the government. Although the                      $7.5 billion. That’s according to Jamie        the underlying mortgages.
government is considered the real (named)                      Dimon, JPMorgan’s CEO, who has been               As we all now know, home loans such as
Plaintiff, if the action is successful, the                    doing damage control over the past weeks.      those issued by Countrywide were at the
relator receives a share of the award. Most                       The botched trades by a JPMorgan unit       center of the financial crisis. As loans
qui tam actions are brought under the                          that Dimon had pushed to boost profit          became delinquent, mortgage-backed secu-
federal False Claims Act (“FCA”), 31 U.S.C. §                  were masked by weak internal controls.         rities like those insured by Syncora col-
3729, et seq., although many states have                       That decision will now saddle the bank         lapsed. This helped to trigger a wider
adopted their own False Claims Acts. The                       with a loss much greater than originally       market meltdown. In its lawsuit, Syncora
successful results speak for themselves—                       thought or at least larger than the public     claimed “a significant percentage” of mort-
over $34 billion in recoveries since 1986—                     was being led to believe. At press time,       gage loans underlying the securitizations
and that tells us a powerful story.                            JPMorgan had already lost $5.8 billion on      did not comply with Countrywide’s repre-
   Qui tam actions typically begin with an                     the trades. That figure may climb by           sentations and war ranties. The bond
employee witnessing his/her employer                           another $1.7 billion in a worst-case sce-      insurer sued for fraudulent inducement and
defrauding the government. The employee                        nario, according to Dimon. We will con-        breach of contract, seeking to recover
may later consult with an attorney on                          tinue to monitor this situation and hope       money paid out on its policies as a result of
another matter, but convey their knowl-                        that members of Congress will do the same.     the bad loans.
edge of false information being given to the                   Sources: Associated Press and Bloomberg           It was alleged that “Countrywide, consis-
government. Attorneys need to be on the                                                                       tent with its business practices at the time,
lookout for such information and recognize                                                                    systematically ignored its own underwrit-
potential claims.                                                                                             ing guidelines and made imprudent loans
                                                               JPmoRGAn SeTTleS cRediT cARd lAwSUiT
   It takes vigilance and courage for these                                                                   that no reasonable underwriter would have
private individuals, commonly referred to                        JPMorgan Chase has agreed to pay $100        made.” As of May 2010, when an amended
as “whistleblowers,” to report fraudulent                      million to settle a lawsuit filed by custom-   lawsuit was filed, Syncora had already paid
activity, but without them the vast majority                   ers who said that the bank increased           more than $145 million in claims and had
of fraud against our government would go                       monthly minimum payments due on credit         been given notice of another $257 million.
undetected. Recognizing the perils faced                       cards to generate more fees. The settle-       Rulings in the Syncora case and a similar
by whistleblowers, legislators have passed                     ment, if approved by the court, will end a     lawsuit brought by bond insurer MBIA Inc.
laws protecting individuals who take a                         federal lawsuit filed three years ago in San   have set precedents for what bond insurers
stand against fraud. Specifically, 31 U.S.C. §                 Francisco.                                     need to show to prove insurance fraud and
3730 prohibits discrimination and retalia-                       The lawsuit accuses JPMorgan of improp-      breach of contract. Syncora Guarantee has
tion against whistleblowers and imposes                        erly increasing cardholders’ minimum pay-      also sued other banks over false and mis-
strict penalties, including double back pay                    ments due to 5% of balances, from 2%, in       leading statements in connection with
with interest, on violators.                                   2008 and 2009. Credit card customers con-      mortgage-backed securities, including JPM-
   As we have written previously, if a qui                     tended that the bank increased payments        organ Chase & Co. over Bear Stearns & Co.
tam action is successful, the whistleblower                    on borrowers who could not afford to pay       transactions. The case is Syncora Guaran-
receives between 10% and 30% of the gov-                       more, ultimately creating more income          tee Inc. v Countrywide Home Loans Inc.,
ernment’s recovery. Damages under the                          from late fees. JPMorgan claimed that the      New York State Supreme Court, New York
FCA include penalties and “3 times the                         increase in monthly payments was both          County.
amount of damages which the Government                         “reasonable” and “sensible.” But if that       Source: Insurance Journal
sustains” due to the fraud. 31 U.S.C. §                        were true, how do the bank’s bosses
3729(a)(1)(G). In short, the law protects                      explain to shareholders the $100 million
and rewards whistleblowers for their                           settlement being paid?                         cAPiTAl one BAnK PAyS $210 million To
instrumental role in exposing and prose-
                                                               Source: New York Times                         SeTTle cHARGeS
cuting fraud. Lawyers in our firm have
waged war against corporate fraud for over                                                                       Capital One Bank has agreed to pay $210
30 years and would welcome the opportu-                                                                       million to settle federal charges that it
nity to assist with any qui tam actions that                   BAnK oF AmeRicA SeTTleS moRTGAGe
                                                                                                              tricked credit card customers into buying
any of our readers may have. If you need                       FRAUd lAwSUiT wiTH Bond inSUReR
                                                                                                              costly add-on services like payment protec-
more information on this subject, we will                      SyncoRA
                                                                                                              tion and credit monitoring. Most of the
be glad to help and look at any potential                                                                     money will go directly to refund customers
cases. You can call 800-898-2034 or email                        Bank of America Corp. has agreed to pay
                                                               $375 million to settle a lawsuit brought by    who were led to believe the services were
C h a d . S t e w a r t @ b e a s l e y a l l e n .c o m o r                                                  free or mandatory or offered more benefits
Andrew.Brashier@beasleyallen.com.                              bond insurer Syncora Guarantee over toxic
                                                               mortgage-backed securities, which were at      than they did. The order against Capital
                                                               the center of the 2008 financial crisis.       One is the first enforcement action by the
                                                                                                              Consumer Financial Protection Bureau,


                                                        www.JereBeasleyReport.com                                                                        9
which was set up a year ago to protect con-         According to FINR A officials, Merrill        THe FedeRAl GoVeRnmenT FileS SUiT
sumers from excessive or hidden fees and         Lynch failed to have an adequate supervi-        AGAinST wyndHAm oVeR dATA BReAcH
other financial threats. Hopefully, this is a    sory system to ensure that customers in
preview of what we can expect from the           certain investment advisory programs were           U.S. regulators have filed a complaint
Bureau in the future.                            billed in accordance with contract and dis-      against Wyndham Worldwide Corp and
   Under its agreement with the CFPB,            closure documents. As a result, the firm         three subsidiaries, alleging that a failure by
Capital One will pay about $150 million to       overcharged nearly 95,0 0 0 customer             the hospitality company to safeguard con-
2.5 million customers and will pay an addi-      accounts fees of more than $32 million.          sumers’ personal information led to more
tional $25 million penalty. Capital One will     Merrill Lynch has since returned the             than $10 million lost to fraud. According
also pay a $35 million penalty to the Office     unwarranted fees, with interest, to the          to the Federal Trade Commission, repeated
of the Comptroller of the Currency, a sepa-      affected customers. Merrill Lynch also           failures to secure consumer data led to
rate federal agency, which has the responsi-     failed to provide timely trade confirmations     hundreds of thousands of consumers’
bility to oversee its banking operations.        to customers in certain advisory programs        payment card information being exported
The refunds will go to customers who             due in what was described as “computer           to an Internet domain address registered
bought add-on card ser vices between             programming errors.” As a result, from July      in Russia. Wyndham, which operates
August 2010 and January 2012. They will          2006 to November 2010, Merrill Lynch             several hotel brands, including Days Inn
receive the full amount of fees they paid        failed to send customers trade confirma-         and Super 8, is one of a large number of
and any other related costs.                     tions for more than 10.6 million trades in       organizations that acknowledged in the
   The charges were based on the con-            over 230,000 customer accounts. All of this      past three years that they had been hacked
sumer bureau’s findings that Capital One’s       is inexcusable and Merrill Lynch is now          by people seeking either financial gain or
call-center vendors were “deceptive” in          paying for it.                                   intellectual property.
selling the add-on services. The CFPB can        Source: Corporate Crime Reporter                    Other victims have included entertain-
charge companies engaged in “unfair,                                                              ment giant Sony, the International Mone-
deceptive or abusive practices” and that’s                                                        tary Fund, Google, Lockheed Martin and
good for all consumers and would also help                                                        Citigroup. In its complaint, the FTC alleged
                                                 FoRmeR AiG And GeneRAl Re execS
businesses that don’t cheat their customers.                                                      that fraudulent charges on Wyndham’s con-
                                                 AdmiT To ReinSURAnce FRAUd                       sumer accounts totaled more than $10.6
   In a statement, Richard Cordray, the
agency’s director, said the agency is               Five former executives of American            million following three data breaches in
“putting companies on notice that these          International Group Inc. and Berkshire           less than two years. The breaches occurred
deceptive practices are against the law and      Hathaway Inc. unit General Reinsurance           in April 2008, March 2009 and in late 2009,
will not be tolerated.” Ryan Schneider,          have admitted to conducting a fraudulent         according to the FTC. It was further alleged
Capitol One card division president, not         reinsurance transaction as part of a deal to     by the FTC in the complaint:
only agreed to settle, but also in a state-      end a years-long criminal case against              Even after faulty security led to one
ment apologized to customers. He admitted        them. All five entered into deferred prose-      breach... Wyndham still failed to remedy
that Capital One is “accountable for actions     cution agreements, meaning their indict-         known security vulnerabilities; failed to
that vendors take” on its behalf. The con-       ments will be dismissed in a year if they        employ reasonable measures to detect
sumer bureau, which was created under            stay out of trouble. They also agreed to         unauthorized access; and failed to follow
the Obama Administration’s financial over-       fines ranging from $100,000 to $250,000.         proper incident response procedures.
haul law, is the first federal regulator         The settlement brings to an end a high-pro-         The FTC brought the complaint based on
focused on protecting consumers, rather          file case that has worked its way through        its belief that Wyndham violated its own
than on just making sure that banks are          the courts since May 2006.                       privacy policy by failing to safeguard data.
stable and profitable. I believe that’s a very      In 2008, former Gen Re Chief Executive        That failure violated the FTC Act which
good thing for the American people.              Ronald Ferguson, Chief Financial Officer         bars unfair and deceptive practices. In its
Source: Associated Press                         Elizabeth Monrad, Senior Vice President          request for relief, the FTC asked the court
                                                 Christopher Garand and Assistant General         to require Wyndham to live up to its
                                                 Counsel Robert Graham, as well as AIG            privacy policies, provide restitution or
                                                                                                  refund money that customers paid, and to
FinRA FineS meRRill lyncH $2.8 million           Vice President Christian Milton, were con-
                                                 victed of engineering a reinsurance deal to      pay the FTC’s costs incurred in the lawsuit.
  T he Fi nancia l I ndustr y Reg u lator y      fraudulently boost A IG’s reser ves. In          The case is Federal Trade Commission v.
Authority (FINRA) has fined Merrill Lynch,       August 2011, a federal appeals court threw       Wyndham Worldwide Corporation, et al.,
Pierce, Fenner & Smith, Inc. $2.8 million        out the convictions and ordered a new            U.S. District Court for the District of
for supervisory failures that resulted in        trial, citing errors by the trial judge in the   Arizona.
overcharging customers $32 million in            case. The five had been sentenced to any-        Source: Reuters
unwarranted fees. Merrill Lynch has paid         where from one to four years in prison.
$32 million in remediation, plus interest, to    Last February, a new judge overseeing the
the affected customers. FINRA enforce-           case set a Januar y 2013 date for their          Sec SUeS FAlcone And clAimS FUnd
ment chief Brad Bennett had this to say:         retrial. When you consider what these            miSUSe
                                                 individuals did and now have admitted to,
  Investors must be able to trust that           their punishment doesn’t appear to be               Philip Falcone, the billionaire hedge-
  the fees charged by their securities           very severe.                                     fund manager who founded Harbinger
  firm are, in fact, correct. When this is                                                        Capital Partners, LLC, has been sued by the
                                                 Source: Insurance Journal
  not the case, investor confidence is                                                            U.S. Securities and Exchange Commission.
  threatened.                                                                                     It was contended that Falcone misappropri-
                                                                                                  ated client assets, favored certain investors


10                                               www.BeasleyAllen.com
over others, and illegally manipulated bond    Web surfers who rely on Apple’s Safari            often spend more when they’re using
prices. The SEC is seeking disgorgement of     browser. T he set t lement h ad to be             “plastic” instead of cash or checks. That
ill-gotten gains, unspecified financial pen-   approved by the FTC’s five commissioners.         may well be true. While that may help our
alties, and a bar prohibiting Falcone from     The $22.5 million penalty is the largest the      economy, it also results in more credit card
serving as an officer or director of any       agency has ever imposed on a single               debt for consumers.
public company, according to a statement       company. But it should be noted that                 Retailers wanted to charge an extra
by the agency. The SEC has settled with        Google earns that much every five hours           amount to customers who use credit cards
Harbert Management Corp., a Birmingham         and that will likely continue. Google was         for their purchases. The ability to charge
investment firm, which was formerly affili-    said to use a special code that “tricked”         customers who use the cards more for their
ated with Falcone. SEC Enforcement Direc-      Apple’s software. To say that $22.5 million       purchases would reduce the retailers’ costs
tor Robert Khuzami said in a statement:        is a “slap on the wrist” for Google may be a      for accepting the cards. But up until now,
                                               stretch, but it may be just that. I am not sure   Visa and MasterCard have banned stores
  Today’s charges read like the final          the penalty fits the wrongdoing in this case.     from charging more to customers who use
  exam in a graduate course in how to                                                            credit cards. But merchants have been
                                               Source: Associated Press
  operate a hedge fund unlawfully.                                                               allowed to offer customers discounts if
  Clients and market participants                                                                they pay with cash. As part of the settle-
  alike were victimized as Falcone                                                               ment, credit card companies have agreed
  unscrupulously used fund assets to           cRediT cARd comPAnieS AGRee To PAy $6
                                                                                                 to reduce swipe fees for eight months.
  pay his personal taxes, manipulated          Billion To SeTTle Fee FixinG clAimS
                                                                                                    The temporary reprieve on fees is valued
  the market for certain bonds, favored                                                          at $1.2 billion. The settlement does not
  some clients at the expense of others,          Visa, MasterCard and a number major
                                               banks have agreed to pay retailers at least       apply to debit cards, which have grown in
  and violated trading rules intended                                                            popularity for small-value transactions. A
  to prohibit manipulative short sales.        $6 billion to settle a long-running lawsuit
                                               that alleged the card issuers conspired to        number of consumer groups are not very
   The SEC action is the second blow in less   fix the fees that stores pay to accept credit     happy with this settlement, contending
than two months for Falcone, who built a       cards. As part of the settlement, stores like     that it will result in purchasers who pay by
$26 billion hedge fund by 2008 with a suc-     Rite Aid and Kroger will be allowed to            credit card being hurt. They complain that
cessful bet against subprime mortgages.        charge customers more if they pay using a         neither the card issuer nor the merchant
Having suffered $23 billion in losses and      credit card. The settlement, which is being       will feel the pain. While this settlement
withdrawals from the peak, Falcone is now      hailed as the largest antitrust settlement in     appears to be very good for the retailers, I
in a battle, fighting to keep control of his   U.S. history, is seen as a major victory for      have to wonder how good it really is for
empire. LightSquared Inc., Harbinger Capi-     merchants. They have been fussing for a           consumers. I suspect we will hear more on
tal’s biggest investment, filed for bank-      long time about the billions of dollars in so-    that aspect of the settlement.
ruptcy in May. Falcone in 2009 took out a      called “swipe” or “interchange” fees paid to      Source: Associated Press
$113 million loan from his Special Situa-      banks for purchases made using credit
tions fund to pay personal taxes. The loan     cards.
was disclosed in the fund’s annual financial      But at a time when shoppers increasingly       U.S. SenATe RePoRT FAUlTS HSBc
statement the following March.                 are using credit and debit cards, merchants
   At the ti me Falcone bor rowed the          will now have to decide if they can afford           A recently released report reveals that
money, clients were barred from pulling        to charge shoppers extra for using the            global banking giant HSBC and its U.S. affil-
money from the fund. Falcone subse-            cards. I don’t believe most folks will want       iate exposed the U.S. financial system to a
quently repaid the loan with interest. That    to pay more for purchases when they use a         wide array of money laundering, drug traf-
same year, with client capital locked up,      credit card instead of cash. Time will tell       ficking, and terrorist financing risks due to
Harbinger, according to reports, allowed       how this will work out.                           poor anti-money laundering (AML) con-
Goldman Sachs Group, Inc., which at the           The dispute between stores and banks           trols. The report was released on July 16 th
end of 2008 had $1 billion invested in two     began in 2005. That’s when large retailers,       by the Senate Permanent Subcommittee on
Harbinger funds, to redeem some money          including Kroger Co., Safeway Inc. and            Investigations. Sen. Carl Levin, D-Mich.,
from the firm. In April 2011, Harbinger told   Walgreen Co., began filing price-fixing law-      Subcommittee Chairman, had this to say:
clients that the government was looking        suits against Visa, MasterCard and other
into whether it had engaged in market          banks. The retailers claimed the credit card        In an age of international terrorism,
manipulation in its trading of the debt        issuers worked together to fix the fees that        drug violence in our streets and on
securities of an undisclosed company from      stores pay to accept credit and debit cards.        our borders, and organized crime,
2006 to 2008. The company whose debt           The fees, which vary depending on the               stopping illicit money f lows that
Harbinger traded was said to be MAAX           type of store and the type of card, average         support those atrocities is a national
Holdings, a Canadian maker of bathroom         about 2% of the price of a purchase.                security imperative. HSBC used its
fixtures.                                         Visa and MasterCard make money on the            U.S. bank as a gateway into the U.S.
                                               fees that stores pay for each customer who          financial system for some HSBC affil-
Source: The Birmingham News
                                               uses credit or debit cards for their pur-           iates around the world to provide
                                               chases. The fees are set by card processing         U.S. dollar services to clients while
                                               networks, but collected by, and divided             playing fast and loose with U.S.
PRiVAcy BReAcH ReSUlTS in $22.5 million                                                            banking rules. Due to poor AML con-
                                               with, the banks that issue the cards. For
Fine AGAinST GooGle                                                                                trols, HBUS exposed the United States
                                               years, the card companies have been
                                               defending the fees they charge stores. They         to Mexican drug money, suspicious
  Google will pay a $22.5 million fine to                                                          travelers cheques, bearer share cor-
resolve allegations that it broke a privacy    say stores benefit from being able to accept
                                               credit and debit cards from customers, who          porations, and rogue jurisdictions.
promise by secretly tracking millions of

                                         www.JereBeasleyReport.com                                                                         11
  The bank’s federal bank regulator,           BP PAyS $5.2 million To SeTTle FAlSe              mAniPUlATion oF liBoR RATe leAdS To
  the OCC, tolerated HSBC’s weak AML           clAimS AcT cHARGe                                 liTiGATion
  system for years. If an international
  bank won’t police its own affiliates            BP America Inc. has paid a $5.2 million           Libor, the London Interbank Offered
  to stop illicit money, the regulatory        civil penalty for submitting false, inaccu-       Rate, is the interest rate set by the British
  agencies should consider whether to          rate, or misleading reports for energy pro-       Bankers’ Associations on the interest rate
  revoke the charter of the U.S. bank          duction that occurred on Southern Ute             that large international banks claim they
  being used to aid and abet that illicit      Indian Tribal lands in southwestern Colo-         must pay when borrowing money from
  money.                                       rado. The case was brought by the Depart-         other banking institutions. The Libor rate is
                                               ment of the Interior’s Office of Natural          important because it’s used as a benchmark
   HSBC set aside $2 billion to cover the      Resources Revenue (ONRR). Paul A. Mus-            rate for trillions of dollars worth of con-
cost of U.S. investigations and compensate     senden, Deputy Assistant Secretary for            tracts that impact the global market. As has
UK customers for mis-selling. The Subcom-      Natural Resources Revenue Management,             been widely reported, Barclays, a British
mittee conducted a year-long investigation     stated:                                           multinational banking institution, recently
into HSBC and released its findings in a                                                         admitted to manipulating Libor rates. As a
lengthy report, along with more than 100         This civil penalty demonstrates the             result of its manipulation of Libor rates, the
documents, including bank records and            expertise, skill and tenacity of the            United States and United Kingdom levied a
internal emails. Senators listened to testi-     Tribal auditors and ONRR enforce-               $450,000,000 fine. It’s suspected that
mony from HSBC officials and federal regu-       ment team members who discovered                several other banks participated in the
lators in a hearing by the subcommittee on       and pursued this repeated misreport-            manipulation of Libor.
the report. The investigation focused on         ing of royalty and production infor-               Unfortunately, as early as April 2008, the
HSBC’s key U.S. affiliate, HSBC Bank USA,        mation, and underscores the value of            New York Federal Reserve was aware of
N.A., known as HBUS, which functions as          our partnership with Tribal and                 potential misrepresentations regarding the
the U.S. nexus for HSBC’s worldwide              State auditors under our cooperative            Libor rate. However, the New York Federal
network. HSBC has 7,200 offices in more          agreements. ONRR remains commit-                Reserve did not act upon its own concerns,
than 80 countries with profits of $22            ted to collecting every dollar due              or even two warnings from a Barclays’
billion last year. HBUS has 470 branches         from energy production that occurs              employee, that Barclays was manipulating
across the United States with 4 million          on Federal and American Indian                  the Libor rate. The manipulation of Libor
customers.                                       lands, and rigorous enforcement of              rates essentially alters the interest rates on
   HBUS provides accounts to 1,200 other         our regulations requiring accurate              contracts worldwide. As a result, the con-
banks including more than 80 HSBC affili-        reporting is crucial to that effort.            tracts of small and large businesses are
ates. Called correspondent banking, HBUS                                                         affected which ultimately impact consum-
provides these banks with U.S. dollar ser-        ONRR’s Office of Enforcement originally
                                               issued the civil penalty in June 2010.            ers. Additionally, state governments are
vices, including services to move funds,                                                         affected by the fraudulent rigging of the
exchange cu r rencies, cash monetar y          Although BP America initially requested a
                                               hearing on the civil penalty, it later elected    Libor rate of potentially millions of dollars.
instruments, and carry out other financial                                                       The derivatives market has been affected
transactions. Correspondent banking can        to pay the penalty instead. ONRR received
                                               the payment on July 17th. In an interesting       the most by the manipulation of Libor
become a major conduit for illicit money                                                         rates. This is because the derivative market
flows unless U.S. laws to prevent money        observation, Mussenden praised the work
                                               of Southern Ute Tribal auditors who ini-          is commonly pegged to Libor.
laundering are followed.                                                                            Additionally, many homeowners or inves-
   In 2010, HSBC was cited by its federal      tially discovered the errors. The Tribe’s
                                               audit was conducted as part of a coopera-         tors might have benefited or lost out on
regulator, the Office of the Comptroller of                                                      Libor-pegged mortgages and derivatives.
the Currency (OCC), for multiple severe        tive agreement with ONRR. The Southern
                                               Ute Tribal auditors and ONRR found that           Those who lost out as a result of this
AML deficiencies, including a failure to                                                         manipulation include pension funds, insur-
monitor $60 trillion in wire transfer and      BP reported incorrect “product codes” and
                                               “sales type codes” resulting in its use of        ance companies, and note holders, among
account activity, a backlog of 17,000 un-                                                        others. Currently, a class action MDL led by
reviewed account alerts regarding poten-       incorrect royalty rates and prices for
                                               roya lt y repor ti ng pu r poses. BP a lso        the City of Baltimore is ongoing to recover
tially suspicious activity, and a failure to                                                     millions of dollars lost by class members as
conduct AML due diligence before opening       reported well production to the wrong
                                               leases.                                           a result of interest rate swaps that were
accounts for HSBC affiliates. Subcommittee                                                       impacted by fraudulent Libor rates.
investigators found that the OCC had failed       After receiving audit issue letters and an
                                               order, the company agreed with the audi-             Two states, New York and Connecticut,
to take a single enforcement action against                                                      have launched an investigation into the
the bank, formal or informal, over the pre-    tors’ concerns and repeatedly promised to
                                               correct the problems, which they attrib-          manipulation of the Libor rate. The New
vious six years, despite ample evidence of                                                       York Attorney General has confirmed that
AML problems. That’s very hard to under-       uted to errors in their automated files. But
                                               ONRR and the Tribal auditors found the            his state launched a probe about six
stand. Hopefully, things will change at                                                          months ago. Additionally, the U.S. Depart-
OCC and wrongdoers will hereafter be           same errors in later reviews, prompting
                                               ONRR to issue the civil penalty. Having           ment of Justice is building criminal cases
held accountable for their actions.                                                              against different banking institutions and
                                               dealt with BP in the oil spill litigation, I am
Source: Corporate Crime Reporter                                                                 their employees according to several differ-
                                               not at all surprised that the company would
                                               try to take advantage of the tribe.               ent reports. Barclays has already termi-
                                                                                                 nated several traders involved in setting
                                               Source: Corporate Crime Reporter
                                                                                                 Libor rates and has had a recent shakeup of
                                                                                                 their top leadership. Barclays’ CEO, COO,
                                                                                                 and Chairman have all stepped down.


12                                             www.BeasleyAllen.com
    If you need more information on the
Libor rate scandal or believe that you or a
                                                       VIII.                                           groups that bankroll most election ads to
                                                                                                       be revealed. But Democrats, led by New
family member has been impacted by the                 CONGRESSIONAL                                   York Senator Charles Schu mer, have
scandal, contact Chad Stewart or Andrew
Brashier, lawyers in our firm, at 800-898-
                                                       UPDATE                                          pledged to keep trying to pass this needed
                                                                                                       bill. The DISLCOSE Act, which was dealt
2034 or by email at Chad.Stewart@beasley-                                                              the same fate in the Senate in 2010, failed
a l l e n . c o m a t A n d r e w. B r a s h i e r @                                                   to overcome a key procedural vote on parti-
beasleyallen.com.                                      PReSidenT oBAmA SiGnS Flood inSURAnce           san lines. The vote on the bill was 51-44.
Sources: http://www.bbc.co.uk/news/magazine-
                                                       ReFoRm Bill                                     With 60 votes being needed to force a vote
18826396                                                                                               on the bill, it fell nine votes short.
http://www.bbc.co.uk/news/business-18848673              President Barack Obama has signed the            Four Republicans and one Democrat did
                                                       “Biggert-Waters Flood Insurance Reform          not vote on the bill, which would require
                                                       and Modernization Act of 2012” into law.        corporate interest groups, unions and non-
                                                       The law extends the National Flood Insur-
coRPoRATe FRAUd in THe U.S.                            ance Program (NFIP) for five years and
                                                                                                       profits that spend $10,000 or more during
                                                                                                       an election cycle to disclose donors who
  I am convinced that few folks realize                makes needed reforms to the program. The        give $10,000 or more. The new version of
how bad the conduct of a large number of               Senate and House passed the legislation as      the bill, sponsored by Sen. Sheldon White-
huge corporations has been over the years.             part of a conference report package along       house (D -R.I.) would have no longer
As a result, most A mericans have no                   with the Surface Transportation Act of          required sponsors of electioneering ads to
concept of how these giants in Corporate               2012 and an extension of the Federal Direct     have a disclaimer at the end and would
America operate. That is, unless they have             Sta f ford Student Loan prog ram. T he          have pushed the effective date to 2013.
been victims of corporate wrongdoing, and              reforms include:                                   Since we are in an election year though, I
even then some don’t fully understand that             •	 phasing	out	subsidies	for	many	proper-       can understand why this bill doesn’t have
the wrongdoing they experienced is wide-                  ties,                                        broad, bipartisan support even though the
spread. But after reading the information                                                              American people favor openness and full
relating to corporate wrongdoing set out               •	 raising	 the	 cap	 on	 annual	 premium	      disclosure of political donations. That is
above, I suspect most—if not all—of our                   increases from 10% to 20%,                   according to all polling results that I have
readers may well conclude that:                                                                        seen. Unfortunately, Republicans stood
                                                       •	 allowing	multifamily	properties	to	pur-      with the big banks, drug companies, oil
•	 Corporate	 fraud—in	 many	 different	                  chase NFIP policies,                         companies, and other powerful special
   forms—is a reality.                                                                                 i nterests that vi r tual ly control what
                                                       •	 imposing	minimum	deductibles	for	flood	
•	 W histleblowers	 to	 repor t	 fraud	 are	              claims,                                      happens in Congress. Those groups cer-
   needed.                                                                                             tainly don’t need more clout in Washing-
                                                       •	 requiring	 the	 NFIP	 administrator	 to	     ton. Outside spending groups, including
•	 The	courts	must	remain	open	and	avail-                 develop a plan for repaying the debt         super PACS, party committees and groups
   able to consumers.                                     incurred from Hurricane Katrina, and         such as corporations and unions have—at
                                                                                                       press time—spent well over $175 million
•	 The	government	must	take	an	active	role	            •	 establishing	 a	 technical	 mapping	 advi-   so far during this election cycle. This is
   in combating the fraudulent conduct.                   sory council to deal with map modern-        according to the Center for Responsive Pol-
                                                          ization issues.                              itics. A large portion of that money goes
   And the sad truth is that we have just
                                                          The new law will require the Govern-         toward sponsoring election ads.
reported on some of the larger settlements
                                                       ment Accountability Office to conduct a            It has become evident that a handful of
involving corporate fraud and wrongdoing.
                                                       study on the prospect of adding business        billionaires willing to contribute huge
Unfortunately, there is much more fraud
                                                       interruption and additional living expenses     sums—in the nine figures—are trying to
and wrongdoing in the corporate world.
                                                       coverage to the NFIP and also will require      sway what may well be a very close presi-
That’s why it’s so very important to keep
                                                       the Federal Insurance Office to study and       dential election. It’s believed that roughly
the courts open and accessible to victims.
                                                       submit a report to Congress on natural          60% or more of these outside dollars are
If any of our readers wonder why Corpo-
                                                       disaster insurance issues and possible legis-   coming from about 15 individuals. Hope-
rate America has pushed so hard to shut
                                                       lative solutions. Several members of Con-       fully, the DISCLOSURE Act, which is so
down the courts, perhaps this section of
                                                       g ress worked ha rd on the measu re,            badly needed, will have a chance to pass
the Report may provide some insight on
                                                       including Sen. Richard Shelby and Rep.          next year. If you agree let your U.S. Sena-
that subject.
                                                       Spencer Bachus from Alabama and their           tors know and ask them to support this
                                                       work paid off for millions of homeowners        legislation.
                                                       and businesses across the U.S. who are          Source: politico.com
                                                       threatened by flooding.
                                                       Source: Insurance Journal
                                                                                                       RePeAl oF THe HeAlTHcARe lAw
                                                                                                         In a move that was nothing more than
                                                       diScloSe AcT FAilS AGAin in THe U.S.
                                                                                                       election-year politics, the U.S. House of
                                                       SenATe                                          Representatives passed a bill, with the
                                                          The American people were the losers          voting along party lines, to repeal The
                                                       when the U.S. Senate failed to pass legisla-    Affordable Care Act. Nobody in the House,
                                                       tion that would have forced donors of           including the Speaker and others in the


                                                www.JereBeasleyReport.com                                                                        13
GOP leadership, could possibly have             ARKAnSAS Rice FARmeRS SUe TexAS                  Clayton J. Smaistrla, a lawyer with the
believed the repeal bill would ever become      comPAny oVeR HyBRid Rice                       Texas firm of Goldman, Pennebaker &
law. But that really didn’t matter since                                                       Phipps, represents the farmers in this
repeal really wasn’t what they wanted.             A group of Arkansas rice farmers have       lawsuit. It should be noted that the farmers
Instead, the motivation was just to keep the    sued RiceTec Inc., a company that produces     aren’t seeking class action status because
issue alive.                                    hybrid seed, claiming that the company         the claims vary from farmer to farmer.
                                                supplied them with seed that produced an       Source: Insurance Journal
                                                inferior crop and sometimes didn’t grow
                                                well enough to be harvested. The claims—
IX.                                             in the form of countersuits—were filed July
PRODUCT                                         16 th in response to RiceTec suing a Greene    X.
LIABILITY UPDATE
                                                County farmer who didn’t pay his bill after
                                                he claimed the Texas-based company didn’t
                                                                                               MASS TORTS
                                                reimburse him for his costs after selling      UPDATE
                                                him inferior seed. That farmer counter-
BewARe oF THe BAd Boy BUGGy                     sued, and 32 other farmers have now
                                                joined the lawsuit. The farmers claim there    Andy BiRcHField APPoinTed To THe
   Lawyers in our firm have learned that an     are two major problems with the seed:          zoloFT PSc
electric hunting vehicle, known as the Bad
Boy Buggy, has some very serious design         •	 Some	seed	is	so	defective	that	farmers	
                                                                                                  Andy Birchfield, who heads up our firm’s
flaws. Our firm is currently handling a case       were forced to replant entire sections of
                                                                                               Mass Torts Section, has been appointed to
involving a serious injury to a young person       their fields, and
                                                                                               the PSC in the Zoloft Products Liability Liti-
who rolled over a Bad Boy vehicle. The cart     •	 RiceTec’s	hybrids	as	a	whole	produce	an	    gation. U.S. District Court Judge Cynthia M.
had an electrical flaw which caused it to          inferior product.                           Rufe made the appointment on July 13 th.
surge and accelerate in a turn. Our discov-                                                    The cases in this MDL are pending in the
ery thus far has revealed some serious             The lawsuit is pending in Greene County     U.S. District Court for the Eastern District
design flaws in this vehicle. The Bad Boy       Circuit Court. The farmers allege that they    of Pennsylvania. Our firm represents
Buggy has also been subject to numerous         are seeing lower prices for their rice         over 100 individual clients against Pfizer,
recalls. Some of the recalls have not been      because RiceTec’s hybrid rice grows with       the manufacturer of Zoloft. We have filed a
completed. The vehicle has a high center of     less bran around the kernel, and it doesn’t    number of lawsuits and are currently inves-
gravity and a significant propensity to roll    mill as well as non-hybrid long-grain rice,    tigating numerous potential claims.
over. It has a very unusual steering system     which has more bran. The farmers claim            As you probably know, Zoloft is a potent
and a very poor braking system. The sus-        that the RiceTec varieties chip and don’t      antidepressant. It has been the number one
pension system is poorly designed, which        cook as well, leading to less demand and       used anti-depressant on the market. Unfor-
results in oversteer.                           lower prices. RiceTec claims on its packag-    tunately, the drug has caused a number of
   The Buggies have been recalled because       ing that its seed will bring a higher yield    birth defects. If you need more information
of defects in the steering system and a pro-    than conventional long-grain rice seed.        on the Zoloft litigation, contact Andy
pensity to suddenly accelerate. Also, there        Many farmers sought hybrid seed after       Birchfield at 800-898-2034 or by email at
has been a recall as a result of the vehicle    non-hybrid rice was contaminated with a        Andy.Birchfield@beasleyallen.com.
running away while unattended. The Bad          genetically-modified strain starting in
Boy Buggy is being manufactured currently       2006. The contamination of traditional
by BB Buggies, Inc., which is a subsidiary of   long-grain rice had a severe economic
                                                                                               An UPdATe on PlAVix liTiGATion
Tex tron. The company was for merly             impact on Arkansas rice growers, who
owned by Bad Boy Enterprises, LLC of            produce about half the nation’s rice.             Sanofi-Aventis and Bristol-Myer Squibb,
Natchez, MS. Bad Boy has been fined by the      Growers saw prices plunge after European       the manufacturers of Plavix, have received
Consumer Product Safety Commission for          nations would no longer buy U.S.-grown         several FDA warning letters regarding false
failing to give notice under the law about      rice because of the genetic modification,      and misleading statements made in promo-
incidents and defects in the vehicle and        which had not been approved for human          tional materials for the blood thinner.
injuries that were occurring.                   consumption.                                   These FDA letters clearly indicate that the
   We have learned that the Bad Boy vehicle        The contamination was linked to Bayer       manufacturers were more concerned with
has had very little design engineering and      CropScience, which produces conventional       increasing sales and profits, at the expense
safety engineering. Sadly, there have been a    long-grain rice seed. The company reached      of providing fair and accurate information
number of people hurt on Bad Boy Buggies        a $750 million settlement with rice farmers    to consumers and doctors. At the time
because of the design f laws. Fabrice           last year. The RiceTec hybrid is popular       Plavix was developed, the makers’ own
Vincent, who is with the San Francisco law      because it resists panicle blight, a disease   studies demonstrated that the drug was not
firm of Leiff Cabraser, has handled cases       that takes hold when nighttime tempera-        any better than Aspirin at preventing heart
against Bad Boy. He has knowledge of the        tures are high and can hurt conventional       attacks and strokes.
many problems these vehicles have. If you       long-grain yields. On its website, RiceTec        Through proper evaluation of clinical
have any questions about the danger associ-     bills itself as “a technology-based rice       trials, the limited benefits as opposed to
ated with this vehicle, you can contact         company focused on high-value products,        the increased risk of heart attacks, strokes,
Greg Allen or Chris Glover, lawyers in our      RiceTec is the first company to commer-        internal bleeding and even death should
firm, at 800-898-2034 or by email at Greg.      cialize hybrid rice seed in North and South    have been apparent. There has been a great
Allen@beasleyallen.com or Chris.Glover@         America.”                                      deal of Plavix litigation around the country.
beasleyallen.com.                                                                              The FDA asked the manufacturers on


14                                              www.BeasleyAllen.com
several occasions to change their mislead-            the risks associated with Pradaxa. Mean-         ing patients to higher levels of cobalt, chro-
i ng st atement s a nd stop promot i ng               while, the European Medicines Agency             mium and other metals.
unproven uses of the medication. But                  (EMA) has requested updated warnings to             While the FDA has not raised the possi-
nothing was done. Finally, the new Plavix             the Pradaxa label, including information on      bility of removing the devices from the
warning has a black box, the FDA’s most               avoiding bleeding risks when using the           market, most panelists said there were few,
severe warning.                                       medication. Although the EMA noted that          if any, cases where they would recommend
   Anyone who has taken Plavix and suf-               the drug’s benefits outweighed the risks—        implanting the devices. For decades nearly
fered a heart attack or had a family member           and that instances of fatal bleedings were       all orthopedic implants were coated with
who died after taking the drug can contact            lower than in clinical trials—it stated that     plastic or ceramic. But in the last ten years
Melissa Prickett, a lawyer in our Mass Torts          more information about the risks should be       some surgeons began to favor all-metal
Section, to find out if there is a potential          included on the label. If you need more          implants. This came after laboratory tests
claim. Melissa can be contacted at 800-898-           information contact Roger Smith at 800-          suggested the devices would be more resis-
2034 or by email at Melissa.Prickett@                 898 -2034 or by email at Roger.Smith@            tant to wear and reduce the chances of dis-
beasleyallen.com.                                     beasleyallen.com.                                location. But recent data gathered from
                                                      Source: lawyersandsettlements.com                foreign registries shows that the devices
                                                                                                       fail at a higher rate than older ceramic and
docToRS conceRned ABoUT PRAdAxA                                                                        plastic implants. There have been nearly
Side eFFecTS                                                                                           17,000 reports to the FDA of problems with
                                                      TeRBinAFine cAn cAUSe liVeR FAilURe
                                                                                                       the implants. In many cases invasive
   A new report suggests some doctors are               A few years ago, the Food and Drug             surgery is required to replace them. The
concerned about Pradaxa side effects,                 Administration issued a public health advi-      pain and inflammation reported by patients
which reportedly include an increased risk            sory about a drug called terbinafine. There      is usually caused by tiny metal particles
of death due to bleeding. Concerns have               were cases in which this drug caused liver       that seep into the joint, damaging the sur-
been raised that patients who are given               failure, including 11 deaths and t wo            rounding tissue and bone. At this juncture,
Pradaxa can suffer from uncontrollable                patients who needed liver transplants.           the long-term effects of elevated metal
bleeding, which puts them at a risk of                There are a few things consumers should          levels in the bloodstream are not clear.
death even after a relatively minor fall. A           know about terbinafine:                          However, some studies have suggested
case in point involved Loraine Franklin, a                                                             links to neurological and heart problems.
Houston resident, who died less than 24               •	 It’s	marketed—heavily,	under	the	brand	          Each year, about 400,000 Americans get
hours after falling on her kitchen floor.                name Lamisil.                                 a hip replacement to relieve pain and
Reportedly, she died from an intracranial                                                              restore motion affected by arthritis or
                                                      •	 The	drug	is	used	to	treat	toenail	fungus	     injury. Metal hips accounted for about 27%
hemorrhage that could not be stopped. Ms.
                                                         infections.                                   of all hip implants in 2010, down from
Franklin had been taking Pradaxa for atrial
fibrillation. Unlike with Coumadin, doctors           •	 The	FDA	approved	it	without	discovering	      nearly 40% in 2008. Doctors have begun
reportedly have no way of stopping the                   a potentially fatal flaw.                     turning away from the implants because of
bleeding when Pradaxa patients suffer a                                                                several high-profile recalls, including J&J’s
traumatic event. This makes something as              •	 The	FDA	still	allows	the	drug	to	be	sold.	    recall of 93,000 metal hips in 2010. Accord-
minor as a fall a life-threatening situation.                                                          ing to the FDA’s experts, patients com-
                                                        It’s sort of hard to imagine a person—         plaining of pain and other symptoms
   It was reported by Reuters in June that
                                                      being treated for a toenail fungus—and           should get regular X-rays and blood testing
some doctors are growing concerned about
                                                      then dying of liver failure! This is another     for metal levels. But as the panelists
the r isk of bleedi ng associated with
                                                      example of how bad drugs slip through the        pointed out, there are problems with the
Pradaxa, going so far as to recommend
                                                      cracks at the FDA.                               accuracy of blood tests. Also, there are dif-
thorough monitoring of patients who are
prescribed the medication. Pradaxa was                                                                 ficulties interpreting the results. Unfortu-
approved by the U.S. Food and Dr ug                                                                    nately, there are no standard diagnostic
Administration in 2010 as an alternative to           FdA PAnel SeeS liTTle USe FoR meTAl-             kits on the market that test for chromium
warfarin in the treatment of atrial fibrilla-         on-meTAl HiPS                                    and other metals.
tion. According to the Institute for Same                                                                 For patients who are not experiencing
Medication Practices, approximately 540                  Government health experts have said           pai n, an nual X-rays are su f f icient to
reports involving death linked to Pradaxa             there are few reasons to continue using          monitor their implants, according to the
were made to the FDA in 2011, with 3,781              metal-on-metal hip implants, amid growing        panelists. If the FDA ultimately follows the
serious adverse events in total. That is in           evidence that the devices can break down         group’s advice, U.S. recommendations
comparison with only 72 deaths and 1,106              early and expose patients to dangerous           would be less involved than those already
r epor t s ove r a l l l i n ked to wa r f a r i n.   metallic particles. The Food and Drug            in place overseas. Earlier this year, U.K. reg-
Although warfarin is linked to an increased           Ad m i n istr ation recent ly a sked it s        ulators recommended that all people who
risk of brain hemorrhages, it appears                 18-member panel to recommend guidelines          have the implants get yearly blood tests to
doctors are able to stop traumatic bleeding           for monitoring more than a half-million          make sure no dangerous metals are seeping
with an antidote when the patient has                 patients in the United States with metal hip     into their bodies. FDA regulators have sug-
taken warfarin.                                       replacements. As we have written in prior        gested they want to take more time to sort
   A number of lawsuits have been filed               issues, the devices were originally mar-         out the di f ferences bet ween var ious
against Boehringer Ingelheim, maker of                keted as a longer-lasting alternative to older   implants and patient groups before making
Pradaxa, alleging that patients died as a             ceramic and plastic models. But recent data      recommendations.
result of using the medication and that the           from the U.K. and other countries suggest           Women and folks who are overweight
drug maker did not adequately warn about              they are more likely to deteriorate, expos-      are among the groups that are more likely


                                               www.JereBeasleyReport.com                                                                           15
to have an implant failure. With little defin-   around implant site, pain in the groin,          Scott and her husband sued C.R. Bard
itive data on U.S. hip implants, the FDA has     thigh or hip, rash, fatigue, and in-coordina-    Medical, contending the company knew its
asked manu factu rers l i ke Joh nson &          tion. Anyone with either the Stryker Reju-       product was unsafe. After hearing the evi-
Johnson, Zimmer Holdings Inc. and Biomet         venate or A BG II modular-neck stem              dence, the jury awarded Mrs. Scott $5
Inc. to conduct long-ter m, fol low-up           components should have their case investi-       million and her husband $500,000.
studies of more than 100 metal-on-metal          gated to determine its merits. If you need          Mrs. Scott’s case has been in court for
hips on the U.S. market. It would have           more information, contact Navan Ward at          about four years and she has been under
been helpful if there had been adequate          800-898-2034 or by email at Navan.Ward@          court-ordered silence during that time. An
pre-marketing testing of these devices           beasleyallen.com.                                active runner, she got the implant to
before they hit the market.                                                                       correct a leaky bladder. But the device
   If you need more information on this                                                           began cutting her colon, and tissue grew
issue, contact Navan Ward, a lawyer in our       SmiTH & nePHew RecAllS meTAl-on-                 and continues to grow through the tiny
Mass Torts Section who is handling hip           meTAl HiP imPlAnTS                               holes in the mesh. This resulted in her
cases, at 800 -898 -2034 or by email at                                                           having eight surgeries. Mrs. Scott’s doctors
Navan.Ward@beasleyallen.com.                        Smith & Nephew recently recalled a            don’t know how many more surgeries will
Source: Associated Press                         metal liner used in its R3 Acetabular            be required.
                                                 System. Smith & Nephew cites dissatisfac-           To date almost 50,000 women have had
                                                 tion “with the clinical results of the compo-    the mesh implanted, and 650 lawsuits have
                                                 nent” a s t he re a son for t he reca l l.       been filed and are pending. The maker
STRyKeR RecAllS THe ReJUVenATe And
                                                 Approximately 7,700 R3 metal liners have         adver tised the mesh as havi ng been
ABG ii HiP imPlAnT comPonenTS
                                                 been implanted in patients worldwide             approved by the FDA. But that wasn’t true
   Stryker has recalled two modular-neck         since its introduction in 2007. This recall      since the FDA has never approved the mesh
stem hip implant components—the Rejuve-          adds the Smith & Nephew R3 metal-on-             for this use. C.R. Bard Medical stopped
nate and the ABG II. Stryker stated “poten-      metal acetabular system to a laundry list of     selling the Avaulta Mesh on July 1, 2012 in
tial risks associated with fretting and          other problematic metal-on-metal hip             the United States, saying it was because the
corrosion at the modular neck junction” as       systems we have written about, including         FDA wanted more clinical trials done. But
its reason for the recall. The fretting and      the DePuy ASR, DePuy Pinnacle with               the dangerous mesh is still being sold in
corrosion may result in adverse tissue reac-     Ultamet (meta) liner, Zimmer Durom Cup,          other countries. Mrs. Scott’s doctors say
tions or metallosis. The modular-neck stem       Wright Conserve, and Biomet M2A-Mag-             that she will continue to deal with compli-
implants subject to the recall are not metal-    num hip implant systems.                         cations from the mesh. But now this brave
on-metal hips, such as the DePuy ASR,               The R3 system is similar to the DePuy         lady will be able to be a voice for other
where both the acetabular cup and femoral        Pinnacle Acetabular System in that liners        women. She wants to help get the message
ball are made of metal. As we have stated,       made of different materials can be chosen        out to other women, hoping they won’t
in the metal-on-metal hips, metal debris         for implantation. The R3 liner is manufac-       become victims and have to go through the
caused by the friction between the metal         tured in polyethylene, ceramic and metal.        same ordeal that she has endured.
head and cup can lead to adverse tissue          It should be noted that only the R3 metal           There will likely be an appeal in the
reactions surrounding the implant.               liner is subject to the recall. The R3 Acetab-   case. But Mrs. Scott says she’s just happy to
   The modular-neck stems experience             ular System with the R3 metal liner can          no longer have the court-ordered silence,
abnormal wear at the modular-neck junc-          lead to various complications, similar to        so that she can talk about what happened
tion. A modular-neck design requires the         other metal-on-metal hip implants. These         to her and why. In fact, she wants to start a
metal femoral neck to be inserted into the       complications include pain in the groin,         support group for women. Bakersfield
metal femoral stem. In the typical hip non-      thigh or hip, swelling, fluid collection, and    lawyer Gene Lorenz and Elaine Houghton,
modular stem implant, the femoral neck           toxic levels of metal ions in patients’ blood.   a lawyer from Tacoma, represented the
and stem are one piece. The advantage of         Moreover, as stated above, research sug-         Plaintiffs. They did a very good job in this
the modular component is that surgeons           gests that this exposure to metal debris can     most significant case.
are free to select from varying neck and         cause long-term health consequences in           Source: Associated Press
stem sizes to achieve the correct fit for        some patients. Anyone with the Smith &
each client. However, the risk of modular-       Nephew R3 metal liner component should
neck stems is the “fretting and corrosion”       have their potential claim investigated to       cliPS USed in Kidney SURGeRy linKed To
where the stem and neck overlap. The             determine its merits. If you need more           deATHS
metal- on-metal neck/stem junction is            information, contact Navan Ward at 800-
under considerable stress after implanta-        898 -2034 or by email at Navan.Ward@               Surgical clips used in kidney donor
tion. The stress can cause micromotion to        beasleyallen.com.                                surgery have been linked to injuries and
occur at the junction, causing the metal                                                          de at h s, pr ompt i ng qu e s t ion s a b out
stem and neck to rub together. The “fret-                                                         warning labels by manufacturer Teleflex
ting and corrosion” at the junction can          JURy AwARdS $5.5 million in VAGinAl              Medical. A hospital in Texas recently
result in metal debris that can lead to          meSH cASe                                        settled a lawsuit with the family of Florinda
adverse tissue reactions, similar to the                                                          Gotcher, who bled to death shortly after
metal-on-metal hip implants.                        A jury in Bakersfield, California, awarded    laparoscopic surgery to donate a kidney to
   This recall was triggered by more than        a couple $5.5 million recently against C.R.      her brother in 2011. As some of our readers
sixty adverse event reports filed with the       Bard Medical, the maker of Avaulta Mesh, a       may already know, in order to perform
FDA’s MAUDE adverse event reporting              medical implant. Christine Scott has had         kidney donor surgery, surgeons must cut
system. Common symptoms of adverse               severe complications ever since she had a        the renal artery and then close it up. Some
soft-tissue reactions include swelling in and    vaginal mesh surgically implanted. Mrs.          surgeons use staples and others use surgi-


16                                               www.BeasleyAllen.com
cal clips to close the artery. Although the         The Plaintiffs allege that “because of         patent dispute. The suit, filed by Mforma-
surgical clips are used in many types of sur-    Defendants’ scheme to delay and suppress          tion Technologies, Inc., was over a remote
geries, they can slip off the renal artery and   generic Lipitor competition, in whole or in       management system for wireless devices.
lead to internal bleeding.                       part, Plaintiffs have paid hundreds of mil-       This verdict, returned in a San Francisco
   Between 2001 and 2005, three deaths and       lions of dollars more for ator vastatin           federal court, comes at a bad time for RIM,
12 injuries were reported to have been           calcium than they would have paid.” The           whose stock has fallen more than 70% in
caused by use of the clips in kidney surgery.    Plaintiffs are seeking triple damages and         the past year. Customers have moved to
In April 2006, Teleflex sent letters to hospi-   other remedies. The lawsuit was filed in          Apple’s iPhone and a number of devices
tals and added a contraindication on its         federal court in Trenton, New Jersey.             using Google Inc.’s Android software. As a
instructions, but failed to add warnings         Source: Reuters                                   result, Blackberry sales have suffered.
about use in kidney transplant surgery on its                                                         The jur y directed RIM to pay an $8
packaging or on the clips themselves. A                                                            royalty for every BlackBerry device con-
number of surgeons have sought these                                                               nected to RIM’s enterprise server software,
                                                 FAceBooK And yAHoo SeTTle lAwSUiTS
warnings. In May 2011, the FDA and Health                                                          which brings the total award to $147.2
Resources and Services Administration               Facebook Inc. and Yahoo Inc. have              million. The verdict only covers U.S. sales
issued a joint safety communication that said    agreed to forge a broad Internet advertising      through the date of trial, and not future or
there had been three more kidney-related         and licensing partnership, putting to rest        foreign damages. According to Research In
deaths since the 2006 contraindication.          their dueling patent lawsuits. The pact           Motion, it has worked hard to develop its
   The agencies reminded urologists, sur-        settles accusations of technology patent          leading-edge BlackBerry technology.
geons and hospital staff not to use the          infringement that began under the stew-              Mformation, based in Waterloo, Ontario,
Weck Hem-o-lock Ligating Clips for laparo-       ardship of ex-Yahoo CEO Scott Thompson.           sued RIM in 2008, bringing claims on a
scopic living-donor kidney transplant sur-       As you may recall, Thompson was ousted            patent for a process that remotely manages
geries. University Medical Center in Texas,      after a scandal erupted over inaccuracies in      a wireless device over a wireless network.
which settled with the Gotcher family, had       his resume. According to Reuters, interim         According to its web site, Mformation helps
received the letters in 2006 at a time when      CEO Ross Levinsohn is now the front               corporations manage their smart phone
the hospital did not purchase the clips. By      runner for the top job at Yahoo. Facebook’s       inventory. The company also says it helps
the time it purchased them years later, the      and Yahoo’s strategic deal—which expands          telecoms operators, such as AT&T and
letters appeared to have been misplaced          an existing multi-year tie-up that involved       Sprint, with remote fixes and upgrades for
and/or forgotten.                                mainly allowing Facebook users to share           users’ gadgets. RIM claimed that Mforma-
Source: Lawyers USA Online                       Yahoo content—encompasses cross-licens-           tion’s patent claims are invalid because the
                                                 ing of patents and collaboration on adver-        processes were already being used when
                                                 tising offerings during major media events        Mformation filed its patent application.
                                                 such as the Olympics and the annual Super         The case, filed in the U.S. District Court,
XI.                                              Bowl.                                             Northern District of California, is Mforma-
BUSINESS                                            Yahoo’s lawsuit had invited some criti-        tion Technologies Inc. vs. Research in
                                                                                                   Motion Ltd.
                                                 cism that it was trying to force a settlement
LITIGATION                                       from a company about to go public in what         Source: Reuters
                                                 has been described as “Silicon Valley’s
                                                 largest coming-out party.” Yahoo sued Face-
PFizeR SUed By ReTAileRS FoR GeneRic             book in March, claiming the number one            APPle clAimS $2.5 Billion dAmAGeS in
liPiToR delAy                                    social networking company infringed ten           SAmSUnG PATenT cASe
                                                 patents including several that cover online
  Five big U.S. retailers have filed an anti-    advertising technology. In its lawsuit,             Apple Inc., which has been pretty active
trust lawsuit against Pfizer Inc. and India’s    Yahoo said Facebook was considered “one           in the courts lately, has filed suit against
Ranbaxy Laboratories Ltd, accusing the           of the worst performing sites for advertis-       Samsung Electronics Co. The suit, over
companies of conspiring to delay sales of        ing” prior to adopting Yahoo’s ideas. Face-       patents for technology used in smart-
generic versions of Lipitor, the best-selling    book, which went public in May, filed a           phones and tablets such as the iPhone and
drug in history. Walgreen Co., Kroger Co.,       countersuit of its own against Yahoo a            iPad, seeks $2.525 billion in damages. The
Safeway Inc., SuperValu Inc. and HEB             month later. It called Yahoo short-sighted        world’s largest consumer electronics com-
Grocery Co., the Plaintiffs in the suit, have    for its decision to prioritize “litigation over   panies were scheduled to start a trial on
accused the Defendants of running an             innovation.” Reportedly, Facebook has             July 30th in U.S. District Court in San Jose,
“overarching anticompetitive scheme” to          been very active beefing up its patents           California. Since this issue went to the
keep generic versions of the cholesterol         arsenal. In April, it announced a deal to pay     printer on that same day, we don’t know if
drug off the market until November 30,           Microsoft Corp. $550 million for hundreds         the trial started or if the matter was settled.
2011, 20 months after the original patent        of patents that originated with AOL.              In this suit, Apple accused Samsung of
expired. Plaintiffs allege that the Defen-       Source: Claims Journal                            infringing its patents by making its popular
dants did this by obtaining a fraudulent                                                           Galaxy phone and computer tablets “work
patent, engaging in sham litigation, enter-                                                        and look” like Apple products, enabling the
ing a price-fixing agreement to delay                                                              South Korean company to overtake it as the
cheaper generics, and entering arrange-          $147.2 million VeRdicT in wiReleSS
                                                                                                   world’s largest maker of smart phones.
ments with pharmacy benefit managers to          PATenT lAwSUiT
                                                                                                     Samsung countered by saying that it
force retailers to buy more Lipitor, whose                                                         simply developed its own “unique” prod-
                                                   A California jury returned a verdict of
chemical name is atorvastatin calcium.                                                             ucts in a bid to “best the competition.”
                                                 $147.2 million last month against Research
                                                 in Motion Ltd. in a lawsuit involving a           Samsung says Apple actually owes it money


                                           www.JereBeasleyReport.com                                                                           17
for using its patented technology. Apple        Schneiderman. The victims include New            U.S. mutual funds through the Birmingham
alleged that Samsung owes “substantial          York Law School, Bard College, Harlem            bank.
monetary damages” because it illegally          Children’s Zone, Homes for the Homeless              Regions claimed that the statute of limi-
“chose to compete by copying Apple.”            and the Metropolitan Council on Jewish           tations had run on the claims. The invest-
Apple said Samsung has been “unjustly           Poverty. The Attorney General called the         ment plans were sold from 1995 through
enriched” by an undisclosed amount—pre-         agreement “a victor y for justice and            2008. But the judge in the case disagreed
sumably $2 billion—and has deprived             accountability,” and had this to say about       with Regions, ruling that the starting date
Apple of $500 million of profit and $25         the settlement:                                  for the statute of limitations was September
million of reasonable royalty damages.                                                           2009, when Regions settled with the SEC.
Apple still plans to pursue a permanent           Many New Yorkers entrusted their                   The lawsuit, seeking class-action status
i nju nction to stop f utu re violations.         investments to Mr. Merkin, who then            and repayment of money invested, says
Samsung said Apple was trying “to stifle          steered the money to Madoff while              Regions performed a wide variety of tasks
legitimate competition and limit consumer         receiving millions of dollars in man-          in support of the unregistered investment
choice to maintain its historically exorbi-       agement and incentive fees. By                 plan. Those tasks included, the suit alleges,
tant profits.”                                    holding Mr. Merkin accountable, this           the use of Regions’ name and logo on sales
                                                  settlement will help bring justice for         materials, production of a marketing video,
Source: Insurance Journal
                                                  the people and institutions that lost          training to USPT sales representatives, and
                                                  millions of dollars.                           sharing fees with USPT. Regions, based in
                                                                                                 B i r m i n g h a m , op e r a t e s a b ou t 1,70 0
APPle PAyS $60 million To SeTTle cHinA            Merkin, a former NASDAQ chairman,
                                                                                                 branches in 16 states.
iPAd TRAdemARK diSPUTe                          had managed investments for hundreds of
                                                investors in four funds: Ariel Fund Ltd.,        Source: The Birmingham News
   In another case, Apple Inc. has paid $60     Gabriel Capital L.P., Ascot Fund Ltd. and
million to Proview Technology (Shenzhen)        Ascot Partners L.P. According to the Attor-
to end a dispute over the iPad trademark in     ney General’s office, many of the investors
China that saw the world’s most valuable        are New York residents and charitable            XIII.
technology company engaged in a pro-            organizations. Most investors will get more      INSURANCE AND
tracted legal tussle with a near-bankrupt       than 40% of their losses, but only up to $5
Chinese firm. The lawsuit had hampered          m i l l ion. T hose who lost more cou ld         FINANCE UPDATE
some sales and delayed the launch of the        receive additional payments, depending on
new iPad in China. Prior to the launch,         the number of investors who seek reim-
Proview Technology, the Chinese company,        bursement.                                       BAnKS & inSUReRS collUde To
requested Chinese authorities in a number       Source: Washington Post                          oVeRcHARGe on FoRce-PlAced
of Chinese cities to order re-sellers to take                                                    inSURAnce
all iPads off their shelves. The court-medi-
ated settlement, announced on the website                                                           Lawyers in our firm are involved in cases
                                                FloRidA SUiT AGAinST ReGionS cAn                 against major banks and insurance compa-
of the Higher People’s Court of Guangdong
                                                PRoceed                                          nies related to the placement of “force-
province, will allow Apple to get on with
selling its popular tablet PC in one of its                                                      pl aced” proper t y i n su r a nce a ga i n st
                                                   A Florida lawsuit against Regions Bank,
most important markets. Obviously, China                                                         homeowners and other owners of real
                                                which seeks class-action status over the
is a very important market for Apple and                                                         property. Standard mortgage loans require
                                                bank’s partnership with an unregistered
this settlement is good for the company.                                                         borrowers to purchase and maintain prop-
                                                investment firm, can move forward as the
Source: Insurance Journal
                                                                                                 erty insurance (typically hazard, f lood,
                                                result of a ruling that the statute of limita-
                                                                                                 and/or wind coverage) on the secured
                                                tions had not run. A judge in U.S. District
                                                                                                 property to protect the lender’s interest in
                                                Court in Miami ruled that the suit can
                                                                                                 the property. To ensure that the lender’s
                                                proceed on behalf of 14,000 investors who
XII.                                            put up about $250 million through a
                                                                                                 interest in the secured property remains
                                                                                                 protected, standard mortgages allow the
AN UPDATE ON                                    company named U.S. Pension Trust Corp.
                                                                                                 lender or third-party servicer to “force-
                                                that partnered with Birmingham-based
SECURITIES                                      Regions. U.S. Pension Trust has already
                                                                                                 place” insurance when the owner fails to
                                                                                                 maintain the property insurance. Any
LITIGATION                                      been sanctioned after being found guilty of
                                                                                                 amounts disbursed for the procurement of
                                                unlawfully engaging in the sale of securi-
                                                                                                 such insurance, which is for the benefit of
                                                ties as an unregistered dealer. It had to pay
                                                                                                 the lender, are passed on to the borrower
                                                back $62 million to investors and forfeit
HedGe FUnd mAnAGeR To PAy $405                                                                   and charged to the borrower’s escrow
                                                $50 million in civil penalties.
million To mAdoFF VicTimS                                                                        account and become additional debt owed
                                                   In 2009, Regions agreed to pay $1
                                                                                                 by the borrower.
  A settlement announced recently will          million to settle a Securities and Exchange
                                                                                                    Force-placed insurance is always more
result in $405 million being paid to victims    Commission case over the matter. Regions
                                                                                                 expensive than standard insurance cover-
of Bernard Madoff’s historic investment         is defending the Florida suit which seeks
                                                                                                 age, even costing up to ten times more than
scam. The clients of hedge fund manager J.      class-action status for the bank’s part in the
                                                                                                 standard policies purchased by a borrower.
Ezra Merkin will receive $405 million from      unregistered U.S. Pension Trust Corp.
                                                                                                 Lenders and servicers claim that the higher
the settlement. New York state will get $5      investment program. It’s alleged in the suit
                                                                                                 cost of force-placed insurance derives from
million to cover the cost of the settlement     that Regions was the trustee of the plan,
                                                                                                 purpor tedly legitimate administrative
worked out by Attorney General Eric             which swept up investment money mostly
                                                                                                 costs, the costs of procuring insurance on
                                                in Latin American nations for investment in

18                                              www.BeasleyAllen.com
property without individual underwriting,
and the higher risks associated with insur-
                                                  expensive subprime loans from 2004 to
                                                  2007, and that mortgage brokers through
                                                                                                   XV.
ing properties that are not insured by the        2009 added charges that caused minority          PREDATORY
borrower. Borrowers, on the other hand,
allege that the cost of force-placed insur-
                                                  borrowers to pay higher fees, costs and
                                                  interest than similar white borrowers. It
                                                                                                   LENDING
ance is artificially inflated to cover kick-      appears senior officials knew that this
backs, self-dealing, and secret profits           wrongdoing was occurring.
shared between lenders, servicers, and the           The settlement with Wells Fargo is the        U.S. deFenSe dePARTmenT GeTS ToUGHeR
providers of force-placed i nsu r ance.           second largest fair-lending accord ever          on ABUSiVe lendinG
“Behind banks’ servicing insurance prac-          reached by the Justice Department. The
tices lie conflicts of interest that align ser-   largest was a record $335 million paid by           I am pleased to report that the U.S.
vicers and their insurer partners against         Bank of America Corp. last year. Country-        Department of Defense will strengthen
borrowers and investors,” writes Jeff             wide, acquired by Bank of America in             rules designed to curb abusive lending to
Horowitz in a November 9, 2010, article           2008, assessed higher fees and interest          service members. This comes as Congress
available at www.americanbanker.com.              rates on more than 200,000 black and His-        considers changes to a 2006 law that regu-
Diane Thompson, of counsel for the                panic borrowers. The Justice Department          lates small loans. The Senate Armed Ser-
National Consu mer Law Center, was                investigation of Wells Fargo uncovered           vices Committee has approved
quoted as having told Horowitz:                   “systemic discrimination” in the bank’s          amendments to the Military Lending Act as
                                                  lending practices. About 34,000 borrowers        part of its annual review of defense policy.
  There’s no arm’s length transaction             in total were affected.                          One of the amendments would tighten the
  here, and that creates all sorts of                In some cases, Wells Fargo steered many       definition of payday loans to cover other
  incentives for the servicer to force-           borrowers into adjustable-rate mortgages         high-interest products. The changes would
  place excessive insurance and over-             with so-called teaser rates when they quali-     also require the Pentagon to study and reg-
  charge consumers for policies that              fied for more standard loans, such as those      ulate installment loans aimed at members
  provide minimal benefit. Servicers              with 30-year fixed rates, the U.S. said in its   of the military.
  and insurers have turned this into a            complaint. The bank created financial               In written testimony to the Senate
  gravy train.                                    incentives by sharing the higher revenue         Banking Committee, Colonel Paul Kantwill
                                                  with employees and brokers, the govern-          said: “The legislation has been extremely
   Lawyers in our firm are involved in litiga-                                                     effective in stamping out abuses involving
tion alleging that banks and insurers have        ment said. The settlement ends litigation
                                                  filed in Illinois and a complaint from Penn-     these types of credit.” According to Col.
engaged in unlawful, abusive practices                                                             Kantwill, who is director of legal policy in
with respect to force-placed insurance,           sylvania, according to the bank. Wells
                                                  Fargo also agreed to commit $50 million in       the Department of Defense’s Office of the
including: providing force-placed insur-                                                           Undersecretary for Personnel and Readi-
ance at unreasonably high costs to borrow-        direct payments for down-payment assis-
                                                  tance in eight U.S. regions where the U.S.       ness, the Department may publish advance
ers; engaging in “kickbacks” from insurers                                                         notices of proposed rulemaking once it is
to banks in the form of purported fees, pay-      alleges the discrimination practices had a
                                                  significant impact.                              clear what changes “may be included” in
ments, commissions, and rebates; and                                                               the final legislation.
forcing borrowers to pay for unnecessary          Source: MSNBC
                                                                                                      Congress passed the law in response to
and duplicative insurance. To learn more,                                                          complaints from the Pentagon that so-
or if you or a family member believe you                                                           called payday loans were often harmful for
have a force-placed insurance claim,              idAHo mAn AwARdS $888,000 in                     service members and affected troop readi-
contact Archie Grubb or Bill Hopkins,             diScRiminATion lAwSUiT                           ness. The law effectively banned payday
lawyers in our firm at 800-898-2034 or by                                                          lending to members of the military by limit-
email at Archie.Grubb@beasleyallen.com              A federal ju r y has awarded nearly            ing the loans to an interest rate of 36%.
or Bill.Hopkins@beasleyallen.com.                 $888,000 in damages to a man who said his        Payday loans are a form of short-term, high-
                                                  Idaho employer discriminated against him         interest credit in which borrowers leave a
                                                  because he is Hispanic. Ricky Garcia began       post-dated check in return for a loan that is
                                                  working for PSI Environmental Systems in
XIV.                                              Twin Falls, Idaho, in 2005. He left to take
                                                                                                   due a few weeks later. Annual interest rates
                                                                                                   can rise as high as 512%, according to the
EMPLOYMENT AND                                    another job in 2007, and filed a complaint       Consumer Financial Protection Bureau.
                                                  with the Idaho Human Rights Commission
FLSA LITIGATION                                   contending that company officials passed
                                                                                                      Advocacy groups, including the Con-
                                                                                                   sumer Federation of America, have con-
                                                  him over for raises and told him that His-       tended with good reason that some lenders
                                                  panic workers would never be promoted.           have evaded the law by redefining their
wellS FARGo SeTTleS BiAS lAwSUiT                  In February 2009, the commission found           products without lowering the interest
                                                  PSI had discriminated against Garcia, and a      rates. Holly Petraeus, assistant director of
  Wells Fargo & Co., the largest U.S. mort-       federal jury has now agreed.                     the Consumer Bureau for Servicemember
gage lender, will pay $125 million and set        Source: Insurance Journal                        Affairs, said in written testimony:
up a $50 million assistance fund to settle
U.S. allegations that it discriminated against                                                       I hear from financial counselors on
minority borrowers. The bank says it will                                                            the installations about the preva-
stop using outside brokers to create mort-                                                           lence of payday-like products that
gages. The accord settles accusations that                                                           are specifically marketed to military
Wells Fargo put creditworthy Hispanic and                                                            families—often with patriotic-sound-
African-American borrowers into more                                                                 ing names and the American flags


                                            www.JereBeasleyReport.com                                                                        19
  on the website to match, but with a             in a statement that the settlement will be      VeRmonT SKi ReSoRT And SKieR ReAcH A
  sky-high interest rate. And the Inter-          presented to Judge King for preliminary         SeTTlemenT
  net is full of ‘military loans,’ some           approval later this summer. Bobby and his
  outright scams and others with very             firm did a very good job in this case. The         A Vermont ski resort has reached a settle-
  high interest rates.                            case is In re Checking Account Overdraft        ment with a skier who said the resort was
                                                  Litigation, 09 -md- 02036, U.S. District        at fault for his injuries on a trail and during
   Con su mer a nd defen s e per s on nel         Court, Southern District of Florida (Miami).    a rescue. Alfred Rocks sued Killington Ski
groups, including the Consumer Federation                                                         Area, contending that it failed to maintain a
                                                  Source: Bloomberg
and the Military Officers Association of                                                          trail in a “reasonably safe condition” when
America, have written senators supporting                                                         Rocks suffered leg fractures during a fall in
the proposed changes. Service members                                                             2009. The 53-year-old Rocks said he suf-
and their families must be protected from         XVI.                                            fered additional injuries when a ski patrol
abuses that undermine their welfare and
morale. The more I learn about how the            PREMISES                                        toboggan he was strapped into f lipped
                                                                                                  over. The settlement was reached as a U.S.
predator y lenders operate, the more I            LIABILITY UPDATE                                District court jury in Rutland was prepar-
realize they are only interested in their                                                         ing for the second day of trial in the
profits and care very little about their cus-                                                     lawsuit. The amount of the settlement is
tomers. I never will forget a memo we                                                             confidential.
obtained through discovery in a case from         $7.5 million SeTTlemenT FoR VicTim’S
a company supervisor that read, “Get them         FAmily in PRoPAne exPloSion                     Source: Claims Journal

(the customers) in debt and never let them
                                                     The family of a Blackstone electrician
get out.” That was exactly the way the
                                                  who was killed in a propane blast two           miSSiSSiPPi HiGH coURT THRowS oUT
lender in that case operated and unfortu-
                                                  years ago has entered into a $7.5 million       JURy AwARd
nately so do many others.
                                                  settlement. William Nichols, 46, was
Source: Business Week                             working on a heating and air conditioning         The Mississippi Supreme Court has
                                                  system in Norfolk, Va., in July 2010 when a     thrown out a $2.5 million judgment for a
                                                  propane tank exploded without warning.          Jackson woman who lost sight in one eye
Pnc BAnK will PAy $90 million To                  The blast was traced to a gas leak that         when purse-snatchers beat her in a super-
ReSolVe oVeRdRAFT lAwSUiT                         could not be detected because there was         market parking lot. In 2009 a Hinds County
                                                  no odorant, which is the additive that          jury found The Kroger Company was negli-
  PNC Bank, a unit of PNC Financial Ser-          allows folks to smell leaking gas. The          gent in the 2007 attack on Linda Knox.
vices Group Inc., will pay $90 million to         lawsuit alleged that EnergyUSA under-filled     One of Knox’s attackers was sentenced to
settle a lawsuit accusing it of improperly        a new propane tank, causing the chemical        25 years in prison; prosecutors dropped
manipulating customers’ debit card trans-         odorant which had been added to fade.           charges against the other, who cooperated
actions to generate excess overdraft fees.        This made the leaking propane odorless          with them. Ms. Knox’s lawsuit contended
The lawsuit, part of litigation involving         and undetectable. Smolinsky Plumbing and        that the store should have had an armed
more than 30 banks, is pending before U.S.        Heating allegedly failed to tighten a con-      guard in the parking lot, rather than just
District Judge James Lawrence King in             nection that led to the leak. Investigators     inside the store.
Miami. The customers claimed in the               sa id t he propa ne h ad “v i r t u a l ly no     In a 4-3 decision, Presiding Justice Jess
lawsuit that PNC Bank’s computer system           odorant.”                                       Dickinson wrote that Ms. Knox did not
resequenced the actual order of debit card           Nichols suffered burns over 80% of his       prove that Kroger had a duty to place an
and ATM transactions by posting them in           body. His family and two other people who       armed guard in its parking lot. Justice Dick-
highest-to-lowest dollar amount instead of        were injured in the explosion reached the       inson said Kroger could not be found liable
the actual order in which they were initi-        settlement with Energy USA and Smolinksy        for the “unforeseeable attack” on Knox. He
ated. That led to excess overdraft fees.          Brothers Plumbing for a total of $22.5          wrote:
                                                  million. The state fire marshal’s office is
•	 The	 PNC	 isn’t	 the	 only	 bank	 that	 has	                                                     But unless Kroger was on notice of
                                                  now proposing new regulations including
   done this sor t of thing and gotten                                                              an atmosphere of violence in its
                                                  training for anyone handling propane—and
   caught. Other banks have reached settle-                                                         parking lot, it had no duty to place
                                                  that includes those who use gas grills.
   ments:                                                                                           an armed guard there. And because
                                                  These regulations should increase public
•	 Toronto-Dominion	 Bank,	Canada’s	sec-          awareness about the potential safety threat       Knox failed to present sufficient evi-
   ond-largest bank, entered in May a pre-        of un-odorized propane in commercial and          dence on this point, we must reverse
   liminary agreement to pay $62 million to       residential settings. Leaking propane gas,        and render.
   settle overdraft claims.                       especially when the odorant fades out of
                                                                                                     Justice Leslie King, in a dissent joined by
                                                  the gas, can cause a serious explosion.
•	 In	 April	 Citizens	 Bank	 agreed	 to	 pay	                                                    two other Justices, said the Court record
                                                  Marc L. Breakstone, a Boston lawyer with
   $137.5 million.                                                                                showed there had been other incidents in
                                                  Breakstone, White & Gluck, represented
                                                                                                  the parking lot of this Kroger store. There
                                                  the Nichols’ family in this case which was
•	 In	February	JPMorgan	Chase	&	Co.,	the	                                                         was testimony at trial that Kroger had secu-
                                                  filed against the two companies in January
   biggest U.S. bank by assets, reached an                                                        rity personnel on duty, but that guards in
                                                  2011. He did a very good job for his clients.
   agreement for $110 million.                                                                    the parking lot were unarmed. Justice King
                                                  Source: CBS News
                                                                                                  wrote in his dissent:
  Robert C. Gilbert, a lawyer with the
Florida firm of Grossman Roth, represented                                                          Whether this was sufficient to give
the customers in the PNC litigation. He said                                                        Kroger notice of an atmosphere of


20                                                www.BeasleyAllen.com
  violence and whether Kroger owed a            Incidentally, GFI breakers are also required       it’s received reports of more than 2,100
  duty to Knox and other patrons to             for hot tubs and swimming pools.                   incidents involving play yards, including 60
  utilize the armed security personnel             Four other children were killed in a pair       fatalities and 170 injuries, between Novem-
  in the parking lot is a question of           of separate electrocution incidents at lakes       ber 2007 and December 2011. The new
  fact to be resolved by the jury. By           in Tennessee and Missouri. Nathan Lynam,           standards go into effect six months after
  returning a verdict for the Plaintiff,        11, and Noah Winstead, 10, who were                the final rule is published in the Federal
  the jury clearly found (there was)            swimming companions at Cherokee Lake,              Register.
  such a duty.                                  located outside Knoxville, were electro-           Source: Claims Journal
                                                cuted on July 4th. It’s believed that a faulty
  Two Justices did not participate in the       houseboat electrical cord was the problem
ruling. Perhaps that gives some hope for        there. The boys had been swimming from
future cases of this sort in Mississippi. But   one houseboat to another. Investigating            XVII.
these cases are always challenging and this
decision does nothing to change that
                                                officers believe that the metal of the boat
                                                was energized. The children were electro-
                                                                                                   WORKPLACE
reality.                                        cuted when they touched the metal ladder           HAZARDS
Source: Claims Journal                          to get in the boat.
                                                   Seven other people were also injured by
                                                the electricity in Cherokee Lake—four              BP AGReeS To PAy $13 million FoR
er To PAy $1 million in womAn’S deATH           adults and three children—and were taken           TexAS ReFineRy PenAlTieS
                                                to area hospitals for medical attention.
   A settlement has been reached by the         They were trying to help the two boys, and             Oil giant BP has agreed to pay an addi-
family of a woman killed in a drug-related      in doing so they put their own lives on the        tional $13 million to settle charges of
shooting. The family will receive $1 million    line. It appears there were serious prob-          failing to fix safety violations at its Texas
from the property owner in the wrongful         lems with the marina’s electrical system.          City oil refinery after a 2005 explosion
death lawsuit. Danielle Melton, who was 19      Tennessee state officials have given the           k i l l e d 15 wo r ke r s. T h e s e t t l e m e nt
years old, was an innocent bystander who        marina 30 days to correct these problems. I        announced last month is the latest move
was gunned down August 20, 2011, as she         understand there were some 20 electrical           toward resolving hundreds of violations at
sat outside an apartment complex.               issues that needed corrective action.              the plant found by the federal Occupa-
   It was alleged in the lawsuit that the          Two other children, who were swim-              tional Safety and Health Administration. BP
property owner failed to provide security       ming in a Missouri lake, also were electro-        had already paid $50 million in 2010 to
at the crime-ridden apartment complex           cuted on the holiday. Alexandra Anderson,          settle some of the OSHA violations. The
even though it was in a high crime area.        13, and his brother Brayden, 8, were killed        government had been seeking a total of
Two men were killed in the shooting and a       while swimming near a private dock in the          $80 million in penalties, the largest fine in
young infant recovered from a gunshot to        Lake of the Ozarks. There were a number            its history.
the head. The lawsuit was filed by Michelle     of sources for the electricity at the dock. At         The settlement resolves all but 30 of
Rockett, the victim’s mother, who is the        press time, we had not learned exactly             more than 700 violations discovered at the
guardian of the victim’s twin boys. Fred        what caused these deaths.                          plant in 2009. The rest are expected to be
Tromberg represented the family and did a          Electricity can’t be seen and it can be         litigated or settled in the future. Of the
very good job.                                  destructive. It’s extremely important to           remaining citations, 110 were withdrawn
                                                have expert assistance when installing any         and most of the others were reclassified as
                                                type equipment at any location when water          less severe under the settlement. The fines
mUlTiPle elecTRocUTionS occURRed                is involved. It’s also essential to maintain all   were a s ses sed a f ter OSH A sa id t he
in JUly                                         systems properly after they are installed          company failed to comply with the original
                                                with scheduled maintenance and monitor-            terms of a 2005 agreement to take correc-
  There were five tragic occurrences            ing. It appears these five deaths could have       tive measures following the deadly blast
reported last month, in which youngsters        been prevented.                                    four years earlier. OSHA also said BP had
were electrocuted while being engaged in        Sources: ABC News and Orlando Sentinel             committed hundreds of new violations
recreational pursuits. The first involved an                                                       when it failed to follow industry practices
11-year-old girl who was electrocuted in                                                           in its pressure relief safety systems.
Florida while playing mini golf at a south-     GoVeRnmenT APPRoVeS new PlAy yARd                      Under the terms of the settlement, BP
west Orange County time share. The child,       SAFeTy STAndARdS                                   must file a report by the end of the year
Ashton Jojo, was electrocuted when she                                                             showing that it has corrected all safety vio-
reached into a small pond, which had a             The Consumer Product Safety Commis-             lations. Overall, the company has paid
fountain, to retrieve her golf ball at the      sion has approved new federal mandatory            more than $2 billion to settle lawsuits and
Orange Lake Resort. Code-enforcement offi-      safety standards for children’s play yards.        fines stemming from the 2005 explosion. It
cers inspected the mini-golf “water feature”    The requirements will include latches and          also has spent more than $1 billion on
after the incident and found a number of        locks that prevent the play yard from              safety and infrastructure improvements at
possible electrical violations. Electrical      folding on a child when it is in use and           the Texas City refinery and another $500
breakers had apparently been improperly         minimum height requirements so children            million to make fixes under a 2010 settle-
replaced. Ground-fault interrupter breakers     can’t get out on their own. The play yards         ment agreement with OSHA. BP is the
are required for such water features that       will have to be tested to ensure they are          second largest producer of oil and gas in
have submerged pumps. But it appears in         stable and that a child can’t be trapped by        the United States.
this case that non-GFI breakers were used.      an accessory attachment, in a flimsy floor             Brent Coon, a Texas lawyer, represented
                                                or a top rail that folds down. The CPSC says       workers and families who sued BP after the


                                          www.JereBeasleyReport.com                                                                                 21
explosion. He com mended OSH A for              pay minimum wage, failing to provide pay          about which the employer knew or should
putting additional pressure on BP to speed      statements and making improper wage               have known. OSHA’s regional emphasis
up safety improvements at the refinery. But     deductions for room and board and care for        programs are intended to address hazards
Brent said the Justice Department’s failure     34 workers.                                       or industries that pose a risk to workers in
to prosecute management personnel indi-            Interestingly, the men lived in a dilapi-      a particular jurisdiction. The grain han-
vidually “has allowed the company to act        dated bunkhouse in Atalissa while working         dling industry is a high-hazard industry in
with less haste than it would have other-       at West Liberty Foods. A federal judge has        which workers can be exposed to many
wise.” He added:                                ordered Henry’s Turkey Service to pay             serious and life-threatening hazards. Some
                                                $1.76 million for similar violations. A           of the hazards include fires and explosions
  BP unjustifiably failed to comply             lawsuit filed by the Equal Employment             from grain dust accumulation, suffocation
  with well-established industry stan-          Oppor tu n it y Com m ission remai ns             from engulfment and entrapment in grain
  dards for safe operations in process          pending.                                          bins, falls from heights, and crushing inju-
  safety management in order to save                                                              ries and amputations from equipment.
                                                Source: Insurance Journal
  money, and at some point manage-
                                                                                                  Source: Claims Journal
  ment itself should be forced to
  answer for it.
                                                loUiSiAnA comPAny ciTed FoR woRKeR’S
  One of the main sticking points until         deATH                                             XVIII.
now had been BP’s failure to install a
system for shutting down or controlling           Federal regulators have cited Migues            TRANSPORTATION
any leaks or other incidents at the refinery.   Deloach Company, a Louisiana general con-
The company has now begun installing a          tracting company, for alleged workplace
sophisticated program that meets OSHA’s         safety violations stemming from an employ-        leGiSlATion inTRodUced THAT woUld
expectations.                                   ee’s death. Jonathan Kyle West, a 23-year-
                                                                                                  BlocK RenTAl oF RecAlled cARS
Source: wtvm.com                                old worker, was electrocuted at a Fort Polk
                                                construction site in January. OSHA con-             We wrote last month about a bill to be
                                                cluded that company super visors and              introduced in Congress that would keep
                                                employees failed to cut off power to over-
loS AnGeleS JURy AwARdS $8.5 million                                                              rental car companies from renting out vehi-
                                                head electricity lines or insulate the lines at   cles that have been recalled because of
To FiRed ReFineRy woRKeR
                                                the worksite. The victim was said to have         safety risks. The bill, “The Raechel and Jac-
   A Los Angeles jury awarded $8.5 million      been in a hydraulic lift basket when it           queline Houck Safe Rental Car Act of 2012,”
recently to a woman who was fired from a        touched an electrical line.                       has now been introduced in the U.S. House
Wilmington refinery after being injured on      Source: Claims Journal                            of Representatives. The bill, named after
the job. The jury found in favor of Michele                                                       the two girls who died in a recalled car
Daniel, who began working at the Tesoro                                                           rented to them by Enterprise, would
refiner y in 1989, and who was a shift          TexAS-BASed Feed mill Fined $45,000               require companies to ground vehicles in
supervisor when she hurt her knee in            FoR SAFeTy HAzARdS                                their fleet that are under safety recall until
2005. Ms. Daniel was placed on extended                                                           they are repaired. Rep. Lois Capps, D.-Cali-
leave by her employer and later fired. Her         OSHA has cited Southwest Feed Mills            fornia, one of the sponsors of the bill, had
lawsuit claimed the company should have         Inc. with 12 serious safety violations for        this to say:
given her back her original job or another      exposing workers to combustible dust,
that would accommodate her disability.          falls, unguarded machines and other                 If a recall notice has been issued for
Tesoro’s lawyers claimed Ms. Daniel was         hazards at the company’s Dallas facility. A         a rented a car, that car should be
fired in 2009 when her condition didn’t         December 2011 inspection was initiated as           taken off the road until it’s fixed—
improve and she either couldn’t perform or      part of OSHA’s Regional Emphasis Program            it’s that simple. Passing this straight-
was unqualified for the jobs she sought.        on Grain Handling Facilities. The proposed          forward bill will protect the public’s
The jury rejected those claims and found in     penalties total $45,000.                            safety and ensure that what hap-
favor of the fired worker.                         The violations include failing to provide        pened to Raechel and Jacquie Houck
                                                fall protection equipment, train workers on         will never happen again.
Source: Claims Journal
                                                the use of powered industrial trucks,                We wrote last month about the back-
                                                ensure that moving machinery parts are            ground events leading up to this bill being
                                                guarded, ensure receiving-pit feed open-
iowA coURT UPHoldS $1.2 million Fine                                                              introduced, but some of it needs to be men-
                                                ings are covered by grates to prevent             tioned again. Cally Houck, the mother of
oVeR diSABled woRKeRS’ PAy
                                                workers from falling into the pit, ensure         Raechel and Jacquie, began pushing for leg-
  An appeals court has upheld a $1.2            that the bucket elevator is not jogged to         islative changes after her two daughters,
million state fine for labor violations com-    prevent igniting combustible materials,           aged 24 and 20, were killed in 2004. The
mitted by a Texas labor broker who under-       en su re t h at elec t r ica l equ ipment i s     Chr ysler PT Cruiser they rented from
paid dozens of mentally disabled workers at     approved for locations containing combus-         Enterprise began leaking steering fluid and
an Iowa turkey processing plant. The Iowa       tible dust, implement a housekeeping              suddenly caught fire before crashing into
Court of Appeals rejected arguments by          program to control combustible dust, and          an oncoming semi-tractor trailer. Even
Henry’s Turkey Service that the workers         develop confined space procedures.                though the car was under a safety recall for
were not its employees. The decision               As we have previously repor ted, a             the potential fire hazard, it was still rented
upholds a fine imposed by Iowa Workforce        serious violation occurs when there is sub-       to the sisters. The Houck family sued Enter-
Development to the company for failing to       stantial probability that death or serious        prise, and after a lengthy legal fight, the
                                                physical harm could result from a hazard

22                                              www.BeasleyAllen.com
company admitted negligence and was               $2.5 million JURy AwARd FoR BRAin                XIX.
required to pay $15 million in damages.           inJURy SUSTAined in 2008 cRASH
Cally Houck is to be commended for her                                                             ENVIRONMENTAL
courage, determination and tenacity. Her
efforts will save lives if this bill becomes
                                                     Kathleen Crockford, the former pastor of
                                                  the Westerly-Pawcatuck Congregational
                                                                                                   CONCERNS
law. But her bringing the issue to the pub-       Church, suffered a traumatic brain injury
lic’s attention was very important.               when her car was rear-ended by a tractor-
   The National Highway Traffic Safety            trailer in 2008. She filed suit and was          SHiPPinG comPAny To PAy A $1.3 million
Administration launched an investigation          awarded $2.5 million in damages recently,        Fine in moBile cASe
to see how quickly rental car companies           following an eight-day trial in U.S. District
repair vehicles that have been recalled. In       Court in Bridgeport, Conn. The jury in her          An Italian shipping company has pleaded
February, Mrs. Houck started a petition on        case found the truck driver was negligent,       guilty in a federal court in Mobile, Ala., to a
Change.org calling on Enterprise, the             but not reckless, and awarded $1,273,500         pollution-related charge and has agreed to
nation’s largest rental car company, to drop      in economic damages and $1,250,000 in            pay a $1.3 million fine. The plea agreement
its opposition to an earlier version of the       non-economic damages to Rev. Crockford.          came at the end of a day that was supposed
bill that was introduced in the Senate last          Rev. Crockford was returning to her           to be the start of a criminal trial. The Botti-
year by Senators Barbara Boxer, D.-Califor-       home in Stonington after performing a            glieri Challenger’s chief engineer also
nia, and Chuck Schumer, D.-New York. The          wedding in Massachusetts on May 29,              worked out a plea bargain with prosecu-
petition garnered signatures from over            2008. She was waiting to make a left turn        tors, as did another engineer. Both admit-
100,000 people, and within days, Enter-           when the tractor-trailer struck her car in       ted their wrongdoing.
pr ise had changed its stance and                 the rear, slamming it into the car in front of      Giuseppe Bottiglieri, on behalf of his
announced it would be supporting the law.         her. Rev. Crockford suffered a brain injury      company, pleaded guilty to failure to main-
If you agree that rental cars under recall        in the crash. She continues to have symp-        tain an accurate Oil Record Book. Under
should not be rented to customers of the          toms, including headaches, dizziness,            the agreement with prosecutors, the
rent a l ca r compa n ies, cont ac t you r        memory loss, slow mental processing, irri-       company will pay $1 million fine to the
members of the U.S. House of Representa-          tability and depression.                         U.S. treasury and make a $300,000 “com-
tives and the U.S. Senate and ask them to            The truck driver, Larry Spencer, who          munity service” payment to the National
support this needed bill.                         was delivering a load of steel for Metals        Fish and Wildlife Foundation.
                                                  USA, claimed his brakes failed and that he          This is the second case in less than a year
Source: ABC News
                                                  attempted to use his emergency brake. The        in which a foreign shipping firm has
                                                  investigating officer determined the truck’s     pleaded guilty in Mobile to offenses related
                                                  brakes were working and the emergency            to false logs concealing pollution in inter-
$36.5 million inJURy VeRdicT AwARded in                                                            national waters. Target Ship Management
                                                  brake had not been deployed. Rev. Crock-
cAliFoRniA cRASH                                  ford, 59, has been unable to return to her       pleaded guilty in May and agreed to pay
                                                  work at the church and as a part-time book       $1.2 million in fines and payments. Under
   A jury awarded a husband and wife from                                                          federal law, prosecutors did not have to
India nearly $36.5 million for injuries sus-      editor. The economic damages cover her
                                                  past and future medical bills and her lost       prove that the pollution occurred with its
tained in a car accident with an 18-wheeler                                                        knowledge—only that it was done by
in 2010. On a visit to relatives in the U.S. in   income of about $65,000 a year. The non-
                                                  economic damages are for pain and perma-         someone acting within the scope of his
2010, Jaishree and her husband Prakash                                                             employment and for the intended benefit of
Sheth were passengers in a vehicle that was       nent injury, disability and loss of enjoyment
                                                  of life and activities.                          the company. A transcript of a phone call
hit by a tractor-trailer owned and operated                                                        between Bottiglieri and the ship’s captain
by Schneider National Carriers, Inc. The             Rev. Crockford said she intended to
                                                  remain at the church for years to come so        on the morning after the vessel arrived in
truck improperly tried to pass the Sheth                                                           Mobile indicates that the company owner
vehicle and hit the vehicle, causing it to        that she could marry the children she had
                                                  baptized after arriving there in 2004. The       was upset and angry that the policies of the
spin out and smash into the center divider                                                         business had not been followed. He report-
and another vehicle.                              lawyers for the driver and his employer
                                                  admitted liability before the trial began.       edly said: “I will send the chief engineer to
   The collision caused Jaishree Sheth, 58,                                                        prison, because he is a rascal and a rogue.”
who was described as being “once-active,”         The Defendants’ own medical exper t
                                                  admitted that Rev. Crockford suffered a          According to the transcript of the call, the
severe injuries, including loss of normal                                                          Chief Engineer acknowledged that he had
use of her bladder and bowels. She will be        permanent injury. But the Defendants pre-
                                                  vailed on the recklessness claim, which          rigged a bypass on a pollution control
reliant on a wheelchair for the rest of her                                                        system, but said it was done to save time,
life. Testimony revealed that her life will       would have added punitive damages to the
                                                  verdict. The Defendants offered $1 million       not to discharge oily waste.
never be the same, and that she had a very                                                            Bottiglieri has acknowledged his compa-
active life. Jaishree’s medical costs are sig-    to settle before the trial began and went to
                                                  $1.4 million during the trial. Those offers      ny’s responsibility for his cargo ship pollu-
nificant. She was initially a quadriplegic                                                         tion during a journey from Singapore to
after the accident and will require more          were refused. Scott D. Carnassar repre-
                                                  sented the Plaintiff in this case and he did a   Brazil to the Port of Mobile. During that
surgery. The Defendants say they plan to                                                           voyage, according to court records, senior
appeal. Los Angeles lawyers Brian Panish,         very good job. Rev. Crockford says the jury
                                                  did the right thing and that she is satisfied    engineers bypassed the vessel’s pollution
Tom Schults and Ryan Casey, represented                                                            control system six times to discharge oily
the Plaintiffs. They did a very good job in       with the amount of its verdict.
                                                                                                   waste directly into the sea. When the ship
this case for their clients.                      Source: theday.com
                                                                                                   arrived in Mobile on Jan. 24, according to
Source: Claims Journal                                                                             the plea agreement, crewmembers pre-
                                                                                                   sented the Coast Guard with a false Oil
                                                                                                   Record Book that failed to note the dis-

                                            www.JereBeasleyReport.com                                                                          23
charges. The chief engineer was accused of          Enbridge Inc. says it has improved its        from the American market. The following
order i ng the discharges. Author ities          operations and training after the spill. It      drugs are prime examples of how bad
contend that he rigged a so-called “magic        says it also plans to see whether further        drugs get on the market and have to be
pipe” to connect the purifier sludge tank        improvements were needed. The compa-             pulled later on:
with the bilge tank, bypassing a device          ny’s president says they want to learn from
called the oil water separator. Interestingly,   what happened to ensure it’s not repeated.       •	 MERIDIA	(sibutramine).	In	1998	Public	
Bottiglieri’s family has been in the shipping    I hope they did learn and will follow up            Citizen warned folks not to take this diet
business since 1850.                             on what they learned. It’s essential that           drug for safety reasons: it increases
                                                 pipelines be properly regulated and moni-           blood pressure and heart rate in many
Source: AL.com
                                                 tored. A failure to do so can result in tre-        people (and weight loss is meager). In
                                                 mendous harm.                                       2002, Public Citizen petitioned the FDA
                                                                                                     to remove the drug from the market, but
neGlecT And inAcTion cAUSed HUGe                 Source: Insurance Journal
                                                                                                     it took 12 years (October 2010) for the
micHiGAn oil SPill                                                                                   manufacturer to pull the drug after
                                                                                                     finally being pressured by the FDA.
   The National Transpor tation Safet y
Board has approved the findings of its
                                                 XX.                                              •	 ZELNORM	 (tegaserod).	 Public	 Citizen	
investigators that Canadian company              THE CONSUMER                                        warned readers about this drug in June
Enbridge Inc.’s neglect of pipeline cracks                                                           2004. The drug was withdrawn in April
and its slow response likely caused the          CORNER                                              2007-nearly three years later.
most expensive “onshore oil spill” in U.S.
history. The board on July 10 approved                                                            •	 VIOXX	(rofecoxib).	In	April,	2001,	Public	
findings by its staff about the cause of a       PUBlic ciTizen PRoTecTS conSUmeRS                   Citizen issued a DO NOT USE warning
2010 rupture in southwestern Michigan                                                                for V IOX X. T he d r ug wa s f i n a l ly
that dumped about 843,000 gallons of                The Food and Dr ug Administration                removed from the market—but only in
heavy crude into the Kalamazoo River and         (FDA) has the responsibility of making sure         September 2004 after it had done great
an tributary creek. According to investiga-      drugs put on the market by the drug manu-           damage to thousands of innocent and
tors, Enbridge knew five years before the        facturers are safe for use. Most folks proba-       uninformed users.
rupture that cracks were forming in the          bly believe the FDA is properly funded by
                                                 Congress, that it has adequate staffing, that    •	 BE XT R A	 (valdecox ib).	 At	 the	 ti me	
pipe but failed to perform excavations that                                                          VIOXX was removed from the market,
might have prevented the spill.                  it tests all drugs before they hit the market,
                                                 that it monitors dr ugs af ter they are             Public Citizen issued a DO NOT USE
   The investigators also say Enbridge                                                               warning for BEXTRA, another NSAID,
control center personnel twice pumped            approved and put on the market, and that
                                                 the agency has authority to demand what             because of serious safety problems. In
more oil into the line after the spill began                                                         April, 2005, the manufacturer agreed to
and didn’t discover what had happened for        drug labels contain. Unfortunately, none of
                                                 the above is accurate.                              stop marketing the product and recom-
more than 17 hours. Enbridge’s failure to                                                            mended that patients stop taking it.
deal adequately with cracks in the pipeline         Public Citizen’s health research group,
and its slow response to the rupture,            which was founded by Dr. Sidney Wolfe 41         •	 PROPULSID	 (cisapride).	 Public	 Citizen	
according to the NTSB, likely caused the         years ago, has done a much better job of            war ned readers about the dr ug i n
spill near Marshall, a city 95 miles west of     protecting consumers in this country than           August, 1998. It was withdrawn a year
Detroit. The pipeline runs from Griffith,        has the FDA. Public Citizen has done that           and a half later.
Ind., to Sarnia, Ontario. The NTSB report        which the FDA does not always do and that
recommended that:                                is to protect consumers from unsafe or           •	 REZULIN	(troglitazone).	Public	Citizen	
                                                 ineffective medications. Hundreds of thou-          warned its readers in March 1998 about
•	 The	U.S.	Department	of	Transportation	        sands of people are needlessly harmed               Rezulin. It was withdrawn in August of
   audit the Pipeline and Hazardous Materi-      each year by the very medications that are          2001-over two years later.
   als Safety Administration’s onshore pipe-     supposed to be helping them. If the Ameri-
   line program, fix problems and provide        can people knew how ineffective the regu-        •	 BAYCOL	 (cerivastatin).	 Public	 Citizen	
   more resources.                               lation by the F DA of the pol itica l ly            warned its readers in March 1998 about
                                                 powerful drug industry has been over the            Baycol. It was withdrawn in August of
•	 The	administration	toughen	regulations	       years, they would be outraged.                      2001-over three years later.
   dealing with how companies monitor               Dr. Wolfe and Public Citizen put out a
   pipelines for cracking, including criteria                                                     •	 EPHEDR A.	 Public	 Citizen	 warned	 its	
                                                 publication, Worst Pills, Best Pills, each          readers in August 2001 about this drug.
   for determining when lines must be            month. The publication is a tremendous
   excavated for visual inspections.                                                                 In September, 2001, Public Citizen peti-
                                                 resource for consumers. In fact, every con-         tioned the FDA to ban it. The regulatory
•	 The	 administration	 develop	 require-        sumer in the U.S. would be well-served to           agency finally did-over two years later!
   ments for training pipeline control           have access to this publication. In this pub-
   center staff.                                 lication, Dr. Wolfe and his staff at Public         While the above information should
                                                 Citizen don’t pull any punches. They don’t       shock most of our readers, I doubt many
•	 Enbridge	improve	its	pipeline	integrity	      hedge their bets and they tell folks exactly     knew about Public Citizen’s efforts to keep
   policies, staff training and emergency        what drugs they should stay clear of and         these drugs off the market. The Vioxx
   response plans.                               why. Public Citizen, in Worst Pills, Best        story alone would be enough to shock even
                                                 Pills, puts out DO NOT USE warnings that         a Tea Party zealot. I would encourage all of
•	 Enbridge	 train	 local	 first	 responders	    often come many months, and sometimes            our readers to subscribe to Worst Pills,
   about dealing with pipeline spills,           years, before unsafe drugs are withdrawn         Best Pills. You can go to Citizen.org or
   including use of oil containment devices.

24                                               www.BeasleyAllen.com
Worstpills.org for more information on this       mation put out on what the new law does         ary for failing to notify it promptly of plans
publication.                                      and doesn’t do, and most of it has come         to recall nearly 340,000 vehicles in 2010.
                                                  from those who have never even read the         Previously, in May 2010, Toyota agreed to
                                                  Act. Hopefully, President Obama and those       pay $16.4 million to settle claims that it did
QUAliTy, AFFoRdABle HeAlTHcARe in                 who supported the law in Congress will          not promptly act to correct sticking accel-
AmeRicA                                           now do a better job of explaining to the        erator pedals on 2.3 million vehicles.
                                                  American people how the new law will            Source: New York Times
   Now that the U.S. Supreme Court has            affect them. Congress should not repeal
upheld The Patient Protection And Afford-         the law, but instead improve it. Inciden-
able Care Act as being constitutional, folks      tally, all members of Congress currently
                                                                                                  deFecT PeTiTion Filed FoR 320,000 FoRd
are beginning to learn much more about            have and enjoy excellent healthcare cover-
                                                                                                  eScAPeS
the good features of this badly-needed law.       age. Any member of Congress who works
In my opinion, the Court’s decision was a         to deny American citizens quality, afford-         The Center for Auto Safety, a well-
good thing for America. President Obama           able healthcare should be embarrassed.          respected nonprof it consumer safet y
has taken a stand on this issue and has           Shame on those who fall in that category!       g roup, for m a l ly a sked t he Nat ion a l
given folks in our country healthcare pro-                                                        Highway Traffic Safety Administration in
tections and benefits that are badly needed.                                                      early July to investigate its claim that some
He accomplished that which many others            GoVeRnmenT FineS VolVo $1.5 million             cruise control cables on about 320,000
before him tried to do and failed. Based on       FoR delAyinG RecAll RePoRTS                     Ford Escapes were damaged during a repair
reliable estimates, the new law will not                                                          for an unrelated recall, making the vehicles
only protect the almost 50 million Ameri-            Volvo Car Corp., the Swedish carmaker        susceptible to unintended acceleration. In
can citizens who are currently uninsured,         now owned by China’s Zhejiang Geely             its defect petition, the safety group said the
it will, over time, reduce health costs for all   Holding Group, has agreed to pay a $1.5         problem, which was said to exist among
citizens and will result in a much healthier      million fine to the federal government to       Escapes from the 2002-2004 model years,
population.                                       settle claims that it delayed recalling vehi-   could have “lethal consequences.”
   Providing affordable health care for all       cles. This was reported by the National            The original recall, which covered about
citizens is most important and without a          Highway Traffic Safety Administration last      470,000 Escapes from 2002-2004 equipped
doubt the right thing to do. Playing politi-      month. David Strickland, the agency’s           with the 3-liter V-6 engine, was performed
cal games on the issue of healthcare may          administrator, said in a news release that      to prevent the accelerator cable from snag-
well backfire on those who recklessly             NHTSA “expects all manufacturers to obey        ging on the accelerator pedal, which could
move in that direction. Some of the talk          the law and address automotive safety con-      have prevented the engine from returning
show hosts who have been critical of the          cerns without delay.” In the case of Volvo,     to idle. In its petition the safety group
law have obviously never read it. Unfortu-        NHTSA said those delays involved seven          argued that in October 2005, Ford sent a
nately, it appears that some of our elected       recalls covering a total of about 32,000        technical service bulletin to dealers cau-
leaders are also uninformed about the law.        vehicles in 2010 and 2012.                      tioning mechanics to not damage the adja-
The U.S. House of Representatives on July            T he problems cited i n the reca l ls        cent cruise control cable during the course
10th voted to repeal the law—with the vote        included incorrect tire-pressure labeling,      of the recall repair. Any damage could
falling along partisan lines. This was            air bags that might not deploy properly and     allow the cable to snag on a ridge in the
nothing more than a political ploy aimed at       engines that could stall, among other flaws.    engine cover, causing unintended accelera-
the general election. The bill will never         Almost 16,000 of the vehicles were recalled     tion, the petition said. Ford has never for-
pass the Senate.                                  for the more serious air-bag and stalling       mal ly i n for med the rough ly 320,0 0 0
   This law—while not perfect—is certainly        issues. In a settlement dated June 29 and       owners who had the repair performed that
a step in the right direction. There is no        announced last month, Volvo agreed to pay       damage may have been caused to their
way to justify having millions of our citi-       the fine. The automaker issued a statement      vehicles’ cruise control, according to Clar-
zens without access to quality, afford-           in which it apologized and said it had          ence Ditlow, the group’s executive director.
able health care. I believe this is a right of    “taken steps to improve the review process         The petition also cites the case of Saige
all Americans and not merely a privilege. I       and analysis of potential quality and safety    Bloom, a 17-year-old who died in a crash in
find it most interesting that the GOP             issues with our vehicles.”                      Payson, Ariz., in January. According to the
nominee for President—the man who pro-               Under federal regulations, after a manu-     petition, the Bloom family hired an expert
vided the model for what is now referred to       facturer discovers a safety problem it has      who inspected the engine of the 2002
as “Obamacare”—is in favor of repealing           five business days to tell NHTSA of its plan    Escape driven by Ms. Bloom at the time of
the new law. Considering that “Romney-            for a recall or face civil penalties. Accord-   the accident and found the cable was
care” has worked very well in Massachu-           ing to NHTSA, Volvo failed to report all        snagged. Mr. Ditlow believes that Ford
setts, with over 98% of that state’s citizens     seven recalls in a timely fashion. The          should conduct a new recall and the safety
having health insurance coverage at afford-       agency can fine an automaker up to $17.35       agency should pursue a civil fine, adding
able rates, it’s most interesting that the        million, an amount consumer safety advo-        that “Ford knew there was a problem and
Republican Party leaders and the man who          cates commonly equate to only a “rounding       knew the consequences.”
believed it was good—before he was told it        error” for automakers.                             Under federal regulations, after learning
was bad—want to deny quality, affordable             According to a recent report by The          of a safety problem, a manufacturer is
healthcare for all American citizens.             Detroit News, that amount would double if       required to inform NHTSA within five
   We should thank President Obama for            a new transportation bill is enacted. But it    working days of its plan for a recall. There
his courageous stand on this issue and give       should be noted that such punitive mea-         were 133 complaints on the NHTSA’s Web
this law a chance to work. There has been         sures are rarely levied. NHTSA levied a $3      site from owners of 2002-4 Escapes who
a great deal of false and misleading infor-       million civil penalty against BMW in Febru-     claimed they experienced sudden accelera-


                                            www.JereBeasleyReport.com                                                                        25
tion. Some owners claimed their experi-          in the engine compartment. It said the             pay $207,000 and Target will pay $25,000
ences occurred before the recall, raising        fluid “may be ignited by hot surfaces in           under terms of the settlement. Both retail-
the possibility that the speed-control cable     the engine compartment.” In the Dodge              ers will adopt measures to prevent future
could fail independent of a faulty repair.       Ram investigation, NHTSA said it had               overcharges. The cities and towns included
Other failures occurred on vehicles that         received 12 complaints of alleged rear dif-        i n t he ca se were A m her st, B oston,
were recalled, according to the petition.        ferential failures resulting in rear wheel         Concord, Everett, Fall River, Framingham,
Interestingly, there is no indication on         lock-up, including “one resulting in a             Hingham, Lowell, Plymouth, Springfield
NHTSA’s web site that it investigated those      crash into a concrete barrier.”                    and Worcester. The Attorney General’s
complaints.                                         Chrysler is an affiliate of Italy’s Fiat SpA.   office has recovered more than $8 million
   It should be noted that anyone can file a     It should be noted that the Dodge Ram              through similar investigations of compa-
defect petition with NHTSA. The agency           pickup is Chrysler’s top-selling vehicle this      nies that sell prescription drugs.
then must decide whether the petition has        year and the Grand Cherokee is its second-         Source: Claims Journal
sufficient merit to begin a formal investiga-    best. Obviously, the Ram is an important
tion. Late in 2009, the Center for Auto          money maker for Chrysler Group LLC. The
Safety filed a defect petition asking the        company sold almost 377,000 of the trucks
                                                                                                    lAwSUiT oVeR FiRe Gel exPloSion Filed
agency to investigate its assertion that         in 2009 and 2010, but some of those sales
                                                                                                    in AlABAmA
1993-2004 Grand Cherokees were suscepti-         were from other model years. A Chrysler
ble to catching fire when struck from            spokesman said any customers who are                  A lawsuit has been filed arising out of the
behind. In 2010, NHTSA granted the               concerned about their vehicles should visit        flash explosion from a small fire pot that
request and in June the agency upgraded          their dealers.                                     badly burned Chris Kutsor, a young Ala-
its investigation to an Engineering Analysis,    Source: MSNBC                                      bamian, in May 2011. The lawsuit, filed in
indicating its heightened concern.                                                                  federal court in Madison County, names as
Source: New York Times                                                                              Defendants Bird Brain Inc., the gel manu-
                                                 BAnKS SeTTle oVeRdRAFT cASeS                       factu rer, and M issou r i-based Gerson
                                                                                                    Company, the fire pot maker. The suit also
nHTSA oPenS inVeSTiGATion oF FoRd                   Birmingham-based BBVA Compass has               names Big Lots, which sold the fuel gel, and
eScAPe And mAzdA TRiBUTe SUVS                    agreed to pay $11.5 million to settle a            TJX, the parent company of Marshalls, T.J.
                                                 lawsuit accusing the bank of improperly            Maxx and HomeGoods, which sold the fire
   NHTSA opened an investigation last            manipulating customers’ checking account           pot as additional Defendants.
month into possible throttle control prob-       transactions to generate excess overdraft             Fuel gel fires have injured at least 86
lems with an estimated 730,000 older             fees. Also, U.N. Bank reached a settlement,        people in the U.S. and caused two deaths
model Ford Escape and Mazda Tribute              agreeing to pay $55 million, in a suit             since 2010, according to the U.S. Consumer
small SUVs, according to NHTSA. There            pending in federal court in Miami. Both of         Product Safety Commission. In September
have been 13 crashes reported that are           these settlements are subject to court             2011, the CPSC announced a recall of gel
related to the issue that led to nine injuries   approval.                                          fuels by nine manufacturers, including Bird
and one fatality. NHTSA said it will investi-       Consumers sued more than 30 banks,              Brain Inc. The fuel pots have not been
gate whether throttles remain open even          claiming the banks re-sequenced the actual         banned, but federal regulators are in the
after a driver has released the accelerator      order of transactions, posting them in high-       midst of rule-making that could lead to a
pedal. A NHTSA investigation is short of a       est-to-lowest dollar amount instead of the         ban, expanded warning requirements or
recall, but may lead to recalls for the two      chronological order, leading to excess over-       changes in manufacturing standards.
vehicles, which are from the model years         draft fees. Those cases were consolidated             The gel is designed to be poured into a
2001-2004.                                       before U.S. District Judge James Lawrence          pot, often a metal cup inside a small deco-
Source: Claims Journal                           King. PNC Bank reached a $90 million set-          rative form. Injuries have most often
                                                 tlement in June. Toronto-Dominion Bank,            occurred, according to regulators, when
                                                 Canada’s second-largest bank, entered in           someone is refueling a pot that has recently
                                                 May a preliminary agreement to pay $62             been in use and appears to have burned
nHTSA oPenS PRoBeS on cHRySleR
                                                 million to settle overdraft claims. In April,      out. But the flame can be difficult to see
VeHicleS                                         Citizens Bank agreed to pay $137.5 million.        and vapors from inside the gel container
   NHTSA has opened defect investigations        I n Febr ua r y, J PMorga n Chase & Co.            can be ignited by the flame, causing an
into Chrysler Group LLC’s 2012 Jeep Grand        reached an agreement for $110 million.             explosion. Apparently, that’s what hap-
Cherokee and 2009-2010 Dodge Ram 1500.           Source: The Birmingham News                        pened in this case. Eric Artrip, a Huntsville
The agency is investigating potential power                                                         lawyer, is handling this case.
steering hose failures that could lead to                                                           Source: The Huntsville Times and USA Today
under-hood fires in about 106,800 2012           wAl-mART And TARGeT To PAy
Grand Cherokees. NHTSA also is investing         mASSAcHUSeTTS FoR oVeRcHARGeS
potential rear differential failures that                                                           JeRKy TReATS FRom cHinA BlAmed FoR
could lead to rear wheel lock-up and loss of       Wal-Mart Stores Inc. and Target Corp.            PeT deATHS
vehicle control in about 230,000 2009-2010       will pay Massachusetts towns and cities
Dodge Ram 1500 pickups.                          $232,000 to settle claims that they over-             Dog owners in eight states who believe
   According to NHTSA’s Office of Defect         charged public agencies for prescriptions          contaminated chicken jerky treats from
Investigation, the power steering hose on        covered by workers’ compensation insur-            China sickened or killed their pets have
the 2012 Grand Cherokee cou ld fai l,            ance. Attorney General Martha Coakley              filed a class-action lawsuit against Nestle
resulting in power steering fluid leakage        announced the settlement. Wal-Mart will            Purina, the maker of two popular brands of


26                                               www.BeasleyAllen.com
the canine snacks, and several mega-stores        Salmonella in humans caused by contact         to phase out rules allowing BPA in such
that sell them. The suit was filed just as        with contaminated dry pet food. As of July     products in October, after determining
Food and Drug Administration officials            20 th, the CDC had confirmed 49 cases of       that all manufacturers of bottles and sippy
refused to release results of inspections of      Salmonella Infantis, 47 in the United States   cups had already abandoned the chemical
Chinese plants that make the jerky treats         and two in Canada, due to contact with         due to safety concerns. It is illegal for com-
blamed for at least 1,000 illnesses and           Diamond Pet Food. They did not, and do         panies to use substances not covered by
deaths in U.S. pets.                              not, track the number of pets sickened by      FDA rules. Hopefully, the FDA will con-
   Six pet owners in states around the            the food. According to the CDC, ten people     tinue to investigate BPA in other types of
county are suing, not only the treat maker,       were hospitalized because of Salmonella        food packaging.
but also Wal-Mart, Target and Costco, three       from contact with the food that was pro-       Source: CBS News
big retailers that sell the products. The         duced in a Gaston, S.C. processing plant.
Plaintiffs seek to join with a lawsuit filed in   There were no human deaths reported.
federal court last month by a Connecticut            According to efoodalert.net, 54 animals
family whose two Boston terriers died after       are known to have became ill from the          XXI.
eating chicken jerky treats.
   Three top brands of chicken jerky treats
                                                  food and eight died. The product affected
                                                  is Diamond Naturals Small Breed Adult Dog
                                                                                                 RECALLS UPDATE
were among those most recently cited by           Lamb & Rice Formula. Only samples, six
pet owners and veterinarians in com-              pou nd, a nd 18 pou nd bag sizes a re             Each month there are a number of safety-
plaints of harm. The brands included              affected. The 47 reported cases of the ill-    related recalls to be reported. This month
Waggin’ Train and Canyon Creek Ranch,             nesses were identified in Alabama, Arkan-      is no different. Serious safety-related recalls
brands produced by Nestle Purina, and             sas, California, Connecticut, Georgia,         have become commonplace. The following
Milo’s Kitchen Home-style Dog Treats, pro-        Illinois, Indiana, Kentucky, Michigan, Min-    are some of the more significant recalls
duced by the Del Monte Corp. Import data          nesota, Missouri, New Jersey, New York,        since those reported in the July issue.
compi led by the f i r m I mpor tG en ius         North Carolina, Ohio, Oklahoma, Pennsyl-       There continue to be a number of recalls
showed that Waggin’ Train and Canyon              vania, South Carolina, Texas, and Virginia.    by automakers. If more information is
Creek Ranch treats are produced and sup-          The two Canadian victims were residents        needed on any of the recalls mentioned
plied by JOC Great Wall Corp. Ltd. of             of Quebec and Nova Scotia.                     below, readers are encouraged to contact
Nanjing, China.                                   Source: Mobile Press-Register                  Shanna Malone, the Executive Editor of the
   The expanded lawsuit seeks to represent                                                       Report. We would also like to know if we
nearly all pet owners in the U.S. who                                                            have missed any safety recalls that should
bought any dog treat product made or sold                                                        have been included in this issue.
                                                  BATTAT inc. AGReeS To $400,000 ciVil
by Nestle Pur ina containing chicken
                                                  PenAlTy FoR FAilinG To RePoRT
imported from China in the past four years.
The dog owners are frustrated that the
                                                  cHildRen’S mAGneTic Toy SeTS                     ToyoTA To RecAll 154,000 lexUS
makers and distributors of the treats have           Battat Inc., of Plattsburgh, N.Y., has
                                                                                                   SUVS To Fix FlooR mAT
failed to recall the products voluntarily,        agreed to pay a civil penalty of $400,000.
despite three federal warnings since 2007                                                          Toyota is now recalling two more
                                                  The penalty agreement has been accepted          Lexus models due to the possibility of
about possible safety issues and nearly           provisionally by the Consumer Product
1,000 reports to the FDA of dogs sickened                                                          loose f loor mats that could cause
                                                  Safety Commission. Battat was alleged to         accelerator pedals to jam, leading the
or killed by the products. They also say the      have knowingly failed to report defects and
companies have violated implied warran-                                                            vehicles to surge out of control. The
                                                  hazards associated with Magnabild Mag-           two models covered by the latest
ties of safety and healthfulness of their         netic Building Sets to the CPSC immedi-
products and commerce rules governing                                                              recall are the Lexus RX 350 and RX
                                                  ately, as required by federal law. The           450h hybrid, with a total of nearly
sale of sound merchandise.                        Magnabild was a magnetic building set
   Thousands of dog owners are calling for                                                         134,000 vehicles involved. The latest
                                                  labeled for ages three and up. Small             recall puts Toyota back into the spot-
the recall of the chicken jerky treats and        magnets inside the building pieces can fall
for more vigorous FDA efforts to identify                                                          light after having spent the last several
                                                  out, and if found by young children, can be      years trying to rebuild its reputation
the source of the problem. Many pet               swallowed or aspirated. If more than one
owners say they’re reminded of the 2007                                                            for high quality and reliability.
                                                  magnet is swallowed, the magnets can
scare in which melamine-tainted pet food          attract to each other, connect, and cause        Owners of the involved vehicles will
from China sickened and killed thousands          intestinal perforations or blockages, which      receive a safety recall notification by
of dogs in the U.S., leading to mass recalls      can be fatal.                                    first class mail in August 2012. Lexus
and criminal indictments of Chinese and                                                            dealers will remedy the involved vehi-
                                                  Source: PRNewswire.com
American pet food executives. It should be                                                         cles at no cost to the customers. Infor-
noted that the problem in 2007 wasn’t                                                              mation and answers to questions are
detected immediately either.                                                                       available at or www.lexus.com/recall
Source: MSNBC                                     FdA BAnS BPA FRom BABy BoTTleS And               and Lex us Customer Satisfaction
                                                  SiPPy cUPS                                       (1-800-255-3987).
                                                    The Food and Drug Administration says
cdc FinAl RePoRT SAyS 47 HUmAnS                   the controversial chemical BPA (bisphenol-       iSUzU RecAllS Rodeo SPoRT And
SicKened By doG Food                              A) can no longer be used in manufacturing        AmiGo SUVS
                                                  baby bottles or sippy cups. The U.S. chemi-
  The Centers for Disease Control and Pre-        cal industry’s chief association, the Ameri-     More than 11,000 Isuzu SUVs have
vention has issued a final report on cases of     can Chemistry Council, had asked the FDA         been recalled because parts in the rear

                                            www.JereBeasleyReport.com                                                                        27
 suspension can rust and break away          power door lock while someone is            firmly and steadily apply the brakes,
 from the frame. The recall affects          moving an interior front door handle,       without pumping the brake pedal,
 Amigo SUVs from the 1998 to 2001            the cable connecting the door handle        shift to neutral, steer the vehicle to a
 model years and Rodeo Sport SUVs            to the door-latch system may loosen. If     safe location, shut the engine off after
 sold as 2001 and 2002 models. The           this happens and the cable moves far        the vehicle is safely stopped and place
 Nationa l H ig hway Tr a f f ic Sa fet y    enough from its proper position it          the transmission in park.” The recall
 Administration posted the recall on its     could prevent the door from latching        affects Escapes built from October 22,
 website. Isuzu said the rear suspension     properly.                                   1999 th roug h Ja nua r y 23, 20 04.
 link brackets can rust and become                                                       NHTSA had been investigating the
 detached from the frame. The problem        If the door is not completely latched it    safety defect in the 2001-’04 Escape
 can hurt the vehicle’s handling and         may open in a crash or during normal        and the 2001-’04 Mazda Tribute.
 cause a crash. I don’t know if there        driving, increasing the risk of injury.
 have been any wrecks or injuries.           The recall affects 172,837 vehicles.        The recall will begin on August 6 th
                                             Under the recall, which is to begin         with parts being available in mid-
 The recall covers SUVs sold or regis-       this month, Honda dealers will replace      August. Ford dealers will repair the
 tered in 21 states and Washington,          the front door latch assemblies free of     vehicles by increasing the engine
 D.C. Those are places where salt is         charge. Honda said it will also replace     cover clearance. If parts are unavail-
 used to clear the roads. Salt can cause     the interior front door handles in          able, dealers will disconnect the speed
 metal to rust. Affected states include      certain CR-Vs. Owners may contact           control cable as a temporary measure.
 Maine, New Hampshire, Vermont,              the company at 800-999-1009.                Owners can contact Ford at 1-866-436-
 Massachusetts, Rhode Island, Connect-                                                   7332 for more information.
 icut, New York, New Jersey, Pennsyl-
 vania, Delaware, Mar yland, West            FoRd RecAllS 2013 eScAPe SUVS
 Virginia, Ohio, Indiana, Michigan, Illi-                                                mAzdA RecAllS 217,000 TRiBUTe
                                             Ford Motor Co. has recalled thousands       SUVS
 nois, Wisconsin, Minnesota, Iowa, Mis-      of 2013 Escape SUVs due to a potential
 souri and Kentucky. Isuzu dealers will                                                  JUly 30, 2012—ASSociATed PReSS—
                                             problem affecting brake pedals. The
 inspect the suspensions and treat                                                       clAimSJoURnAl.com
                                             automaker said the carpet padding is
 them with a rust-resistant compound         not positioned correctly in more than       Mazda will also recall about 217,000
 or install a reinforcing bracket free of    8,000 vehicles which could prevent          Tribute SUVs to fix a problem that can
 charge. In rare cases when the rust is      drivers from moving their feet from         cause the gas pedals to stick. It’s the
 so severe that the rein forcement           the accelerator to the brake pedal.         same problem that Ford had since the
 bracket won’t work, Isuzu will buy the      Ford will fix the problem free of           Tribute and Escape are essentially the
 vehicles back based on the Kelley Blue      charge.                                     same vehicle. The Mazdas are from
 Book private party sale price, the
                                                                                         model years 2001 through 2008 and
 company said in a letter to NHTSA.
                                                                                         are powered by 3-liter V-6 engines.
                                             FoRd eScAPe RecAlled FoR                    The cr uise control cable can get
 Isuzu is notifying owners by mail and
                                             THRoTTle TRoUBle                            snagged on the engine cover and
 started the recall last month. NHTSA
 acknowledged the recall in a letter to      Ford h a s reca l led 423,634 Ford          cause the accelerator to stick if the
 Isuzu. As you may recall, Isuzu Motors      Escapes from 2001-2004 equipped             driver has pushed the gas pedal close
 Ltd., famous for developing one of the      with 3.0-liter V6 engines and cruise        to the floor. Dealers will install fasten-
 first mid-sized sport utility vehicles      control because a cr uise control           ers to create more space between the
 and an ad campaign that featured a          problem may cause the throttle to           cables a nd t he cover. Pa r t s a re
 salesman telling lies, stopped selling      stick, resulting in “very high vehicle      expected to arrive about the middle of
 new pickup trucks and SUVs in North         speeds.” NHTSA has been investigating       the month. Mazda says if customers
 A merica in 2009 due to financial           the defect based on complai nts,            have concerns about their Tributes
 problems. The company remains in            including the death of a 17-year-old girl   before that, dealers will disconnect
 the U.S. with commercial vehicles.          in Arizona. “Inadequate clearance           the cruise control until the parts
 The company has said that it will           between the engine cover and the            arrive.
 back its products and dealers for           speed control cable connector could
 years to come, honoring all product         result in a stuck throttle when the
 warranties.
                                                                                         niSSAn RecAllinG 11,000 JUKeS To
                                             accelerator pedal is fully or almost
                                                                                         Fix ReAR SeATS
                                             fully depressed,” NHTSA said in its
                                             recalls summary of the problem. “This       Nissan has recalled about 11,000 Juke
 HondA RecAllS 172,837 VeHicle FoR           risk exists regardless of whether or        small SUVs to fix a problem with the
 FAUlTy dooR lATcHeS                         not speed control (cruise control) is       rear seats. The company says a weak
 Honda Motor Co. has recalled certain        used. A stuck throttle may result in        weld can cause the seat backs to come
 Honda CRV compact SUVs from the             very high vehicle speeds and make it        loose in a crash, increasing the risk of
 2012 model year, and Acu ra IL X            difficult to stop or slow the vehicle,      injury. The recall affects Jukes from
 sedans from the 2013 model year to fix      which could cause a crash, serious          the 2012 model year. Nissan says
 a flaw in their door-locking mecha-         injury or death,” according to NHTSA.       dealers will notify owners and replace
 nisms. In a document filed with the                                                     a faulty part that holds the seat back in
                                             Ford say that if drivers “experience
 Nationa l H ig hway Tr a f f ic Sa fet y                                                place. The company says the recall
                                             what they believe is a stuck throttle in
 Administration the car maker said that                                                  will start later this month. According
                                             this, or any other vehicle, they should
 if an occupant operates the manual or                                                   to the National Highway Traffic Safety

28                                          www.BeasleyAllen.com
Ad m i n i st r at ion t he Ju ke s b e i ng      Carryall 232 Gas   XL 1233-300113 to XL 1238-   between April 2010 and July 2012 and
                                                                     314964
recalled were made from February 3rd                                                              sold in the U.S., Canada and Mexico
to May 26th.                                      The golf cars were sold by authorized           experienced tread loss and/or air loss
                                                  Club Car dealers nationwide from                caused by tread belt separation. “This
                                                  March 2012 through May 2012 for                 condition may increase the risk of a
HyUndAi RecAllS elAnTRA SedAnS                                                                    vehicle crash,” Michelin said in a news
                                                  between $5,000 and $7,000. Consum-
oVeR AiR BAG conceRnS                                                                             release.
                                                  ers should stop using the recalled golf
Hy u ndai issued t wo overlappi ng                ca r s a nd tr a nspor t veh icles a nd         Michelin said no deaths or injuries
recalls on July 31st , both involving             contact Club Car for a free inspection          have been reported in connection
2007 to 2009 Elantra sedans. The                  and repair of the fuel hose system. The         with the tires being recalled. The
recalls are aimed at fixing sensor prob-          f i r m is contacti ng its customers            recall, which affects about 799,900
lems that could keep air bags from                directly. For more information, contact         tires in the U.S., is for two sizes of both
deploying in a crash. The first recall is         Club Car at (800) 227-0739, ext. 3831,          BFGoodrich Commercial T/A A/S and
to fix more than 188,000 Elantras from            between 8 a.m. and 5 p.m. ET Monday             Uniroyal Laredo HD/H tires. The tires,
the 2007 to 2009 model years. They                through Friday, or visit the company’s          sold only as replacements, are typi-
may have a faulty electrical connector            website atwww.clubcar.com.                      cally found on commercial light trucks
for a sensor designed to deactivate the                                                           and full-sized heavy duty vans and are
right front air bag under certain cir-                                                            no longer being produced, according
cumstances.                                       conTinenTAl RecAllS TiReS on 2008-
                                                  2009 FoRd F-250/F-350 TRUcKS                    to the company.
T he second reca l l covers nearly                                                                Dealers and tire owners are being noti-
100,000 Elantras from the 2007-2008               Continental Tire is recalling about
                                                  390,000 Contitrac tires supplied as             fied about the recall. Owners will be
model years. Those are the same vehi-                                                             able to take their vehicles to autho-
cles covered by the first recall. This            original equipment on some of the
                                                  2008 and 2009 Ford F-250 and F-350              rized dealers where the tires will be
one will repair a sensor on the seat                                                              replaced at no cost. Owners can iden-
track of the driver’s side that helps             tr ucks. The recal led ti res are as
                                                  follows:                                        tify tires on their vehicles by finding
determine whether the air bag should                                                              the U.S. Department of Transportation
deploy. The recalls are expected to               Continental/Contitrac/LT275/70R18               codes on the tires’ sidewalls.
begin in April.                                   125/122S
                                                  Production Dates: 5/06/07-9/20/08               For more information on the recall,
                                                                                                  visit BFGoodrich’s voluntary safety
clUB cAR RecAllS GolF And                         C ont i ne nt a l / C ont it r ac T R B S W/    recall page, visit Uniroyal’s voluntary
TRAnSPoRT VeHicleS dUe To FiRe                    LT275/70R18 125/122S                            safety recall page or call 1-800-637-
HAzARd                                            Production Dates: 5/06/07-9/20/08               5527 between the hours of 8 a.m. and
                                                                                                  8 p.m. ET Monday-Friday and between
About 800 golf cars and transport                 Cont i nent a l / Cont it r ac T R OW L /       8:30 a.m. and 4:30 p.m. ET Saturday.
vehicles have been recalled by Club               LT275/70R18 125/122S
Car LLC, of Augusta, Ga. The fuel hose            Production Dates: 5/06/07-9/20/08
can separate from the f uel tank,                                                                 STRyKeR oRTHoPAedicS RecAllS Two
posing a fire hazard. Club Car has                According to Continental Tire, some of          HiP imPlAnT modelS
received one report of a fuel hose sep-           the tires may experience uneven wear
arating from the tank but it says no              and vibration and, in some cases, sepa-         Or thopedic device manu factu rer
injuries have been repor ted. The                 ration between the belt edges, espe-            Stryker Orthopaedics has recalled two
recalled vehicles are various sizes,              cially when overloaded or when the              of its hip implant models over con-
models and colors of 2012 gas-pow-                temperature is very high. Separation            cerns the devices are prone to “fret-
ered golf and transport vehicles used             of the belt edges could lead to tread           ting and corrosion” that could trigger
for short-distance transportation. The            belt separation, increasing the risk of a       pain, swelling, and other complica-
vehicles can be identified by model               crash. Tire separations are very dan-           tions in patients. The recall involves
and serial number. The serial number              gerous and can cause vehicles to roll-          Stryker’s Rejuvenate Modular and ABG
is above and to the right of the acceler-         over and crash resulting in serious             II modular-neck stem devices, devices
ator pedal. Model names do not appear             injuries and death. Continental Tire            that incorporate a femoral stem and
on the vehicles, but models can be                will notify owners and replace the              femoral head ball connection that are
identified by two-letter prefixes on the          affected tires free of charge. Owners           both made of metal. Stryker advises
serial number. Club Car is printed on             may contact Continental Customer                patients who have been implanted
the front of each vehicle. A list of              Service toll-free at 1-888-799-2168.            with one of the recalled devices to
recalled models and serial numbers is                                                             contact their physician. Meanwhile,
set out below.                                                                                    the company has stopped global pro-
                                                  micHelin RecAllinG 841,000 TiReS                duction of the devices.
Model             Serial Numbers
DS Gas Golf Car   AG 1232-298757 to AG 1238-
                                                  Michelin has recalled about 841,000
                  314938                          BFGoodrich and Uniroyal tires pro-              TRAmPolineS RecAlled By PAnline
Villager 4 Gas    TG 1232-299285 to TG 1237-      duced at plants in Tuscaloosa and in            USA dUe To FAll HAzARd
                  312956                          Woodburn, Ind. The company said
XRT 850 Gas JZ    1233-300104 to JZ 1238-314710   about 143, or 0.017%, of the recalled           Panline USA Inc., Northvale, N.J., has
XRT 800 Gas XJ    1233-300372 to XJ 1238-         BFGoodrich and Uniroyal tires made              recalled about 8,000 Alex ® Model
                  313369


                                               www.JereBeasleyReport.com                                                                    29
 786X Little Jumpers Trampolines. The         www.alltrade2.fox-international.com            Foothill Ranch, Calif. The placement
 handlebar can break, causing a fall          to receive a free drill. Consumers             of internal wires near the circuit board
 hazard. The product is a small, tod-         should not return the drills to the            can cause electrical short-circuiting
 dler-sized trampoline with a yellow          store where they purchased it. All-            and sparking, posing a fire and a burn
 and blue colored handlebar over the          trade Tools is also directly contacting        hazard to consumers. Innovage has
 top of the trampoline for toddlers to        co n s u m e r s w ho pu r c h a s e d t h e   received 11 reports of short circuiting.
 hold on to while jumping. The trampo-        recalled drills. For more information,         This includes three reports of lamps
 line has a blue mat and orange pads          contact Alltrade Tools toll-free at (800)      catching fire, which led to property
 with different colored circles printed       727-7420 between 8 a.m. and 5 p.m.             d a m a ge. No i nju r ies h ave b een
 onto the pads, yellow legs and blue          Monday through Friday PT, or visit the         reported, according to the company.
 feet. A white label is sewn into the         company’s website at www.alltrade2.
 underside of the orange pads which           fox-international.com.                         This recall involves Discovery Kids
 has “786X Little Jumpers Trampoline”                                                        Animated Marine and Safari Lamps
 printed above the bar code. This recall                                                     that feature rotating films with marine
 involves trampolines with the codes          exHAUST FAnS Sold AT lowe’S                    or safari scenes. The words “Discovery
 21011-P0003070, 21011-P0003246,              SToReS RecAlled dUe To FiRe                    Kids” are printed on the front top-left
 25511-P0003071, 27811-P0003372,              HAzARd                                         corner of the product. The recalled
 29811-P0003373 and 34211-P0003375.                                                          products have both an 11-digit batch
                                              About 68,000 Harbor Breeze Bath Fans           nu mber that beg i ns with either
 This code is printed underneath the
                                              with Heater and Lights have been               584894 or 10128 and a model number
 barcode.
                                              recalled by Delta Electronics (Dong-           of 162 8 62 6 , 16 42433, 16 41522 ,
 The trampolines were sold at indepen-        guan) Co. Ltd., of China. The fan’s            1641523, 1645729, or 1645853. Batch
 dent specialty toy and retail stores         heater blades can fail to rotate prop-         numbers can be found imprinted in
 from January through March 2012 for          erly, causing the fan to overheat and          the plastic underneath the lamps and
 about $100. Consumers should stop            posing a fire hazard. The firm has             on the bottom of the packaging. Model
 using the product immediately and            received 11 reports of the fan over-           numbers can be found on stickers
 contact the firm for instructions on         heating with smoking or flames within          placed underneath the lamps and on
 receiving a replacement trampoline.          the fan housing, including three               the bottom of the packaging near the
 For additional information, contact the      reports of minor property damage.              barcode.
 firm at (800) 666-2539 between 9 a.m.        This recall involves plastic Harbor
 and 5 p.m. ET Monday through Friday,         Breeze bathroom fans with a center             The lamps were sold at Bed Bath &
 or visit the company’s website at            light and a heater. The fans are white         Beyond, Bonton, JCPenney, Kohls,
 www.alextoys.com/safety.                     and measure about 11 x 17 inches.              Toys “R” Us stores nationwide as well
                                              Model number 7109-01-L, Lowe’s item            as the online retailers Amazon, Ideeli,
                                              nu m b e r 19 4 492 a n d U P C co d e         JCPenney, Kohls, Macy’s and Over-
 KAwASAKi coRdleSS dRill RecAll               820633985358 are printed on the fan’s          stock from June 2010 through March
                                              packaging. A date code beginning               2012 for between $10 and $20. Con-
 Alltrade Tools, Inc., has recalled about     with either 0, 11, 12 or 13 is printed on      sumers should immediately stop using
 45,000 Kawasaki Cordless Drills.             the fan’s housing, which indicates the         the lamps and contact Innovage for
 These drills were sold at Costco stores      fa n wa s m a nu fac t u red b et ween         instructions on how to obtain a full
 nationwide from May 2011 through             August 2010 and March 2011.                    refund. For additional information
 February 2012. The trigger switch on                                                        contact Innovage toll-free at (888) 232-
 the drill can short and generate exces-      The fans were sold exclusively at              1535 between 9 a.m. and 5 p.m. PT
 sive heat, posing a burn hazard. All-        Lowe’s stores nationwide and at www.           Monday through Friday, visit the com-
 trade Tools has received 33 reports of       lowes.com from September 2010                  pany’s website at www.innovage.net,
 incidents, including one minor burn          through March 2012 for about $90.              www.lamprecall.org or e-mail info@
 injury.                                      Consumers should stop using the                lamprecall.org.
                                              recalled bathroom exhaust fans imme-
 The recall involves Kawasaki Cordless        diately and contact Delta Electronics
 Drills, model 691761, sold in green and      Dongguan to schedule a free repair by          BATH PeTAlS RecAllS Soy cAndleS
 black color combination, with a 19.2v        a trained service technician. For addi-        dUe To FiRe And lAceRATion
 battery pack. “Alltrade Tools LLC” and       tional information, contact Delta Elec-        HAzARdS
 “Made in China” are printed in white         tronics Dongguan toll-free at (855)
 lettering on the left side of the drills.    301-6578 between 9 a.m. and 8 p.m.             Bath Petals Inc., of Gardena, Calif. has
 The drill’s model and serial numbers         ET Monday through Friday, or visit the         recalled their Soy Candles. The candle
 are located on a label on the right side     company’s website at www.heaterfan-            can burn with a high flame, causing
 of the drill. The recalled drills have       recall.com.                                    excessive heat. This poses a fire
 the following serial numbers: From                                                          hazard. The heat and flame can cause
 11030 30201 to 11030 33656; From                                                            the glass candle holder to shatter. This
 11040 00001 to 11040 17120; From             innoVAGe RecAllS diScoVeRy KidS                poses a laceration hazard. The firm
 11060 00001 to 11060 07340; From             lAmPS dUe To FiRe And BURn                     has received one report of a candle
 11070 00001 to 11070 05984; and              HAzARdS                                        burning with a high flame and shatter-
 From 11070 16801 to 11070 20640.                                                            ing the glass holder. No injuries or
                                              About 300,000 Discovery Kids™ Ani-             property damage were reported. The
 Consumers should immediately stop            mated Marine and Safari Lamps have             candles are 7.5 oz. soy candles sold in
 using the recalled drills and register at    been recalled by Innovage LLC, of              four colors and scents: Australian

30                                           www.BeasleyAllen.com
Eucalyptus, California Rose Garden,         stop using the recalled battery packs      Consumers should immediately stop
French Alpine and Thai Lemongrass           immediately, remove them from the          using the recalled strollers and contact
Ginger. “Bath petals” and the scent         camera and contact Nikon for a free        the firm for a free repair kit. Do not
name are printed on the glass candle        replacement battery pack. For addi-        return the stroller to the retailers as
holder.                                     tional information, contact Nikon at       they will not be able to provide the
                                            (8 0 0) 645 - 6 687 bet ween 8 a.m.        repair kit. For additional information,
The following UPC codes are on the          through 12 midnight ET Monday              call Peg Perego at (888) 734- 6020
bottom of the box: 6-10696-55269-3,         through Friday, or visit the company’s     anytime or visit the company’s website
7-97734-03754-8, 7-97734-03755-5 and        website at www.nikonusa.com.               at w w w.PegPeregoUSA.com. CPSC
7-97734-03758-6. The candles were                                                      and Peg Perego warn consumers that
sold at TJ Maxx and Marshalls in the                                                   these strollers may be available on the
U.S. from February 2012 through April       PeG PeReGo RecAllS STRolleRS dUe           secondhand market, in thrift stores or
2012 and at Homesense, Winners and          To RiSK oF enTRAPmenT And                  at yard sales. Consumers should not
Marshalls in Canada in April 2012 for       STRAnGUlATion                              buy or sell these recalled strollers until
about $10. Consumers should stop                                                       the repair kit is installed.
using these candles immediately and         Peg Perego USA Inc., of Fort Wayne,
contact Bath Petals for a full refund.      Ind., has recalled about 223,000 stroll-
For additional information, contact         ers due to a risk of entrapment and        BoScH RecAllS SKilSAw miTeR SAwS
Bath Petals toll-free at (855) 772-7258     strangulation. A six-month-old baby        dUe To lAceRATion HAzARd
between 9 a.m. and 5 p.m. PT Monday         boy from Tarzana, Calif. died of stran-
through Friday or visit the company’s       gulation after his head was trapped        Approximately 22,149 Saws have been
website at www.bathpetals.com.              between the seat and the tray of his       recalled by Robert Bosch Tool Corpo-
                                            Peg Perego stroller in 2004. Another       ration of Mount Prospect, Ill. The
                                            baby, a seven-month-old girl from New      lower guard can break and contact the
niKon RecAllS RecHARGeABle                  York, N.Y., nearly strangled when her      blade during use, posing a laceration
BATTeRy PAcKS Sold wiTH diGiTAl             head became trapped between the            hazard to users. The company has
SlR cAmeRAS dUe To BURn HAzARd              seat and the tray of her stroller in       received no reports of incidents or
                                            2006.                                      injuries. The recalled product is the
Nikon Inc., of Melville, N.Y., has                                                     SkilSaw® 10-inch compound miter
recalled its Nikon digital SLR camera       Entrapment and strangulation can           saw, with model number 3316 and
battery packs. This includes about          occur, especially to infants younger       date codes 111, 112, 201, 202, 203 or
5,100 in the United States, 1,100 in        than 12 months of age, when a child is     204. The model number and date code
Canada and an additional 195,000            not harnessed. An infant can pass          are on the lower right side of the name
worldwide. The batter y packs can           through the opening between the            plate located on the motor housing.
short circuit, causing them to overheat     stroller tray and seat bottom, but his/    The SkilSaw logo appears at the top of
and melt, posing a burn hazard to con-      her head a nd neck ca n become             the upper blade guard and on the dust
sumers. Nikon has received seven            entrapped by the tray. Infants who         collection bag. The saws were sold at
reports of incidents outside of the U.S.    become entrapped at the neck are at        Lowe’s Home Centers nationwide and
and Canada of the recalled battery          r isk of strangu lation. T he recal l      OC Tanner from January 2012 to April
packs overheating. No incidents have        involves two different older versions      2012. Consumers should immediately
been reported in the U.S. or Canada.        of the Peg Perego strollers, Venezia       stop using the miter saw and contact
No injuries have been reported.             and Pliko-P3, manufactured between         Robert Bosch Tool Corporation for a
                                            January 2004 and September 2007, in        free lower guard replacement kit. For
This recall involves Nikon EN-EL 15         a variety of colors. They were manu-
rechargeable lithium-ion battery packs                                                 additional information, contact the
                                            factured prior to the existence of the     company toll-free at (888) 727-6109
with lot numbers E and F. The battery       January 2008 voluntary industry stan-
pack was sold with the Nikon digital                                                   between 7 a.m. and 7 p.m. CT Monday
                                            dard which addresses the height of the     through Friday, or visit the company’s
SLR D800 and D7000 model cameras.           opening between the stroller’s tray
The battery pack’s model number “EN-                                                   website at www.skiltools.com.
                                            and the seat bottom. The voluntary
EL15” and “7.0V 1900mAh 14Wh” are           standard requires larger stroller open-
printed on the back of the battery          ings that prevent infant entrapment        cHicco Polly HiGH cHAiRS RecAlled
pack. Only battery packs with an “E”        and strangulation hazards.                 dUe To lAceRATion HAzARd
or “F” in ninth character of the 14-digit
lot number located on the back of the       Only strollers that have a child tray      Artsana USA Inc., of Lancaster, Pa., has
batter y pack are included in this          with one cup holder are part of this       recalled Chicco Polly High Chair. Chil-
recall.                                     recall. Strollers with a bumper bar in     dren can fall on or against the pegs on
                                            front of the child or a tray with two      the rear legs of the high chair, result-
T he ca mer a pack s were sold at           cup holders are not included in this       ing in a bruising or laceration injury.
camera, office supply and mass mer-         recall. The strollers were sold at         The firm is aware of 21 reports of inci-
chandise stores, in catalogs and on         various retailers nationwide, including    dents in which a child fell against the
various websites nationwide. They           Babies R Us and Buy Buy Baby from          peg and received injuries, including
were sold with the digital SLR camera       January 2004 through September 2010        four laceration injuries requiring
in Canada from February 2012 through        for between $270 and $330 for the          medical closure (stitches, tape or glue)
March 2012 and in the U.S. from March       Pliko P-3 stroller and between $350        and one scratched cornea. This recall
2012 through April 2012 for between         and $450 for the Venezia stroller. They    involves a range of Chicco Polly high
$1,200 and $3,000. Consumers should         were manufactured in Italy.

                                        www.JereBeasleyReport.com                                                               31
 chairs with pegs on the back legs               TRoxel RecAllS FlexiBle FlyeR               Molenaar should return them for a
 intended for tray storage. The high             SwinG SeTS dUe To FAll HAzARd               refund or credit. Consumers or busi-
 chairs have a folding metal frame for                                                       nesses can contact Molenaar LLC for
 storage and a reclining seat. The               The Troxel Company, of Moscow,              more information. For additional infor-
 recalled high chairs can be identified          Tenn., has recalled Flexible Flyer          mation, contact Molenaar at (877) 719-
 by the model number and date code               Swi ng Sets. T h is i ncludes about         4442 between 8 a.m. and 4:30 p.m. CT
 printed on a label on the underside of          100,500 in the United States and 4,900      Monday through Friday or visit the
 the seat, close to the footrest. The date       in Canada. The see saw seats can            company’s website at www.miline.
 code is in the format DDMMYYYY or               break away from the bolt fasteners          com where a link to this recall will be
 YYYY-MM-DD. The chairs were sold at             during use, posing a fall hazard. The       posted.
 retail stores including Babies R Us,            firm received 1,232 reports of see saw
 Burlington Coat Factor y, Buy Buy               seats breaking resulting in 13 injuries
 Baby, Shopko and Toys R Us, as well as          to you ng ch i ldren that i ncluded         FAmily dollAR SToReS RecAllS
 online outlets including Albeebaby.             bumps, bruises and lacerations. The         decoRATiVe liGHT SeTS dUe To FiRe
 com, A mazon.com, Babyage.com,                  Flexible Flyer swing sets come in 11        And elecTRicAl SHocK HAzARd
 Babysupermart.com, Diapers.com and              different models, each with a see saw
                                                 attachment along with swings, bars or       Family Dollar Services, Inc., of Mat-
 Ta r g e t .co m f r o m Ja nu a r y 2 0 0 5
                                                 a slide. The model number can be            t hews, N.C., ha s reca l led about
 through July 2012 for between $100
                                                 found on a sticker located underneath       280,000 200 Mini Lights. The light
 and $150.
                                                 the center of the top bar of each swing     sets do not meet the UL standard for
 Consumers should contact Chicco for             set u n it. T he sets were sold by          this product and pose a fire and shock
 a free peg cover kit which will be              Walmart, Toys R Us, Academy and at          risk. There were three reports of over-
 mailed to them. To help prevent inju-           other specialty stores, and online          heati ng. No i njur ies or proper t y
 ries before repair, consumers should            retailers from December 2011 through        damage were reported. The recalled
 store the tray on the pegs when the             May 2012 for between $130 and $280.         decorative light sets have “200 Mini
 high chair is not in use. For additional        Consumers should stop using the see         Lights” and “Multi Lights, Green Wire”
 information, contact Chicco toll-free           saws immediately and contact Troxel         printed on the red box. The product is
 at (800) 807-8817 between 8 a.m.                to receive a free repair kit. For addi-     identified by SKU # 2211428 and UPC
 through 5 p.m. ET Monday through                tional information, contact Troxel at       # 049696720465 found on the back of
 Friday, or visit the company’s website          (888) 770-7060 between the hours of         the package. The product contains
 at www.chiccousa.com/pollykit.                  7 a.m. and 6 p.m. CT Monday through         labels attached to a tag on the power
                                                 Friday or visit the company’s website       cord with UL Listing # E346525 and
                                                 at http://www.regcen.com/flexible-          Model # F0L200A4S. The lights were
 cHildRen’S BeAcH cHAiR RecAlled                 flyer.                                      sold exclusively at Family Dollar stores
 dUe To lAceRATion HAzARd                                                                    from September 2011 through Decem-
                                                                                             ber 2011 for $8.
 Downeast Concepts Inc. has recalled             molenAAR RecAllS FoldinG STeP
 more than 15,000 children’s folding                                                         Consumers should immediately stop
                                                 SToolS dUe To FAll HAzARd
 beach chairs. These chairs were sold                                                        using the light sets and return the
 at Home Goods and others stores                 Molenaar LLC, of Willmar, Minn., has        product to a Family Dollar store for a
 nationwide from June 2011 through               recalled about 3,700 Folding Step           full refund. For additional information,
 June 2012. The recalled chairs have             Stools. The folding step stools can         contact Family Dollar Stores at (800)
 exposed, sharp metal rivets that pose           break or collapse unexpectedly when         547- 0359 between 8:30 a.m. and 5
 a laceration hazard. Downeast Con-              in use, posing a fall hazard to consum-     p.m. Monday through Friday, or visit
 cepts has received one report of an             ers. No incidents or injuries reported      the firm’s website at www.familydol-
 injury to a 21-month-old girl who fell          were reported. This recall involves         lar.com in the Help section.
 on the chair’s metal rivets and cut her         13-inch high folding step stools. The
 forehead, which required stitches.              step stool is plastic and has a handle
                                                 for carrying the stool when it is folded.   edic AiR BloweRS RecAlled dUe To
 The recalled children’s folding beach
                                                 The stools have a single step and come      FiRe HAzARd
 chairs have white aluminum tube
                                                 in beige with a brown top. The stools,      More than 53,000 air blowers manu-
 frames and pink, yellow, blue or
                                                 which were used as promotional prod-        factured by EDIC of Los Angeles have
 purple fabric seats and chair backs
                                                 ucts, have various company logos            been recalled after four incidents
 with fish, palm trees or mermaid deco-
                                                 imprinted on the side panel beneath         involving fires that resulted in prop-
 rations.The chairs measure 13 inches
                                                 the top of the stool.                       erty damage, according to the Con-
 wide by 18 inches high by 20 inches
 deep. Consumers should immediately              The recalled stools were distributed        sumer Product Safety Commission.
 stop using the chairs and return them           free by various companies as promo-         The blowers’ internal electrical capaci-
 to Downeast Concepts for a f u ll               tional products between March 2012          tor can fail and overheat. The recall
 refund. For additional information,             and May 2012. Consumers should              involves air movers/blowers that are
 contact Downeast Concepts at (800)              immediately stop using the step stools      used to dry floors in homes and other
 343-2424 between 8:30 a.m. through 5            and return them to the business             buildings. “Aqua Dri” is printed on the
 p.m. ET Monday through Thursday                 printed on the step stool to receive a      top of some of the air movers. Model
 and between 8 a.m. and 4:30 p.m. on             different promotional item. Businesses      “3004AD” or model “3004ADxxx”
 Friday, or visit the company’s website          who purchased the product from              (with additional letters) is printed on
 at www.downeastconcepts.com.

32                                              www.BeasleyAllen.com
the serial number plate on the back of     dents involving exploding plastic           GB2012, GB2021, GB2022, GB2031,
the units.                                 bottles including three in which con-       GB2032, GB2041, GB2042, GB3001
                                           sumers received cuts to various parts       and GB3011. The style number is only
Model numbers with “N” are not             of their upper body. The products are       printed on the sales tag and does not
included in this recall. The air movers’   plastic bottles used as a part of the iSi   appear on the garments.
plastic housing measures about 18          Twist’n Sparkle Beverage Carbonation
inches high by 18 inches long by 18        System. The recalled bottles were sold      The pajamas were sold at children’s
inches deep and has a 25-foot yellow       in the Starter Set model number 1005        clothing and specialty retailers nation-
electrical cord. Users should immedi-      with one reusable bottle and the Bottle     wide and online including at The
ately stop using the blowers and           Set model number 1006 with two reus-        Pajama Princess in Austin, Texas,
contact EDIC for a free repair kit. For    able bottles. The model numbers are         Anklebiter’s in Roswell, Ga., Cute As A
additional information, contact the        printed on the bottom of the box. The       Button in Tarboro, N.C., Bhumbles in
company toll-free at (888) 289-8720        recalled plastic bottles are available in   Winder, Ga., and www.bhumbles.com,
between 8:30 a.m. through 4 p.m. PT        one size and two colors of caps/            from February 2010 to December 2011
Monday through Friday, or by fax at        bottoms, white or gray.                     for between about $20 and $50. Chil-
(323) 667-0144, by email at recall@                                                    dren should stop wearing the recalled
edic-usa.com or visit the company’s        The bottles were sold at Williams-          sleepwear immediately and consumers
website at www.EDIC-USA.com.               Sonoma, QVC and other national retail-      should return it for a refund, exchange
                                           ers and websites from June 2010 to          or store credit. For additional informa-
                                           March 2012 for approximately $50 for        tion, contact Ishtex Textile Products
iKeA RecAllS TRAcK liGHTinG                the Starter Set and $30 for the Bottle      toll-free at (800) 935-0914 between 9
SySTem dUe To elecTRic SHocK               Set. Consumers should immediately           a.m. and 5 p.m. ET Monday through
HAzARd                                     stop using the recalled products and        Friday or by e-mail at info@ishtex.com
                                           either contact iSi or the place of pur-     or visit the company’s website at
IKEA North America Services LLC, of
                                           chase for instructions on returning the     www.ishtex.com.
Conshohocken, Pa., has recalled its
                                           product for a refund or store credit.
IKEA 365 + SANDA track, 28” and 45”.
                                           For produc t s pu rch a sed on l i ne,
The ground connection in the track is                                                  PoSSiBle meTAl FRAGmenTS in winn-
                                           contact the online retailers for instruc-
defective, posing an electric shock                                                    dixie SKilleT dinneRS
                                           tions on how to ship the returns and
hazard. This recall involves white,
                                           receive a refund or credit. Note that
straight track systems used to hold and                                                Winn-Dixie has recalled the grocery
                                           the US Postal Service does not accept
power light fixtures. The recalled                                                     store chain’s brand of Cheeseburger
                                           CO2 gas chargers for shipment by
tracks are model numbers 00149242                                                      Macaroni Skillet Dinners. There is a
                                           mai l. For additional in formation,
and 10149246, supplier number 21338                                                    possibility that the product contains
                                           contact iSi at (800) 645-3595 anytime
and date stamp 1134 through 1213.                                                      small, metal fragments. The recall
                                           or visit the company’s website at
The brand name IKEA, 365+ SANDA,                                                       affects the 5.8 oz packages with a UPC
                                           www.twistnsparkle.com.
supplier number and date stamp are                                                     code of 2114018080, and a sell-by date
printed on a white label attached to                                                   of May 14, 2013. There have been no
the side of the track. The recalled        cHildRen’S PAJAmAS RecAlled By              reports of any issues associated with
tracks are 28” and 45” long.               iSHTex TexTile PRodUcTS dUe To              the product at this time. The product
                                           ViolATion oF FedeRAl FlAmmABiliTy           was sold in Winn-Dixie stores in
The lighting systems were sold exclu-                                                  Alabama, Florida, Georgia, Mississippi
sively at IKEA stores nationwide from      STAndARd
                                                                                       and Louisiana. Anybody who has the
September 2011 through March 2012          About 6,000 Gabiano Collection Boys         recalled item should immediately
from $15 to $20.Consumers should           and Girls Pajamas, Sets and Gowns           discard the product or bring it back to
immediately stop using the track and       have been recalled by Ishtex Textile        a Winn-Dixie store and request a full
return it to any IKE A store for a         Products Inc. of Duluth, Ga. The            refund. To receive the refund, present
replacement unit or a full refund. For     pajamas fail to meet the federal flam-      proof of purchase through a receipt or
additional information, contact IKEA       mability standards for children’s sleep-    the product packaging label. Consum-
toll-free at (888) 966-4532 anytime, or    wear posing a risk of burn injury to        ers with questions about the recalled
visit the company’s website at www.        children. The garments were adver-          products may contact the Winn-Dixie
ikea-usa.com.                              tised and sold as children’s sleepwear.     Guest Service Center toll free at 1.866.
                                           This recall involves all styles of boys     WINN-DIXIE (866.946.6349).
iSi noRTH AmeRicA RecAllS TwiST’n
                                           and girls 100% cotton pajamas, includ-
SPARKle BeVeRAGe cARBonATion               ing sets (tops and bottoms), one-piece
                                           suits and gowns in a variety of colors      PediGRee doG Food RecAlled
SySTem dUe To exPloSion HAzARd                                                         BecAUSe oF PoTenTiAl cHoKinG RiSK
                                           and designs in sizes 2 through 14.
About 162,700 Twist’n Sparkle Home         “Gabiano” is printed on a tag sewn          Some Pedigree weight management
Beverage Carbonation System plastic        into the center back neckline of the        canned dog food products are being
bottles have been recalled by iSi North    tops and gown and at the center back        recalled due to a potential choking
America Inc, of Fairfield N.J. The         of the bottoms. This recall includes        risk. Affected products may contain
plastic bottles can explode under pres-    style numbers GB201, GB204, GB205,          small pieces of blue plastic, which
sure, expelling plastic parts, resulting   GB207, GB208, GB213, GB215, GB220,          entered the food during the produc-
in an injury hazard to anyone nearby.      GB225, GB230, GB245, GB250, GB260,          tion process. The source of the plastic
The company is aware of nine inci-         GB275, GB2001, GB2002, GB2011,              has been identified and the issue

                                       www.JereBeasleyReport.com                                                              33
  resolved, according to Mars Petcare             berland School of Law in 1993, began his        kAy Cox
  which manufactures the food. Only               law practice in Birmingham. He became a            Kay Cox, who came to the firm in August
  cans of Pedigree weight management              partner in the firm of Hogan, Smith &           of 20 03, is a legal assistant to Mi ke
  canned dog food varieties with the              A lspaug h before leav i ng to joi n us.        Andrews. Kay has worked in the legal field
  production codes shown below are                Although Ben’s practice has always focused      for 24 years. She received a legal assistant
  included in the voluntary recall. Each          on products liability and crashworthiness       certification from Auburn University at
  product will have a lot code printed            cases, his secondary specialties are in the     Montgomery in 1994. In the firm, Kay helps
  on the end of the can that begins with          areas of aviation crashes, construction site    with the drafting and filing of pleadings
  209, 210, 211 or 212 and a Best Before          injuries and nursing home litigation.           and discovery in cases, organizing docu-
  date that falls between 2/24/2014 and              Ben has frequently lectured on legal         ments for trial, obtaining and organizing
  3/23/2014. The UPC numbers are:                 topics for various organizations including:     medical records, and corresponding with
                                                  the Alabama Association for Justice, the Bir-   clients and experts. Kay also keeps up with
  •	 2310034974—Pedigree	Healthy	Weight	          mingham Bar Association, the Cumberland         case deadlines and scheduling.
     Premium Ground Entrée in Meaty               School of Law, the National Business Insti-        Kay has twin daughters, Erin and Jessica,
     Juices                                       tute, the Southern Trial Lawyers Associa-       who are 18 years old. Erin graduated from
  •	 2310001913—Pedigree	 Weight	 Man-            tion and Jones School of Law.                   Prattville High School this past May and
     agement Meaty Ground Dinner Beef &              Ben has been involved in a number of         Jessica will graduate in May of 2013. The
     Liver Dinner in Meaty Juices                 high profile cases. He recently obtained a      family lives in Prattville. Kay enjoys being
                                                  $2.75 million verdict against Ford Motor        outside and enjoying nature—especially
  •	 2310023045—Pedigree	 Weight	 Man-            Company in a wrongful death case tried in       the colors of Fall. She likes to go fishing
     a ge me nt M e at y G r ou nd D i n ne r     Montgomery. In 2009, Ben’s client received      when she gets a chance and also enjoys
     Chicken & Rice Dinner in Meaty Juices        a $3.5 million verdict in a wrongful death      deer hunting—but only with a camera!
                                                  case trial in Chilton County, Ala. Ben was      Most of all, Kay is an avid Alabama fan and
  No other Pedig ree products a re                also part of the trial team that obtained a     enjoys watching SEC football. Kay is a very
  affected. Consumers who have pur-               $4 million verdict in Montgomery County         good employee. She is a hard worker and is
  chased the affected products are                against Wal-mart in a defective tire case.      dedicated to helping clients with their
  encouraged to discard the food or               Ben has also obtained a $12 million record      cases. We are most fortunate to have Kay
  return it to the retailer for a full refund     verdict in a crashworthiness case against a     with us.
  or exchange. The company has not                cab guard manufacturer. He has also
  received any reports of injur y or              settled a number of crashworthiness cases       CARey HendeRson
  illness associated with the affected            which have resulted in multi-million dollar        Carey Henderson has been with the firm
  product. The recalled food was distrib-         recoveries for his clients.                     since February of this year, working in our
  uted to retail customers throughout                Ben has been selected for inclusion in       Web Department. Since starting, Carey has
  the United States. For more informa-            Super Lawyers in 2010, 2011 and 2012,           been helping with the redesign of the
  tion, call 1-877-720-3335 or visit www.         published by Business Alabama magazine.         current Beasleyallen.com website, as well
  pedigree.com.                                   In December 2010, Ben was selected as our       as numerous smaller sites. Carey also helps
                                                  firm’s Lawyer of the Year for the Product       with the graphic design elements as well as
   There were so many recalls last month                                                          writing code for the websites.
that we weren’t able to include all of them       Liability Section. Ben is a prior member of
                                                  the Executive Committee for the Alabama            Early in his career, Carey worked with a
in this issue. We tried to include those of                                                       firm that put the very first internet café on
the most importance and urgency. If you           Association for Justice. He previously was
                                                  elected to serve on the Executive Commit-       a cruise ship, the Norwegian. He has also
need more information on any of the                                                               worked with several design firms that have
recalls listed above, visit our firm’s web site   tee for the Young Lawyers Section of the
                                                  Birmingham Bar Association. Ben was once        built websites for a number of companies
at w w w.BeasleyA llen.com/recalls. We                                                            including Coca-cola, the NBA, and Pepsi.
would also like to know if we have missed         selected “Boss of the Year” by Birmingham
                                                  Magazine.                                       During the last few years before coming
any significant recall that involves a safety                                                     with our firm, Carey worked with the U.S.
issue. If so, please let us know. As indicated       Ben, who was raised in Ozark, Ala., is
                                                  married to the former Kimberly Strag who        Army Combat Readiness Center at Ft.
at the outset, you can contact Shanna                                                             Rucker. While there, he helped build
Malone at Shanna.Malone@beasleyallen.             is from Philadelphia, Pa. They have one
                                                  daughter and two sons. Ben is a board           numerous websites for soldiers in combat
com for more recall information or to                                                             theaters. During his time at the USA CRC,
supply us with information on recalls.            member of t he Pa seo movement i n
                                                  Alabama which is a worldwide movement           Carey received several commendations
                                                  of the Christian Church. Ben and his wife       from two Brigadier generals, as well as cer-
                                                  are members of the Christchurch, an Angli-      tificates of accomplishments from the U.S.
XXII.                                             can Parish in Montgomery. Ben is also a         Government for contributions to existing
                                                                                                  and new websites.
                                                  past board member of the Landmarks Foun-
FIRM ACTIVITIES                                   dation of Montgomery, a non-profit organi-         From all accounts, Carey has a variety of
                                                  zation committed to preserving historic         interests that occupy his time away from
                                                  structures.                                     work. Carey is a guitar player in two differ-
emPloyee SPoTliGHTS                                  Ben is a dedicated lawyer who works          ent bands, he writes fiction and editorials,
                                                  very hard for his clients and cares deeply      enjoys photography, and studies Roman
                                                  about them. Ben is not only a very compe-       history, which he says is for fun. He also
Ben BAkeR                                         tent lawyer, but also a very good person.       says that he enjoys dabbling in philosophy,
  Ben Baker is a lawyer in our firm who           We are truly blessed to have him with our       religion and anthropology. Carey is a very
primarily handles product liability law-          firm.                                           good employee and we are pleased to have
suits. Ben, who graduated from the Cum-                                                           him with us.

34                                                www.BeasleyAllen.com
BeASley, Allen ReceiVeS PRo Bono                  XXIII.                                              return full-time to my real love in
AwARd                                                                                                 legal education: teaching.
                                                  SPECIAL
                                                                                                       A U.S. Marine Corps flight officer on 200
   Our firm was selected by the Alabama
Bar Association as the recipient of the
                                                  RECOGNITIONS                                      missions during the Vietnam War, John
Alabama State Bar Pro Bono Award for                                                                graduated from Cumberland in 1974. After
2012. The Bar has been giving awards to                                                             serving as a civil rights lawyer, law profes-
acknowledge outstanding pro bono service          dR. Sidney wolFe doeS A GReAT SeRVice             sor and federal judge, he returned to Cum-
since 1996. Specific categories of nomina-        FoR THe AmeRicAn PeoPle                           berland in 2001 as Dean. Under John’s
tion—Individual, Firm, Law Student and                                                              tenure as Dean, the law school returned to
Mediator—were added i n 20 0 0. T he                 I have referred quite often over the years     an earlier focus on producing courtroom-
purpose of the award is to recognize the          to Public Citizen, an organization that           ready lawyers.
outstanding pro bono efforts of lawyers,          works extremely hard on behalf of consum-            U.S. News and World Report ranked
law firms, mediators, and law students who        ers, and I hope the information we have           Cumberland’s trial advocacy program
are actively donating time to the civil repre-    supplied has been helpful. Dr. Sidney             fourth nationally in 2012, up from fifth in
sentation of those who cannot otherwise           Wolfe, who serves as Director of Public Cit-      2011. Recently, John led an effort to update
afford legal counsel and to recognize indi-       izen’s Health Research Group, deserves a          the curriculum to better prepare students
viduals who encourage greater legal repre-        tremendous amount of credit for helping to        for the ever-evolving practice of law. John
sentation in and acceptance of pro bono           keep dangerous drugs off the market. It’s         Carroll has been a highly effective and suc-
cases.                                            well known that the United States is one of       cessful Dean and will be hard to replace.
   Nominations for each award category are        the biggest drug-consuming countries in           He leaves Cumberland in great shape by all
reviewed by the Alabama State Bar Volun-          the world. Of course, I am referring to pre-      standards.
teer Lawyers Program. Nominations are             scr iption dr ugs and over-the- counter           Source: Al.com
accepted from Bar members, judges and             drugs—all “legal” drugs. Most folks expect
the public. Our firm was chosen for this          those drugs to be safe for them to use.
                                                     Un for t u nately, ma ny of t he d r ugs
year’s award based on the following
                                                  allowed by the FDA to be put on the market
                                                                                                    moRRiS deeS cHoSen FoR ToP leGAl
achievements:
                                                  are extremely dangerous and have been
                                                                                                    AwARd
•	 The	 lawyers	 at	 Beasley	 Allen	 regularly	   approved by the regulatory agency. Dr.
                                                                                                       Morris Dees, the co-founder of the South-
   accept pro bono cases from the Alabama         Wolfe and his co-workers at Public Citizen
                                                                                                    ern Poverty Law Center in Montgomery,
   State Bar Volunteer Lawyers Program.           have fought hard for years attempting to
                                                                                                    was chosen to receive the highest award
   The firm also schedules one attorney           keep bad drugs from being approved by the
                                                                                                    from the American Bar Association. Morris
   each month to assist at the Montgomery         FDA and to get bad drugs that are approved
                                                                                                    received the ABA Medal in Chicago at the
   County Bar’s walk-in legal advice clinic.      off the market. While they have been most
                                                                                                    annual meeting last month. ABA President
   Without such firm support these proj-          successful, there is much more for them to
                                                                                                    Bill Robinson said Morris is an outstanding
   ects would not be possible.                    do. I only wish Congress would provide the
                                                                                                    example of a law yer who moves the
                                                  FDA with sufficient funds and laws so that
•	 The	firm	maintains	100%	participation	in	                                                        country toward tolerance and equality case
                                                  Public Citizen wouldn’t have to do the job
   the St ate Ba r’s Volu nteer L aw yers                                                           by case.
                                                  for them.
   Program. This policy was a first for a                                                              Morris and Joseph Levin started the
                                                     I recommend that any person who wants
   Montgomery-based firm and has encour-                                                            Southern Poverty Law Center (SPLC) in
                                                  to learn what drugs to avoid should sub-
   aged other firms around the state to                                                             1971. Morris is known for having won cases
                                                  scribe to Worst Pills, Best Pills. As men-
   follow suit.                                                                                     that helped integrate government and
                                                  tioned in another part of this issue, this is a
                                                                                                    public institutions, and for fighting white
•	 Beasley	 Allen	 also	 provides	 significant	   publication put out by Public Citizen and it
                                                                                                    supremacist hate groups. He took on cases
   resources in support of pro bono activi-       should be required reading for every U.S.
                                                                                                    that some considered unpopular, but that
   ties in the state. In 2009 the firm estab-     consumer. You can go to either Citizen.org
                                                                                                    didn’t deter him or SPLC in their quest for
   lished a competitive grant of $10,000          or Worstpills.org for more information.
                                                                                                    justice and fair play. I can think of no
   awarded annually to an organization that                                                         person more deserving than Morris Dees to
   promotes pro bono activity.                                                                      receive this distinguished award from the
                                                  cUmBeRlAnd lAw deAn JoHn cARRoll                  American Bar Association. Morris, a tre-
   Tom Methvin, our managing Share-               will ReTURn To TeAcHinG                           mendous lawyer, is a great American by
holder, made pro bono work by Alabama                                                               any standard.
lawyers a top priority during his tenure as         John Carroll will step down as Dean of
                                                                                                    Source: Associated Press
President of the Alabama Bar. His work            Cumberland School of Law next summer.
paid off with a tremendous increase in the        He will return to teaching at the law school
number of Alabama lawyers volunteering            where he graduated. As Dean, John led the
to do pro bono work under the Bar’s Volun-        law school through its 50 th anniversary.         A woUnded wAR HeRo ReTURnS Home
teer Lawyers Program. We are both pleased         John, who will make the transition on June
and humbled to have been selected by the                                                               Josh Wetzel, an A r my Paratrooper,
                                                  30, 2013, had this to say about his future
Bar Association to receive this award.                                                              served his country in Afghanistan and
                                                  plans:
                                                                                                    while there suffered some most serious
                                                    There is nothing mystical about my              injuries. While on a foot patrol, this brave
                                                    decision. I have simply decided that            warrior was injured in a roadside bomb
                                                    it is time to take a step back and              explosion in May of this year. Josh lost both
                                                                                                    of his legs and suffered a neck injury and


                                           www.JereBeasleyReport.com                                                                          35
other less serious injuries in this blast. Josh   KendAll dUnSon RAiSeS $1,000 FoR                XXIV.
recovered from his wounds and has begun           cHild PRoTecT
h is road to recover y at Walter Reed                                                             FAVORITE BIBLE
National Military Medical Center. He is
determined to lead a normal life, and based
                                                     Kendall Dunson, a shareholder in our
                                                  firm, and his wife Samarria Munnerlyn
                                                                                                  VERSES
on all reports, he will do just that.             Dunson, led an event recently at Super
   Josh, a native of Glencoe, Ala., is married    Suppers Montgomery to help raise aware-           Lisa Harris, who is our firm’s Executive
to the former Paige Beasley, who is from Ft.      ness for Child Protect Children’s Advocacy      Director, told me that a specific verse has
Payne. Paige is the granddaughter of G. B.        Center. Kendall is on the Board of Direc-       been a tremendous help to her over the
and Jean Beasley, who also reside in Ft.          tors for Child Protect and works regularly      past several years. Lisa does a tremendous
Payne. G. B. was a well-known high school         on its behalf. Jannah Bailey, executive         job for our firm and is a most valuable
football coach, who later served as princi-       director of Child Protect, said:                employee.
pal at Ft. Payne High School. Paige, who
was teaching school in Tacoma, Wash.                We are grateful beyond measure for              When you pass through the waters,
when Josh was injured, had to give up her           the c ontinu ed suppor t Ke n d all             I will be with you; And through the
job so she could be with her husband while          Dunson and his wife, Samarria,                  rivers, they shall not overflow you.
he is at Walter Reed. Paige says that Josh is       un selfi shly c ont r ibute to Chil d           When you walk through the fire, you
working extremely hard and is on the road           Protect. They truly have servants’              shall not be burned, Nor shall the
to recovery. Josh has a great attitude and a        hearts and great passion for abused             flame scorch you.
tremendous desire to return to a normal             children that come through our
                                                    doors every day. We could not con-              Isaiah 43:2
lifestyle.
   I asked G.B. and Jean how we could help          tinue our service to the least of these
                                                                                                    Brenda Boman, who is with Alabama
Josh and Paige and they told me they only           without their belief in our cause.
                                                                                                  Arise, sent in a verse for this issue. Brenda,
wanted folks to pray for them. I suggested          They have left their handprints on
                                                                                                  along with others with ARISE, works hard
to G.B. that a fund be set up so that friends       the hearts of many of the children we
                                                                                                  for the poor in our state. She will be
and others could help the couple through a          serve.
                                                                                                  blessed for that work.
tough time in their lives. A fund has now           Established in November of 1989, Child
been set up, and it’s projected that Josh                                                           We know that a l l things wor k
                                                  Protect was originally developed to aid the
will be at Walter Reed for a year.                                                                  together for good to them that love
                                                  Department of Human Resources and law
   Neither Josh, Paige nor any of the family                                                        God.
                                                  enforcement in their investigation of child
requested that this fund be set up, and they      abuse, both physical and sexual. Child            Romans 8:28:
didn’t want to solicit donations. But the         Protect, which operates as a 501(c)3 non-
fund will give folks a way to help them out.      profit agency, works for children. It has          I wrote about the ordeal Josh and Paige
The account was set up at First Federal           saved countless children from endless           Wetzel are facing in another section of this
Bank in Ft. Payne where folks can send            interrogations by creating an atmosphere        issue. Josh sent in a verse that he feels
monetary donations. Checks should be              where a child can tell his or her story once    strongly about and one Josh says he
made out to Josh & Paige Wetzel, P.O. Box         and have it recorded for future use. The        depends on. While the ordeal that Josh and
680488, Ft. Payne, AL 35968. Any dona-            fund-raising event consisted of a cooking       Paige are facing is a tough one, I am con-
tions received, according to G.B., will go to     demonstration, chef tasting and wine            vinced they will come through it.
pay travel expenses for Paige and other           tasting to highlight local and seasonal
family members and for other expenses                                                               “For I will restore health to you And
                                                  produce in five different courses. All of the
related directly to Josh’s hospital stay and                                                        heal you of your wounds,” says
                                                  food was donated by the venue of the
rehabilitation. Any funds left over after                                                           the Lord, “Because they called you an
                                                  event, Super Suppers, located in the Pep-
Josh is discharged from Walter Reed, will                                                           outcast saying: ‘This is Zion; No one
                                                  pertree Shopping Center off Vaughn Road.
be paid over to the Wounded Warrior                                                                 seeks her.”’
                                                    During a presentation by Kendall on
Project, a most worthwhile cause, to help         Child Protect, the importance of donations        Jeremiah 30:17
others.                                           for Child Protect was emphasized. The
   Anybody who would like more informa-           donations go to child victims of physical,         Penny Marcum, who was a longtime
tion on Josh’s progress can go to Prayers         mental and sexual abuse. All attending the      legal secretary with our firm before moving
For Josh Wetzel on Facebook. I want to            event donated to Child Protect Children’s       to Chattanooga, Tenn. in 1998, sent in a
emphasize the only thing Josh and Paige           Advocacy Center. For more information           verse for this issue. Penny has a grandson,
have asked for is prayers to help them get        about Child Protect and its upcoming            Cade, who has been battling vision prob-
through this ordeal. You can also write           events, or on how to make a donation to         lems for several years. He has made a
Josh whose current address is SPC Josh            Child Protect, visit its website at www.        miraculous recovery.
Wetzel, 8901 Wisconsin Ave., Bldg. 10, 4 th       childprotect.org, or call (334) 262-1220.
Floor, Room 442, Bethesda, MD 20889.                                                                Blessed is he who considers the poor;
   Even though Josh had only served in the                                                          The Lord will deliver him in time of
war in Afghanistan for a relatively short                                                           trouble. The Lord will preserve him
time, he was doing his duty and was doing                                                           and keep him alive, And he will be
it very well. He, like all others who have                                                          blessed on the earth; You will not
fought in this long war, is an American                                                             d e live r h im to t h e w il l of h i s
hero. May God bless them all and their fam-                                                         enemies. The Lord will strengthen
ilies.                                                                                              him on his bed of illness; You will
                                                                                                    sustain him on his sickbed.


36                                                www.BeasleyAllen.com
  Psalms 41:1-3                                XXV.                                              ciously prosecuted when he won an
                                                                                                 election despite the fact that millions of
   Penny says there are many more scrip-       CLOSING                                           dollars were pumped into his opponent’s
tures that she has prayed for Cade’s healing
as well. One being Jeremiah 33:3, in which     OBSERVATIONS                                      campaign by the U.S. Chamber of Com-
                                                                                                 merce, an entity dedicated to protecting
God says: “Call unto me and I will answer                                                        the interests of huge corporations.
you and show you great and mighty things                                                            Finally, the documentary discusses the
that you don’t know.” Penny believes           HoT coFFee docUmenTARy ScReeninGS in              impact of mandatory arbitration clauses on
praying scripture is the most important        AlABAmA                                           the civi l justice system. It gives the
thing we can do besides telling others                                                           example of Jamie Leigh Jones, a woman
about Jesus and leading them to Him.              Hot Coffee, a documentary directed by          who signed an employment contract with
   Soo Seok Yang, a staff attorney in our      Susan Saladoff, was recently shown around         Halliburton, in her quest to help with
firm, furnished a verse for this issue. Soo    the State of Alabama at law schools and           Operation Iraqi Freedom. Jamie was told
Seok says that God has blessed his family      legal organization events. It also had            when hired that she would be housed with
this year with a new addition—a precious       selected showings at some movie houses.           other women, but when she arrived in Iraq,
daughter, Yoojin Johanna. Soo Seok and his     The documentary chronicles an actual              she was bunked with 400 men. She was
wife Doh Ah Kim, celebrated their fifth        lawsuit that brought tort reform to the fore-     sexually harassed, assaulted, and raped
anniversary recently, beginning what he        front of political campaigns, and propa-          while working for Halliburton despite her
says is a new chapter in their lives. Soo      ganda fed to the media by Corporate               requests to be moved. Jamie could not
Seok says he is constantly reminded and        America. That case is Stella Liebeck v.           pursue her civil claims against Halliburton
encouraged that God is our hope and help.      McDonalds. While most Americans are               in a court of law because of a mandatory
                                               familiar with the “McDonald’s Coffee              arbitration clause tucked into the employ-
  “For I know the plans I have for you,”       Case,” and most likely equate that case with
  declares the Lord, “plans to prosper                                                           ment contract. W hen she signed her
                                               fr ivolous lawsu its, it’s become qu ite          employment contract, she never antici-
  you and not to harm you, plans to            obvious that few actually know ver y
  give you hope and a future. Then you                                                           pated that she would have to arbitrate Hal-
                                               much—if anything—about the facts giving           libur ton’s liabilit y for its employees’
  will call on me and come and pray to         rise to the lawsuit.
  me, and I will listen to you. You will                                                         horrendous actions and would be denied
                                                  Stella Liebeck, a 79-year-old woman, was       access to the courts.
  seek me and find me when you seek            riding with her nephew when they pur-
  me with all your heart.”                                                                          The documentary seeks to shed light on
                                               chased a cup of coffee from the McDon-            the true nature of the civil justice system.
                                               ald’s drive-thru. Her nephew pulled into a        That system is not one of frivolous lawsuits
  Jeremiah 29:11-13
                                               parking spot so that Stella could put cream       and unlimited jury awards. Instead, it’s a
  Lindsey Meadows, a law clerk in our          and sugar in the coffee. When Stella lifted       system that seeks justice for all concerned.
Mass Torts Section, also furnished a verse     the lid of the cup, the coffee spilled all over   The truth is our judicial system utilizes one
for this issue. Lindsey reminds us that the    her lap and legs, causing severe burns. The       of the greatest entities ever created, and
Bible says that to love God is to follow His   coffee was as hot as radiator water in a car      that’s the jury. Without our jury system,
commandments. She pointed out that what        after driving. It was McDonald’s policy to        corporations would police themselves and
we say out loud to others, or even mutter to   keep the coffee at that extremely high tem-       would never be held accountable for their
ourselves, is a reflection on what we think    perature. During the trial, it was discov-        actions. The right to trial by jury in civil
and, she says, how we think about things.      ered that McDonald’s had received over            disputes was considered to be so important
And how we think about things reflects         700 prior complaints of similar coffee spills     by our forefathers that it was guaranteed to
what we do. For Lindsey, understanding         and injuries.                                     all Americans by way of the 7th Amendment
the connection between the meditations of         This case sparked a media-fueled politi-       to the U.S. Constitution! That’s why the
her heart, her words, and her actions is       cal frenzy calling for tort reform. The docu-     truth about the jury system in America
important to her faith.                        mentar y discusses three types of tort            must be made available to the public.
                                               reform. The first is capping damages. To
  Let the words of my mouth and the            illustrate how caps work, the documentary
  meditation of my heart be acceptable         tells the story of twins: one healthy and
  in your sight. Oh Lord, my strength          one with brain damage. One of the twins           THe Penn STATe ScAndAl TeAcHeS A
  and my redeemer.                             suffered brain damage when the doctor             needed leSSon
                                               failed to deliver the babies according to the
  Psalm 19:14                                                                                        I had not intended to write about the
                                               standard of care. The Life Care Plan for the
                                                                                                 Penn State debacle, but after reflecting on
                                               baby showed that the family would need
                                                                                                 it, I changed my mind. The detailed report
                                               $6 million to take care of him for the rest
                                                                                                 released last month by the school revealed
                                               of his life. The jury awarded the family $5.6
                                                                                                 that the tragic events involving the school
                                               million, but the award was capped at $1.25
                                                                                                 were even worse than I had thought. Based
                                               million. The documentary notes that a cap
                                                                                                 on findings in the report, it’s very clear
                                               on damages takes away the power of the
                                                                                                 that senior officials at Penn State Univer-
                                               jury and gives it to legislative bodies.
                                                                                                 sity, including the school’s president and
                                                  The documentary then looks at “court
                                                                                                 Coach Joe Paterno, concealed critical facts
                                               reform” as a form of so-called tort reform.
                                                                                                 about Coach Jerry Sandusky’s abuses of a
                                               As an example, the documentary reviews
                                                                                                 huge number of children over a long
                                               the prosecution of Oliver Diaz, a Missis-
                                                                                                 period of time. The obvious reason for the
                                               sippi Supreme Court Justice who was mali-
                                                                                                 cover-up was that those in charge at Penn


                                         www.JereBeasleyReport.com                                                                         37
State were concerned about bad publicity          will have learned from this tragic episode     churches, in the work place, on military
for the football program. This makes their        and will make sure such a thing never          bases, in shopping centers, and now in a
conduct, which was not only very bad, but         happens again at any school.                   movie theatre.
almost impossible to believe, even more             This is without a doubt a painful lesson        How many more mass murders will it
despicable. The school, and all persons           for this school. But we must remember that     take before our political leaders realize that
involved in this scandal, deserve to be           the real pain and suffering was experi-        changes are needed on how we control
severely punished.                                enced by the young men who were abused.        access to guns in this country? I say—no
  The report, coming from an internal             Our prayers are certainly with these young     more! We must wake up and demand
investigation, revealed that Joe Paterno and      men and hopefully they will be able to get     action. Obviously, the place to start with is
other senior officials at Penn State “con-        on with their lives. May God bless and         with members of Congress. We should
cealed critical facts” relating to Jerry San-     sustain them.                                  demand that action be taken by Congress
dusky’s child abuse. To cover up such             Source: Associated Press                       to keep “assault rifles” in this country off
horrendous conduct is reprehensible and                                                          the streets. There can be absolutely no jus-
can’t be tolerated. The 267-page report,                                                         tification for allowing the sale of assault
released on July 11th , follows an eight-                                                        rifles to individuals. These weapons are for
                                                  A monTHly RemindeR
month inquiry by former FBI director Louis                                                       use by the military and have no place on
Freeh. The report shows in detail how this          If my people, who are called by my           the streets in America.
scandal was covered up. Freeh was hired             name, will humble themselves and                The gun manufacturers and sellers are
by University trustees weeks after San-             pray and seek my face and turn from          making tremendous profits from the sale
dusky was arrested in November to look              their wicked ways, then will I hear          of guns of all sorts, including assault rifles,
into what has become one of sports’                 from heaven and will forgive their           and that’s a stark reality. The National Rifle
biggest scandals. The report concluded              sin and will heal their land.                Association (NRA) controls Congress on all
that Paterno, President Graham Spanier,                                                          matters related to any form of gun control
Vice-president Gary Schultz, and Athletic           2Chron 7:14                                  and that, too, is a fact. It’s quite evident
Director Tim Curley “failed to protect                                                           that most U.S. politicians are afraid they
against a child sexual predator harming             Woe to those who decree unrighteous          will face defeat at the hands of the NRA if
children for over a decade.” The report             decrees, W ho wr ite misfor tune,            they even debate gun control, much less
concluded:                                          Which they have prescribed. To rob           do something about a real problem in the
                                                    the needy of justice, And to take what       U.S. It’s past time for those politicians to
  In order to avoid the consequences of                                                          start this debate, but it’s certainly not too
  bad publicity, the most powerful                  is right from the poor of My people,
                                                    That widows may be their prey, And           late. While most Americans favor the right
  leaders at the university—Spanier,                                                             to own guns, I don’t believe even members
  Schultz, Paterno and Curley—repeat-               that they may rob the fatherless.
                                                                                                 of the NRA want the sale of assault rifles
  edly concealed critical facts relating            Isaiah 10:1-2                                protected by the 2 nd Amendment to our
  to Sandusky’s child abuse.                                                                     Constitution.
   Penn State has suffered greatly because                                                          From a personal perspective, I have
                                                    All that is necessary for the triumph
of this scandal. On July 23 rd , the NCAA                                                        owned shotguns, rifles and pistols all of my
                                                    of evil is that good men do nothing.
came down very hard on the school and                                                            life. I learned gun safety at an early age and
deservedly so. The Freeh report describes a         Edmund Burke                                 I was trained to use a rifle properly in the
classic case of a lack of institutional control                                                  military. I hunted, starting in my teenage
by the school over the football program                                                          years, and continued to do so on a regular
                                                    The only title in our Democracy supe-
with the bad conduct being at the highest                                                        basis until I decided to quit a few years ago.
                                                    rior to that of President is the title of
levels. Regardless of how we feel about                                                          But hunting—with weapons designed for
                                                    Citizen.
sports, and college football in particular,                                                      hunting—is quite different than dealing
we can’t allow any school, or any person            Louis Brandeis, 1937                         with assault rifles and automatic weapons
con nec ted w it h a s cho ol’s at h let ic         U.S. Supreme Court Justice                   that have no business on the streets or
program, to become so revered and power-                                                         available for sale to individuals in our
ful that they come to believe that laws                                                          country. It makes sense for people—who
don’t apply to them and that common                                                              want to do so—to own a handgun to keep
decency can be ignored.                           XXVI.                                          in their home in a safe place for the protec-
                                                                                                 tion of themselves and their family.
   While Penn State’s football problem—
and the reputation of the school—have suf-        PARTING WORDS                                     But it’s high time for the American
fered, those who have really suffered are                                                        people to say enough is enough and
Sandusky’s victims. The young men who                                                            demand some reasonable changes in our
                                                    The mass shooting last month in a Colo-      gun laws in this country without doing
were abused, first by Sandusky, a well-
                                                  rado movie theater resulting in 12 innocent    damage to the rights conveyed by the 2 nd
known football coach, and then by other
                                                  people being killed and another 58 injured,    Amendment. But the question remains—
powerful men at the school in a massive
                                                  some critically, is just another wakeup call   how many more mass murders will it take
cover-up, must be compensated to the
                                                  for our country. It’s impossible to compre-    before Congress acts? The sad truth is that
fullest extent allowed by law. The Defen-
                                                  hend how this sort of thing could even         the public is shocked and saddened when
dants in civil suits must also be punished
                                                  happen in a civilized society, but it did.     mass murders occur and those feelings last
by the imposition of punitive awards.
                                                  Sadly, in America, we have experienced         for a time. But unfortunately, the time
Hopefully, university presidents, boards of
                                                  this sort of thing—all too often—over the      comes when the public soon forgets and
tr ustees, ath letic directors and head
                                                  past decade with tremendous loss of life.      therein lies the problem. We must remem-
coaches in all sports around the country
                                                  We have had mass murders in schools, in        ber that the NRA never slows down its

38                                                www.BeasleyAllen.com
public relations and lobbying efforts. It           ones in Colorado, for those who were                 tragic events in Colorado that only He can
works its agenda on a full-time basis. As a         injured, for their community, and for our            supply in times like this. People in our
result, the NRA has been very successful in         entire country. We all lost something that           nation must come to their senses and say to
its efforts to mold public opinion and to           fateful day in the movie theatre—but not             those in authority—we have seen enough
control Congress. Hopefully, the time has           nearly what the families of victims who              of these senseless mass murders. So now
come for some serious debate on gun                 were killed by a mass murderer lost. The             let’s do whatever it takes to stop them!
control and from that some reasonable and           healing process will be long and painful for
needed changes in our gun laws.                     them and for many others in Colorado. May
   For now, all of us must pray daily and           God provide the peace and comfort to all
earnestly for those families who lost loved         of those persons touched in any way by the




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                           Jere Locke Beasley, founding shareholder of the law firm Beasley, Allen, Crow,
  Jere Locke Beasley, founding shareholder of the is one of the most successful litigators of all Miles,
                    Methvin, Portis & Miles, P.C., law firm Beasley, Allen, Crow, Methvin, Portis & time,
                    with the best track record of all time, any lawyer track record of verdicts of any
  P.C. is one of the most successful litigatorsof verdicts ofwith the bestin America. Beasley’s law firm,
                    established in 1979 with the in 1979 of “helping those who need it who need it
  lawyer in America. Beasley’s law firm, establishedmission with the mission of “helping those most,” now
                    employs 44 lawyers and more than support staff. Jere Jere has always always
  most,” now employs over 50 lawyers and more than 200 200 support staff.BeasleyBeasley hasbeen an
                    been an advocate for victims of wrongdoing
  advocate for victims of wrongdoing and shareholder of the and has been helping those who need
  Jere Locke Beasley, founding has been helping those who need it most for over 30 years.
                                                                    law firm Beasley,
                 it most for over 30 years.                                                                                 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 lawyers and more than 200 support staff. Jere Beasley has always
  been an advocate for victims of wrongdoing and has been helping those who need
                    representation is made
  it most for overNo30 years. that the quality of services to be performed is greater than the quality of legal services performed by other lawyers.

				
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