Docstoc

Jere Beasley Report_ July 2009

Document Sample
Jere Beasley Report_ July 2009 Powered By Docstoc
					                                            JULY 2009




Distributed to over 45,000 subscribers each month

            www.BeasleyAllen.com
I.                                          dent with only minor injuries. The            the stories of average folks who have
                                            1994 Pontiac Bonneville was manufac-          been seriously injured or who have
CAPITOL                                     tured by General Motors. This vehicle         lost a loved one as a result of a defec-
OBSERVATIONS                                was part of a project within GM               tive GM or Chrysler vehicle. They have
                                            known as the “2500 Project.”                  twice been victimized by these compa-
                                               The goal of this project was to            nies.
THE DAVIS FOR GOVERNOR CAMPAIGN             reduce the manufacturing cost of each            The bankruptcy has, in the case of
  I have agreed to serve as Chairman        vehicle by $2,500. To save that much          Chrysler, and will, in the case of GM,
of the Artur Davis for Governor Cam-        money, GM used lighter, less-safe mate-       immunize these companies from the
paign. Throughout my involvement in         rials. GM thinned the metal and               responsibilities for death and injuries
Alabama politics over the years, I have     shaved the door beam. GM used low-            from the defects in all of their automo-
seen Governors come and go. They            strength steel rather than high-strength      biles sold before the bankruptcy.
have fit every political description:       steel in order to save money. As a            There are approximately ten million
Republican and Democrat, liberal and        result of GM’s choice to put profits          Chrysler vehicles currently on the
conservative, and some were even            over safety, Shona now faces a life           road. There are approximately 30
independent thinkers. My conclusion,        where she is completely dependant on
in retrospect, is that the best Gover-      others for her care. She faces astro-
nors had a definitive leadership quality.   nomical medical expenses. Shona is                    I N TH I S I S S U E
I see that in Artur Davis. That’s why       only 45 years old.
                                                                                           I.     Capitol Observations . . . . . . . . . . . . 2
I’m proud to chair his campaign for            On June 24, 2007, Florian Hinrichs
                                            was a passenger in a GM pickup truck.          II.    General Motors & Chrysler . . . . . . . 2
Governor. I believe in his ability to                                                             Bankruptcies
lead and bring people together to           Florian was properly belted. While
                                            driving down a rural county road in            III.   Recent Filings and Settlements . . . . 3
attract jobs and transform our state to                                                           By The Firm
unlock its full potential. In my            Alabama, the GM truck was unexpect-
                                            edly hit by another vehicle that failed        IV.    Legislative Happenings . . . . . . . . . . 4
opinion, he is the right man for the
job. I sincerely believe that Artur can     to yield the right-of-way. As a result of      V.     Court Watch . . . . . . . . . . . . . . . . . . 5
and will be Alabama’s next Governor.        the impact, the truck went off the             VI.    The National Scene . . . . . . . . . . . . . 7
In the event that any of our readers        roadway overturning once.             The
                                            rollover caused the roof of the GM             VII. The Corporate World . . . . . . . . . . . 8
want to become involved with the
                                            truck to completely collapse onto              VIII. Congressional Update . . . . . . . . . . 10
Davis campaign, please contact Anna
Ruth      Williams     by    email     at   Florian. Florian is now a quadriplegic.        IX.    Product Liability Update . . . . . . . . 12
ARWilliams@arturdavis2010.com or            The driver of the GM truck walked
                                                                                           X.     Mass Torts Update. . . . . . . . . . . . . 14
call (205) 322-9096.                        away from the accident with minor
                                            injuries.                                      XI.    An Update on Securities Litigation. . . 18
                                               Florian was a 27-year-old helicopter        XII. Employment and FLSA Litigation. . . . 20
                                            pilot with the German Air Force. He
II.                                         was in Alabama training at Ft. Rucker.
                                                                                           XIII. Insurance and Finance Update . . . 21
GENERAL MOTORS                              Florian, too, is now completely depen-         XIV. Predatory Lending Update. . . . . . . 22
& CHRYSLER                                  dant on others for his care and faces          XV.    Premises Liability Update . . . . . . . 23
                                            substantial financial hardship. He obvi-
BANKRUPTCIES                                ously can no longer pilot a helicopter.
                                                                                           XVI. Workplace Hazards. . . . . . . . . . . . 26
                                            His life has been tragically and forever       XVII. Transportation . . . . . . . . . . . . . . . 26
OUR CLIENTS ARE EXAMPLES OF THE             changed.                                       XVIII. Arbitration Update . . . . . . . . . . . . 29
HARDEST HIT VICTIMS OF THE GM AND              These are the stories of two of the
                                                                                           XIX. Nursing Home Update. . . . . . . . . . 30
CHRYSLER BANKRUPTCIES                       victims hardest hit by GM’s bank-
                                            ruptcy. These are our clients who we           XX.    Healthcare Issues . . . . . . . . . . . . . 30
  On November 4, 2006, Shona Scott          must now tell that they may not get            XXI. Environmental Concerns . . . . . . . . 31
was riding as a passenger in her 1994       their day in court. If the Bankruptcy          XXII. Tobacco Litigation Update. . . . . . . 33
Pontiac Bonneville. The car ran off the     Court allows GM to shed its legal
roadway resulting in it overturning.        responsibility to our clients, a jury will     XXIII. The Consumer Corner. . . . . . . . . . 34
The roof on the passenger side where        not hear how GM’s motivation to maxi-          XXIV. Recalls Update . . . . . . . . . . . . . . . 38
Shona was sitting crushed in. As a          mize its profits destroyed Shona’s and         XXV. Firm Activities . . . . . . . . . . . . . . . . 38
result, Shona, who was properly             Florian’s lives. But their stories are just
belted, suffered a C-7 spinal fracture of   two of the thousands of folks who              XXVI. Special Recognitions . . . . . . . . . . . 40
the neck, rendering her a quadriplegic.     have been or will be killed or injured         XXVII.Closing Observations. . . . . . . . . . . 42
The driver walked away from this acci-      by GM or Chrysler vehicles. These are          XXVIII Parting Words . . . . . . . . . . . . . . . 43



2                                           www.BeasleyAllen.com
million GM vehicles on the road.                             ment of insurance for        over; and gasoline tanks and brake
People don’t realize that, according to                      any kind of defects that     fluid containers that are improperly
the bankruptcy plans, families driving                       may be there, especially     positioned and catch fire or explode,
these vehicles now on the road, who                          if the product is going      severely burning and killing occu-
may be severely injured or killed as a                       to be carried forward. I     pants. You can do the math. Thou-
result of a safety defect in the car in                      need to know on the          sands and thousands of ordinary
the future, will have no legal recourse                      record, Mr. Henderson,       everyday folks, as it stands today, just
against GM or Chrysler.                                      if you are going to seek     lost their legal right to any recourse
   In a sad ironic twist, the U.S. Bank-                     that same kind of            against Chrysler and potentially GM,
ruptcy Court that handled the Chrysler                       immunity for existing        even if they are injured or killed in the
bankruptcy determined that public                            claims and potential         future. This is outrageous, and the
policy was served when it determined                         claims for any cars that     numbers are potentially staggering.
that Fiat should only assume the liabili-                    have been sold prior to         Our leaders in Washington need to
ties that promote its commercial inter -                     the closing of your          close this ticking time bomb loophole
est . Under the terms of the deal, Fiat                      bankruptcy.                  now and protect consumer safety.
or “the new Chrysler” will have no              Henderson: That would be our              Force GM and Chrysler to accept
further responsibility for injuries or                       expectation.                 responsibility for their existing prod-
wrongful death claims linked to                 McCaskill: Well, I’m very troubled        ucts. It simply isn’t right or fair to use
defects in the cars they sold.                               by that. I don’t get how     taxpayer dollars to bail out GM and
   U. S. Senator Claire McCaskill of Mis-                    we can afford to fix the     Chrysler in a way that takes away
souri recently hit the nail on the head                      car but if someone           those same taxpayers’ legal rights. A
at a Congressional hearing related to                        loses their life or limb     company that has been badly managed
the bankruptcy when she was ques-                            there is no liability. And   should not receive billions of our tax-
tioning a GM representative:                                 by the way. I’ve under-      payer dollars from the U.S. Govern-
   McCaskill: I understand that you                          stood that since that        ment while individual taxpayers who
                 guys are going to try to                    happened we’ve had           have been injured or killed by these
                 do a 363 bankruptcy                         several companies go         companies are left with no remedy.
                 similar to Chrysler.                        back and make filing            The victims’ stories have been virtu-
   Henderson: Yes.                                           for 363s now, thinking       ally buried in all of the reports about
   McCaskill: In an almost unprece-                          they can come in and         the bankruptcies of Chrysler and
                 dented fashion, there                       absolve themselves of        General Motors. Hopefully, that story
                 has been a decision                         any liability they might     is now being heard and the Obama
                 made in the Chrysler                        have for defects. I          Administration and Congress will
                 bankruptcy that if                          think that is very trou-     respond. I urge all of our readers to
                 someone bought a                            bling moving forward.        write their Senators and members of
                 Chrysler six weeks ago         Think about this – right now there        the House, as well as President Obama,
                 and there is a defect in    are 40 million Chrysler and GM cars on       about this travesty of justice.
                 that car there will be      the road, some of which tragically will
                 liability in the new        have defects that will kill or injure
                 company for the recall      people. Historical data compiled for         III.
                 costs, for the warranty     the National Highway Transportation
                 costs -- they will be       Safety Administration indicates that
                                                                                          RECENT FILINGS
                 required to fix the car.    47% of all deaths and injury claims          AND
                 But if because of that      filed against auto manufacturers             SETTLEMENTS BY
                 defect a child loses        involve Chrysler and GM cars. In the
                 their life because of an    last five years alone, these claims
                                                                                          THE FIRM
                 accident or if a man        involved 3,497 casualties connected to
                 loses his legs because      problems with Chrysler cars; 15,284          SERIOUS EYE INJURY CASE SETTLED IN PIKE
                 of an accident, there is    connected to problems with GM cars.          COUNTY
                 absolutely nowhere for      Examples include seatbelts that fail
                 that person to turn.        and strangle children; seat backs that         On January 16, 2008, Henry Jinright
                 Now that, to me, seems      collapse and cause brain injuries;           left Ken Cox Ford in Troy, Alabama
                 like a very weird result.   unstable vehicles that flip and roofs        where he was employed as a salesper-
                 And it is very unusual      that cave, crushing occupants; cars          son. As he was driving home on U.S.
                 in bankruptcy to have       with gears that “self-shift” from park to    Highway 231 to Brundidge, to pick up
                 absolutely no require-      reverse and end up running people            his wife and attend church, Mr. Jinright



                                       www.JereBeasleyReport.com                                                                  3
was involved in a motor vehicle wreck.         vehicle and died from the injuries sus-       care to the weak and vulnerable resi-
The wreck occurred within the city             tained in the accident. The Geo               dents. Frank Mayweathers developed
limits of Troy. A car, driven by an            Tracker is defective and unreasonably         severe bedsores from the neglect
employee of Werner Enterprises, failed         dangerous in its design, manufacture,         during his stay at the facility and he
to yield the right-of-way, pulling in          and sale, and also in the warnings that       suffered emotional and physical
front of Mr. Jinright. Werner Enter-           accompanied the vehicle. We will              trauma as his health deteriorated
prises had sent a driver and two other         prove that the Geo Tracker is unstable        before his death.
persons to Troy to pick up an 18-              and prone to roll over. In this incident         It is absolutely shameful that a facil-
wheeler truck. When the crash                  the vehicle's restraint system failed to      ity having the responsibility to care for
occurred, the airbag in the Jinright car       restrain the occupant. The lawsuit sets       the most vulnerable folks would put
deployed. Mr. Jinright suffered a frac-        out four counts contributing to the           profits first and knowingly place their
ture to the right orbit and severe             wrongful death of Mr. Mims, including         patients' health and safety in jeopardy.
trauma to his right eye.                       negligence in the design, manufactur-         Mr. Mayweathers endured pain, distress
   As a result of his injuries, Mr. Jinright   ing, warnings, and inspection, and            and humiliation as he was neglected
suffered traumatic glaucoma to his             failure to recall the Geo Tracker when        and virtually ignored while at the facil-
right eye which required surgery. The          problems with the model became                ity. The Complaint alleges both negli-
lens in the eye had to be replaced and         apparent after it entered the market.         gence and violations of the Arkansas
he also suffered some damage to the            We will seek jury-determined compen-          Long Term Care Residents' Rights
retina in that eye. As a result of the         satory and punitive damages on behalf         Statute. J.P. Sawyer from our firm and
injuries, Mr. Jinright lost the sight in his   of Mr. Mims’ family. Cole Portis from         Robert Sexton from the firm of Rain-
right eye.                                     our firm and Rob Riley of the Birming-        water, Holt & Sexton, P.A., located in
   In addition to his employment at the        ham firm of Riley & Jackson will              Little Rock, will handle this case.
Ford dealership, Mr. Jinright also had a       handle this case for the family.
job as a catastrophic property
appraiser. He was unable to resume                                                           IV.
that job because of the depth percep-          COMPLAINT FILED AGAINST ARKANSAS
                                               NURSING HOME                                  LEGISLATIVE
tion problem resulting from his eye
injury. The case settled recently for a                                                      HAPPENINGS
                                                  Our firm represents the family of an
confidential amount. Mike Crow from
                                               Arkansas man who suffered at the
our firm handled the case for Mr. Jin-
                                               hands of a staff that was not equipped        A SPLIT DECISION IN SPECIAL ELECTIONS
right and did a very good job. We are
                                               to care for him at the White Hall
greatly pleased to have reached a good                                                          Two of the special elections to fill
                                               Nursing and Rehabilitation Center,
settlement for him.                                                                          seats in the Alabama Senate have now
                                               located in White Hall, Arkansas. The
                                               Complaint, filed in the Circuit Court of      taken place. Marc Keahey – the Demo-
                                               Jefferson County,Arkansas, alleges that       crat – won in District 22 by a very
LAWSUIT FILED IN GEO TRACKER ROLLOVER                                                        large margin over a strong and well-
DEATH CASE                                     Defendants, including Central Arkansas
                                               Nursing Centers, Inc., Nursing Consul-        financed opponent. It’s my belief that
  Our firm has filed a lawsuit for an          tants, Inc., and Park Health Care, LLC,       Marc will be a force in the Senate. In
Alabama woman whose husband was                misrepresented the skill and number           Senate District 7, the Republican, Paul
killed in a vehicular rollover accident        of the facility’s nursing staff in order to   Stanford, won handily over his oppo-
while driving his 1993 Geo Tracker .           qualify for government funding.               nent, Laura Hall, who is in the House
The lawsuit was filed in U.S. District            The Defendants held themselves out         and was said to have led in the polls.
Court for the Middle District of               to the Arkansas Department of Human           At press time, the race in the 19th
Alabama Northern Division, and names           Services (DHS) and to the public at           Senate District hadn’t taken place, but
as Defendants Suzuki Motor Corpora-            large as being properly staffed, super-       it will go to a Democrat.
tion;American Suzuki Motor Corpora-            vised and equipped to meet patient
tion; General Motors; General Motors           needs with a skilled nursing, rehabilita-
                                                                                             SENATOR HANK SANDERS WILL RETIRE
of Canada, Ltd.; Cami Automotive Inc.;         tive and medical support staff. This
Takata Inc.;Takata-Fischer Corporation;        was done in an effort to have govern-           I was surprised to learn that Hank
Takata Fabrication Corporation; and            ment-funded patients placed at the            Sanders won’t seek reelection to the
Key Safety Restraint Systems, Inc.             nursing facility. But the Defendants          Alabama State Senate when his term
  Charles Mims was driving the Geo             actually hired and retained unqualified       ends next year. Hank has been an out-
Tracker down a county road in Chilton          and untrained nursing staff and the           standing member of the Senate and
County, Alabama, on April 9, 2008,             facility was grossly understaffed. As a       will be most difficult to replace. I am
when the vehicle became unstable and           result, the facility was unable to            setting out below Hank’s news release
rolled over. He was ejected from the           provide even the minimum standard of          relating to his decision.


4                                              www.BeasleyAllen.com
For the last few months I have            Hank has been an extremely effec-        V.
been struggling with a decision        tive legislator and will be very hard to
whether to run for the State           replace. We wish him the very best in
                                                                                   COURT WATCH
Senate again in 2010. This deci-       all his future endeavors. I am looking
sion has weighed heavy on my           forward to reading his next book!           RECENT DECISIONS FROM THE U.S.
mind and heart and did not                                                         SUPREME COURT
come easy. Representing the
people of Alabama in the State           GOP LAWMAKERS WARNED BY ALFA                On June 8th the U.S. Supreme Court
Senate has been an honor and                                                       released a number of important deci-
one of the great privileges of my         Alfa political chief John Pudner fired   sions. I am setting out below a few of
life. I will look back only with       a warning shot recently aimed directly      the more significant results. The High
fondness at the many long hours,       at Republican state legislators. John       Court did the following:
the battles, the victories, and        said efforts to change insurance laws
defeats. Most of all I will miss the   to make coastal coverage cheaper and        • The Justices ruled that judges must
many colleagues and friends I’ve       more available could “hurt” the GOP           step aside from cases when large
met on this wonderful journey.         lawmakers in the 2010 elections. The          campaign contributions from inter-
                                       warning was sent by e-mail after              ested parties create the appearance
I truly hope that I made a differ-                                                   of bias. The High Court on a 5-4 vote
                                       Republican Paul Sanford won the
ence in the State Senate and for                                                     sent back to the West Virginia
                                       special election in Huntsville for a
the State of Alabama in some                                                         Supreme Court a case where a judge
                                       state Senate seat. Alfa backed the new
small way. As chair of the Senate
                                       senator with a $26,000 campaign con-          remained involved in a lawsuit filed
Finance and Taxation Education
                                       tribution, which I am told was his            against the company of the most
Committee, I committed myself to
                                       largest. As you probably know, the            generous supporter of his election.
the school children of this state,
and tried to make a real differ-       Farmers Federation is the “agriculture
                                                                                   • The Court ruled that the current
ence in the programs, the teach-       arm” of Alfa, the state's second-largest
                                                                                     government in Iraq cannot be held
ing and the environment in             property insurer, and one of the
                                                                                     responsible for the actions of
which our children live and            strongest lobbying groups in the state.
                                                                                     Saddam Hussein's regime. The High
learn. I hope our children will        I have always thought that Alfa was
                                                                                     Court unanimously rejected lawsuits
continue to be a priority of the       really an insurance company with an
                                                                                     from Americans who were held in
State Senate and the State of          agricultural division, but on paper they
                                                                                     Iraq during the Gulf War. The Court
Alabama.                               are separate.
                                                                                     said a federal law enacted in 2003
                                          It appears Alfa is concerned that the
I will not run for re-election in                                                    gave Iraq back the immunity that
                                       unpopularity of the GOP nationally
2010. This political phase of my                                                     was stripped because of the Hussein
                                       will hurt GOP state senators in
life is complete, and it is time for                                                 government's designation as a
                                       Alabama who voted, as John put it, for
me to move on to new challenges,                                                     sponsor of terrorism.
                                       "the same kind of anti-insurance legis-
new responsibilities and new           lation that chased all insurance compa-     • The Court turned down a challenge
commitments. In particular I           nies out of Florida." John claimed that       to the Pentagon policy forbidding
want to finish writing a series of     type law would only benefit rich              gays and lesbians from serving
books I started several years ago      owners of beach condos. The message           openly in the military. The Court
but could not make the time to         warned that 99% of lawmakers' con-            refused to hear an appeal from
finish then.
                                       stituents would be forced to pay more         former Army Capt. James Pietrangelo
But one thing will never change: I     to subsidize premiums near the Gulf.          II, who was dismissed under the mili-
will continue to work to make a        While that might be true, I was sort of       tary's policy. He had asked the High
difference in the life of this area    surprised that Alfa would put its veiled      Court to rule that the policy is
and in the life of this state;         threat in an email and apparently leak        unconstitutional.
however, that contribution, will       it to the media for the world to see.
now come through my new roles,         Source: Mobile Press Register
                                                                                   • The Justices agreed to find a way to
whatever they may be. My unwa-                                                       determine where a company's prin-
vering commitment to improving                                                       ciple place of business is located.
the ordinary lives of our citizens                                                   Hertz Corp. wanted a lawsuit alleg-
remains as strong as ever; only                                                      ing wage and hour violations moved
my roles will change.                                                                from California courts to federal
                                                                                     court because that state is not its
Senator Hank Sanders                                                                 principle place of business. A federal
News Release                                                                         court said a plurality of Hertz's busi-
June 4, 2009                                                                         ness occurs in California, even



                                   www.JereBeasleyReport.com                                                              5
    though its headquarters is in          • The Justices turned down an appeal        COURT UPHOLDS SETTLEMENT IN ASBESTOS
    Delaware, and sent the case back to      from Indian tribes who wanted to          LAWSUITS
    state court. Hertz said different        block expansion of a ski resort on a
    courts have used different criteria,     mountain they consider sacred. A             The U.S. Supreme Court has agreed
    including headquarters location,         half-dozen Western tribes wanted to       to reinstate a roughly $500 million set-
    center of corporate activities and       block the expansion of the Arizona        tlement of asbestos lawsuits against
    places of operation.                     Snowbowl ski area north of Flagstaff      the Travelers Companies Inc. Travelers
                                             because the resort plans to use           had been named in lawsuits alleging
• The Court refused to hear an appeal                                                  that it tried to hide dangerous health
                                             treated wastewater to make artificial
  from two former top executives of                                                    effects of asbestos. The company
                                             snow on the mountain.
  Tyco International that challenges                                                   argued that asbestos claims should be
                                           Source: Associated Press
  their convictions for fraud and                                                      paid out of a trust created by Johns
  larceny involving more than $100                                                     Manville in the 1980s and approved by
  million in bonuses. Tyco's former        SUPREME COURT RULES AGAINST MASSEY          a federal bankruptcy judge.
  CEO L. Dennis Kozlowski and former       UNIT IN JUDICIAL BIAS CASE                     Travelers settled with several groups
  CFO Mark Swartz will serve prison                                                    of plaintiffs with the caveat that
  terms of eight and 1/3 years to 25         In one of the cases mentioned             federal courts make clear the company
  years for taking unauthorized pay.       above, a divided U.S. Supreme Court         wouldn’t have to face any new law-
                                           ruled that a West Virginia justice should   suits of a similar nature. The U.S Court
• The Court refused to hear a Marine's     not have participated in state court        of Appeals for the Second Circuit in
  lawsuit blaming the government's         decisions overturning a $50 million         New York overturned lower-court
  dumping of toxic chemicals at Camp       judgment against A.T. Massey Coal Co.,      approval of the settlement, saying a
  Lejeune in North Carolina for his        whose chief executive had been a            bankruptcy judge lacks the authority
  son's illnesses. The Marine argued       major contributor to the justice's polit-   to act so broadly. The U.S. Supreme
  that the dumping of trichloroethyl-      ical coffers. The Supreme Court ruled       Court overturned that decision.
  ene, an ingredient in cleaning sol-      5-4 that West Virginia Justice Brent Ben-   Source: AL.com
  vents, into the ground in the 1970s      jamin should have recused himself
  polluted the water and made his son      from the cases because the A.T. Massey
  ill.                                     campaign contributions created a            JUDGE SAYS A PROPOSED ASBESTOS
• In an interesting decision, the Court    serious risk that Benjamin would be         SETTLEMENT WAS COLLUSIVE
  told a military court it can re-         biased in the case. Benjamin twice
                                           was the deciding vote in West Virginia         A federal bankruptcy judge has
  examine the guilty plea for a Niger-
                                           High Court rulings that threw out the       blasted a proposed bankruptcy plan to
  ian-born serviceman who faces
                                           judgment against A.T. Massey, a unit of     resolve asbestos claims as the product
  deportation. Jacob Denedo says he
                                           Massey Energy Co.                           of collusion and refused to approve it.
  pleaded guilty to larceny because his
                                             The $50 million verdict stems from a      It was reported that the proposal was
  lawyer told him he would not be
                                           business fraud lawsuit filed against A.T.   put together by lawyers at McGuire-
  deported. He found out that his
                                           Massey by Harman Development                Woods representing the debtor,
  lawyer had an alcohol problem after
                                           Corp., a privately-held mining              Skinner Engine, and the law firm repre-
  deportation      proceedings     had
                                           company based in Beckley, West Vir-         senting claimants, the Maritime
  started. The military court said it
                                           ginia. Don Blankenship, the A.T.            Asbestos Legal Clinic of Detroit,
  could not look at the case again
                                           Massey executive, contributed more          according to the Madison St. Clair
  because Denedo is no longer in the
                                           than $3 million to Benjamin for his         Record. U.S. Bankruptcy Judge Bruce
  Navy.
                                           2004 campaign for the state High            McCullough said the asbestos settle-
• The Court won't stop Pennsylvania        Court, which represented more than          ment plan was reached despite “strong
  officials from prosecuting a man         half of the campaign funds for Ben-         evidence as to the futility of such
  whose computer was found to              jamin's political campaign.          The    claims.”     The debtor’s insurance
  contain child pornography while it       Supreme Court’s decision reversed the       company,Travelers Casualty and Surety
  was at Circuit City being upgraded.      West Virginia court ruling for Massey       Co., had objected to the settlement.
  Kenneth Sodomsky wanted the              and sent the case back for further pro-     Judge McCullough said the plan could
  videos found on his computer sup-        ceedings. Hopefully, this decision will     not be approved over the insurer’s
  pressed. He had taken it into the        force some meaningful reform in how         objection.
  store to get a DVD burner installed.     we elect state court judges.                   Travelers defended the now-defunct
  A worker found questionable files        Source: Associated Press
                                                                                       Skinner Engine against about 28,000
  and called police, who found child                                                   claims over 20 years and apparently
  pornography.                                                                         they hadn’t lost a single claim. Skinner
                                                                                       made ship engines insulated with



6                                          www.BeasleyAllen.com
asbestos and was still an operating           business owners and others harmed by        fraud that ran from 1996 through
company when it initially filed for           the massive 1989 oil spill off Alaska.      2002. All of them said Scrushy was in
bankruptcy.                                   The ruling by the U.S. Court of Appeals     on the fraud, and that thousands of
  The rejected proposal provided that         for the Ninth Circuit in San Francisco      small but fictitious entries were made
claimants who used a dispute resolu-          on June 15th affirms the amount set by      to HealthSouth's financial records to
tion process to resolve their claims          the U.S. Supreme Court last year. It        artificially boost profit.
would have to agree to give 20% of the        also awards interest payments at 5.9%       Source: Birmingham News
proceeds to the debtor company. In            to Plaintiffs from the date of the origi-
Judge McCullough's view, the provi-           nal judgment in 1996. The Plaintiffs
sion gave Skinner Engine an incentive         originally were awarded $5 billion, but     VI.
“to sabotage its own defense or, more         that amount was cut in subsequent
aptly, the insurers’ defense of itself vis-   appeals by Exxon. Exxon was responsi-       THE NATIONAL
a-vis the asbestos claims.” In his order,     ble for the worst oil spill in the          SCENE
the judge wrote:                              nation’s history when the tanker
                                              Exxon Valdez ran aground March 24,
  The asbestos claims settlement is           1989, spewing 11 million gallons of         JOAN CLAYBROOK HONORED IN WASHINGTON
  neither reasonable nor one that             crude into Prince William Sound. It
  was entered into in good faith.             now appears that Exxon – after some            Consumer advocate Joan Claybrook,
  The ground for such holding is              20 years – will finally have to pay the     who retired earlier this year as the
  that the asbestos claims settle-            victims. Even so, the giant oil company     head of Public Citizen, was honored
  ment is the result of patent collu-         has to believe that it really won this      last month in Washington. The organi-
  sion between the debtor and the             battle.                                     zation held a dinner event in honor of
  co-proponents, on the one hand,             Source: Associated Press                    her 27-year leadership. Without a
  and the asbestos claimants, on                                                          doubt, Joan was one of Washington's
  the other hand.                                                                         most relentless consumer-interest lob-
                                              RICHARD SCRUSHY IS HELD TO BE               byists. Her work has influenced rules
  Later in his opinion, Judge McCul-          RESPONSIBLE FOR HEALTHSOUTH FRAUD           on automobile safety standards, Con-
lough said he uses the word “collu-                                                       gressional ethics, campaign finance
sion” for the collective problems with          A Jefferson County judge ordered
                                                                                          and more.
the proposed plan, including the disin-       Richard Scrushy to pay HealthSouth
                                                                                             Among the lawmakers who praised
centive for the company to win its            Corp. $2.87 billion, finding Scrushy
                                                                                          Claybrook's efforts were House
defense of asbestos claims. He wrote:         responsible for the company's fraud.
                                                                                          Speaker Nancy Pelosi, Representatives
“However, whether it be collusion or          The ruling by Jefferson County Circuit
                                              Judge Allwin Horn marks the first time      Henry Waxman and Ed Markey, and
not is not really important; what is                                                      Senators John McCain and Russ Fein-
                                              HealthSouth founder Scrushy has been
important is that all of the foregoing                                                    gold. Actor and longtime environmen-
                                              found responsible for the $2.6 billion
demonstrates bad faith on the part of                                                     tal advocate Robert Redford also spoke
                                              in faked profits and assets that almost
the debtor, the co-proponents, and the                                                    highly of Joan and her distinguished
                                              plunged the company into bankruptcy
asbestos claimants in entering into the                                                   career. He called her one of his
                                              once the subterfuge was detected in
asbestos claims settlement.”                                                              mentors. At the event, Joan told dinner
                                              2003.
  Apparently, the judge did not hold an         In the suit, shareholders of Birming-     guests that Public Citizen was success-
evidentiary hearing before making his         ham-based HealthSouth were seeking          ful because of its determination. She
decision and writing his opinion. The         $2.6 billion plus interest from Scrushy,    described its efforts like this:
judge converted the bankruptcy to a           saying he fabricated profits to boost
Chapter 7 liquidation, and was said to                                                      One of our operating principles is
                                              the stock price and trigger bonuses for
be unlikely to approve any reorganiza-                                                      that we fight back when we're
                                              himself. The trial was before the judge
tion plan. One of the lawyers in the                                                        attacked, and we try to have fun
                                              without a jury. The shareholders sued
case said this judge “has strong feelings                                                   doing it. If you don't have some
                                              on behalf of the company, with all pro-
about asbestos claims.” That certainly                                                      fun, it's hard. So we're scrappy,
                                              ceeds less legal fees to be paid to the
appears to be true.                           corporation.                                  and agile and bold and creative
Source: ABA Journal                             During the trial, Scrushy denied            and determined and principled
                                              under oath that he knew anything              and relentless.
                                              about the fraud. He tried to prove that       Joan has seen both sides of policy-
EXXON ORDERED TO PAY $507.5 MILLION           he was flim-flammed by devious subor-
FOR 1989 ALASKA OIL SPILL                                                                 making, revolving through government
                                              dinate executives who carried out the       roles and consumer advocacy. After
                                              fraud behind his back. Five former          working at the Social Security Adminis-
  ExxonMobil Corp. has been ordered
                                              chief financial officers pleaded guilty     tration, she turned toward Capitol Hill
to pay $507.5 million in punitive
                                              in 2003 and 2004 to federal criminal        as a Congressional fellow. Joan then
damages to Alaska natives, fishermen,
                                              charges related to the $2.6 billion


                                        www.JereBeasleyReport.com                                                                7
joined the agency that would later          of mortgages, requiring that lenders       Secretary of Health and Human Ser-
become the National Highway Traffic         give customers the option of "plain        vices prior to her approval by the
Safety Administration.                      vanilla" plans with straightforward and    Senate on April 28th.
  In 1971, Ralph Nader created Public       affordable terms, among other                 Besides Congress, PhRMA also
Citizen. A few years later, Joan was the    changes.                                   lobbied the Department of Health and
founding director of the organization's        The new agency would have the           Human Services and several of its agen-
Congress Watch division, a Congres-         power to set tough new rules so that       cies, and the Commerce Department.
sional lobbying group. But Joan didn't      companies compete by offering inno-        Among those registered to lobby on
stay out of the government very long.       vative products that consumers actu-       the trade group's behalf in the first
She was selected in 1977 by President       ally want and actually understand.         quarter were: Jennifer Swenson
Jimmy Carter to head NHTSA. In this         President Obama's changes would            (former legislative director for Sen. Pat
position, she oversaw the introduction      begin to reverse the easing on federal     Roberts, R-KS); Matt Sulkala (former
of the original automobile fuel             regulations that actually came about       senior legislative assistant to Rep.Allen
economy standards.         Interestingly,   starting in the 1980s. Democratic          Boyd, D-FL);Valerie Jewett (former leg-
automakers referred to her as the           leaders in Congress are promising leg-     islative director to Rep. Rodney Frelin-
"dragon lady," which I consider a com-      islation will get passed this year, but    guysen, R-NJ); Michael Woody
pliment considering the source. Joan        that depends in part on how key ques-      (formerly a professional staffer on the
rejoined Public Citizen as president in     tions are addressed on Capitol Hill,       Senate Health, Education, Labor & Pen-
1982. I am proud to call this coura-        including the role of the Federal          sions Committee); and David Boyer
geous woman my friend and I wish her        Reserve. Hopefully, the president’s        (who served in about a half-dozen
the very best in all of her future          proposal will pass without significant     positions in the Food and Drug Admin-
endeavors.                                  change.                                    istration, the White House and else-
Source: Associated Press                    Source: Associated Press                   where).
                                                                                          Interestingly, former Congressman
                                                                                       William J. “Billy” Tauzin (who was
PRESIDENT OBAMA CALLS FOR NEW
CONSUMER PROTECTIONS
                                            VII.                                       known to be a lackey for the drug
                                                                                       manufacturers in Congress) now
                                            THE CORPORATE                              serves as President and CEO of
  President Barack Obama is running         WORLD                                      PhRMA. He served as chairman of the
into strong opposition from hard-line
                                                                                       House committee that regulated the
defenders of a financial system that has
                                                                                       pharmaceutical industry. After Tauzin
exploited consumers for years. The          BIG PHRMA SPENT $6.9 MILLION               pushed a major drug bill through Con-
president is pushing for a law this year    LOBBYING                                   gress, he resigned and took his new
which would impose and enforce new
                                              The pharmaceutical industry's main       job on January 3, 2004.
rules for the nation's embattled finan-
                                                                                       Source: Associated Press
cial system. The goal is to prevent a       trade group spent more than $6.9
repeat of the breakdown that sent the       million lobbying during the first three
U.S. economy reeling during the last        months of this year. Its main focus was
                                                                                       LOBBYISTS CAN HONOR LAWMAKERS WITH
months of the Bush Administration.          health care reform, according to a
                                                                                       FEW RESTRICTIONS
There will be a tough fight in Con-         recent disclosure report. The $6.9
gress. There is opposition from some        million was almost twice the amount          An article in the June 8th edition of
leaders in the banking and insurance        spent last year. The Pharmaceutical        USA Today tells in detail how lobbyists
world who simply don’t want to be           Research and Manufacturers of              are allowed to operate in our Nation’s
regulated. When you consider that the       America spent $3.6 million on lobby-       Capitol. I encourage all of our readers
lack of regulation in the financial         ing in the year-ago period. The group's    to get a copy of this article and read it
industry was the root cause of our          members include Pfizer Inc., Merck &       carefully. It shows how effective the
nation’s economic woes, it’s hard to        Co., Johnson & Johnson and more than       lobbying tactics are and how the lob-
accept this opposition to regulation.       two dozen other U.S. and foreign com-      byists do their “work” in an area that
  One important part of the presi-          panies.                                    pays dividends. While the lobbyists
dent’s plan is the creation of a new          Among the areas where the money          play favorites, generally they spend
consumer watchdog office that would         was spent, PhRMA lobbied on health-        their clients’ money in a bi-partisan
protect people's interests. Ordinary        care-related aspects of the 2010 federal   manner. But the party in power always
Americans who rely on credit cards,         budget, the federal stimulus plan, and     seems to do better for obvious reasons.
home loans and other financial instru-      the budgets of health-related agencies.    Years of service by the lawmakers and
ments must be protected. The new            Interestingly, the group also lobbied      their committee assignments also
Consumer Financial Protection Agency        Congress on the confirmation of            count with the lobbyists.
would specifically take over oversight      Kansas Governor Kathleen Sebelius as         Despite a ban on gifts to lawmakers


8                                           www.BeasleyAllen.com
and limits on campaign contributions,        motive to the giving.                      under control and make it really work
lobbyists and groups that employ them           As a matter of interest, last year      as it should, lobbyists’ activities in
can spend unlimited money to honor           Amgen spent the most in honor of           Washington must be controlled. But
members of Congress or donate to             members of Congress. Amgen was             that will be most difficult to bring
non-profits connected to them or their       among 20 corporations and unions           about unless citizens back home get
relatives. The public has never had any      responsible for $17.6 million — or         involved and demand reform in Con-
real insight into the scope of this          nearly half — of the spending in honor     gress of a broken system. Over the
largely hidden world of special-interest     of lawmakers and federal officials last    years the powerful lobbyists have had
influence. That is changing now              year, the USA Today analysis shows.        far too much power and authority in
because of some new rules.                   Those groups spent a total of $137.5       Washington and I believe ordinary
   For the first time, under ethics rules    million to lobby Congress and federal      folks have suffered as a result. If you
passed in 2007, lobbyists had to report      agencies last year. Amgen also donated     agree, get involved and let your
any payment made for an event or to a        to the Frontier Foundation in honor of     members of Congress know how you
group connected to a lawmaker or             Rep. Steve Buyer (R-IN), who is on the     feel, and ask them to help reform the
other top federal official. To its credit,   House panel that regulates the drug        system.
USA Today undertook the first com-           industry. That foundation, which pro-      Source: USA Today
prehensive analysis of the lobbying          vides college scholarships and was
reports and found 2,759 payments,            once headed by the Congressman’s
totaling $35.8 million, were made in         daughter, received $385,000 in dona-       MARVEL SETTLES SHAREHOLDER LAWSUIT
2008. The money went to honor 534            tions from pharmaceutical companies
current and former lawmakers. Also,          from 2005 through 2007, according to          Chipmaker Marvell Technology
                                                                                        Group Ltd. will pay $72 million to
almost 250 other federal officials and       its IRS filings.
                                                                                        settle a shareholder lawsuit. It appears
more than 100 groups, many of which             Interestingly, Rep. Buyer, who has
                                                                                        the company has settled the final out-
count lawmakers among their                  worked on health policy issues in Con-
                                                                                        standing shareholder lawsuit related to
members, were honored. The total             gress for years, helped kill a provision
                                                                                        its past stock option-granting prac-
cost is said to be roughly “equivalent to    in 2007 opposed by drug companies
                                                                                        tices. The settlement is subject to
what the U.S. government spends to           and broadcasters that would have
                                                                                        approval by the U.S. District Court for
operate Yellowstone National Park            imposed a three-year ban on advertis-
                                                                                        the Northern District of California. If
each year.”                                  ing new drugs. Consumer advocates,
                                                                                        given final approval, it appears that the
   USA Today reported that most of the       including the Consumers Union,
                                                                                        settlement, along with the previously
money — about $28 million — went             pushed that important legislation. It’s    announced settlement of a derivative
to non-profit groups, some with direct       been my position that drug manufac-        lawsuit, would put an end to all share-
ties to members of Congress. The lob-        turers should not be allowed to adver-     holder litigation involving Marvell and
byists found a way to do an "end-run"        tise their products to consumers.          its stock option practices.
around campaign-finance laws with            There is no way to justify that in my      Source: Reuters
this type spending. The campaign laws        opinion. Trained medical doctors
“are designed to limit the appearance        should decide what drugs to prescribe
of undue influence," according to            for their patients and not some slick      $40 MILLION RECOVERED IN
Ellen Miller of the Sunlight Founda-         advertising clip on television.            WHISTLEBLOWER CASE
tion, a watchdog group. The money               Aggressive drug advertising unduly
reported came from companies, trade          sways patients to seek treatment from         A whistleblower case that has been
associations and labor groups that           drugs before their safety records have     in the courts for 15 years, filed by a
lobby Congress and the government            been established, according to the con-    former employee against Healthways,
on a range of issues, including “seeking     sumer group. It appears that Rep.          Inc., has been settled for approxi-
a share of last year's $700 billion finan-   Buyer has been a very good and loyal       mately $40,000,000. The case was
cial bailout package.”The efforts were       friend of the drug industry. During        filed in June 1994, by Scott Pogue, who
also aimed at trying to shape the            debate by a Commerce subcommittee,         had been fired from his job as a mar-
debate on climate change.                    he co-sponsored an amendment that          keting representative for a company
   Congressional leaders have prom-          stripped the advertising ban from a        called Diabetes Treatment Centers of
ised to sever ties between lawmakers         larger bill overhauling the Food and       America (DTCA). The case was filed in
and special interests. But the reports       Drug Administration. There may not be      Nashville under the False Claims Act
indicate that lobbyists often give to        a connection between Rep. Buyer’s leg-     against his former employer.
non-profits associated with the law-         islative actions and the donations to         On March 13, 2009, the Board of
makers who regulate their industries.        the foundation, but it simply doesn’t      Directors of Healthways, Inc., DTCA's
                                                                                        parent corporation, approved a settle-
While the causes reported are good           look right.
                                                                                        ment under which the United States
ones, I suspect there is an ulterior            If we are ever to get government
                                                                                        will receive $28,000,000 in damages.


                                       www.JereBeasleyReport.com                                                               9
Mr. Pogue’s lawyers’ fees and litigation     Wynn, Newell & Newton firm, joined         a fifteen-year effort by Mr. Pogue and
expenses, totaling about $12 million,        the litigation team.                       his lawyers – between the parties. It
will be paid by Healthways, Inc.                DTCA violated the Anti-Kickback         was a classic example of persistence
  My friend Scott Powell, a partner in       Statute by paying kickbacks to more        and good lawyering by the litigation
the Birmingham law firm of Hare,             than 200 doctors in exchange for refer-    team.
Wynn, Newell & Newton, was one of            ring their patients to DTCA's hospital       Statistics maintained by the Justice
the lawyers representing Mr. Pogue.          customers around the country. DTCA         Department show that the total of all
Scott had this to say about what was         paid these kickbacks under the guise       recoveries in qui tam cases where the
accomplished:                                of payments to the doctors as "medical     Department decided not to intervene
                                             directors" of diabetes care centers        in the case have exceeded the
  The law established and devel-
                                             based at those same hospitals. DTCA's      $28,000,000 mark in only three prior
  oped by the Pogue case has
  enabled the Department of                  primary source of revenue was the          years. The Pogue settlement is one of
  Justice to recoup several hundred          "management fees" paid by the hospi-       the highest recoveries in such a case in
  million dollars in taxpayer                tals based on DTCA's promise to            the history of the False Claims Act.
  money wrongfully and fraudu-               increase the number of patients            Source: The Montgomery Independent

  lently taken through Medicare              referred to the hospital, which DTCA
  fraud and illegal kickbacks.               accomplished by paying numerous
                                             "medical directors" to bring their         VIII.
  This case was filed pursuant to the        patients to the facilities.
False Claims Act. Under the Act, a              Violations of the Anti-Kickback
                                                                                        CONGRESSIONAL
whistleblower, formally known as a           Statute can be the basis for a civil       UPDATE
"relator," is empowered to file a case       lawsuit under the False Claims Act.
seeking to recover damages suffered          Extensive discovery against DTCA and
by the United States as a result of a        its parent company by the Pogue legal      SUPPORT ACCOUNTABILITY AND
knowing violation of contract or other       team led to a waiver of the attorney-      TRANSPARENCY IN GOVERNMENT
requirements by a government con-            client privilege by the founder and           In recent months, we have seen an
tractor. Qui tam relators are rewarded       CEO of the company during deposi-          organized effort by some in Corporate
for their service with a percentage of       tion testimony. The resulting discovery    America to keep employees from
the funds recovered by the United            of all correspondence between DTCA         reporting fraudulent or illegal conduct
States in settlement or judgment.            and its lawyers revealed that the          by their employers. When scientific
  False Claims Act cases are filed under     company’s lawyers were greatly con-        research is altered or suppressed,
seal and investigated by the Justice         cerned that the company’s payments         when government contractors waste
Department, which must elect                 to doctors violated the Anti-Kickback      millions of taxpayer dollars, or when
whether to intervene in the case and         Statute. It also showed that DTCA          national security documents are falsi-
take over primary responsibility or          elected to take the risks anyway.          fied, employees with knowledge need
decline to intervene, in which case the         After 15 years of litigation during     to know that they can blow the
whistleblower is empowered to liti-          which DTCA refused to acknowledge          whistle without threatening their
gate the case on the Government's            any liability, U.S. District Judge Royce   careers. We are very close to ending
behalf. It’s significant that the Justice    Lamberth denied DTCA's motion for          retaliation against those who speak up
Department declined intervention in          summary judgment on July 21, 2008,         to protect the American people, but
Mr. Pogue's case in early 1995. But his      clearing the way for a jury trial in       the U.S. Senate needs to strengthen the
lawyers – without the Justice Depart-        Nashville. The judge conducted an          current bill that’s being debated. Presi-
ment’s direct involvement – carried it       extensive review of the evidence, con-     dent Obama often has said that trans-
forward for 15 long years. Initially filed   cluding in his order:                      parency and accountability are
in Nashville, the case was moved to
                                               In sum, the Court finds that             priorities for his Administration.
Washington, D.C., in late 1999 as part
                                               relator has produced a wealth of            During his campaign, then-candidate
of multi-district litigation proceedings
                                               evidence supporting his claim            Obama said he would work to
against Columbia HCA, which was
                                               that Defendant compensated               strengthen whistleblower laws to
DTCA's largest customer.
                                               physicians for their referrals to        protect federal workers who expose
  Initially, Jennifer Verkamp and Fred-
                                               DTCA centers, and a reasonable           waste, fraud, and abuse of authority in
erick Morgan who are with a Cincin-
                                               jury could decide the issue in           government. He said as President, he
nati law firm, Morgan Verkamp,
                                               relator's favor.                         would ensure that federal agencies
represented Mr. Pogue. When the case
                                               Settlement negotiations followed         expedite the process for reviewing
was transferred to multi-district pro-
                                             that decision and finally a very good      whistleblower claims and whistleblow-
ceedings in 2002, Scott and Don
                                             settlement was reached – the result of     ers would have full access to the
McKenna, who is also with the Hare,
                                                                                        courts and due process.


10                                           www.BeasleyAllen.com
  The legislation that will make             said:                                       this country.
Obama’s campaign promise law is the
                                               This may be the dealers' last           • Even worse, the bill would repeal
Whistleblower Enhancement Act of
                                               hope. Our hope is that we can get         parts of the Clean Air Act, preventing
2009. Public Citizen and its partners in
                                               other members of Congress and             President Obama from cracking
the Make It Safe Coalition strongly
                                               the Obama Administration to               down on dirty power plants.
support the House version of the bill
                                               support our efforts to save these
(H.R. 1507), which is on track to pass                                                 • For the sake of our economy and our
                                               dealers and preserve jobs. GM
again for the third time. It includes                                                    planet, we need our representatives
                                               and Chrysler's assumption is that
two critical provisions missing from           they have too many dealerships            in Congress to fight to fix the energy
the Senate bill (S. 372):                      and thus they take business away          bill.
• The House bill provides federal              from each other, costing them
                                                                                         Congress will soon be voting on this
  employees and contractors access to          money. The arbitrary closing of
                                                                                       energy bill. Hopefully, enough Sena-
  jury trials for their claims of retalia-     thousands of dealerships will not
                                                                                       tors and House members will make
  tion when the government’s admin-            save GM and Chrysler money, but
                                                                                       the bill one that addresses real needs
  istrative review process fails, as it        will cause the loss of potentially a
                                                                                       and not one that is pushed through by
  often has in the past. This right has        hundred thousand jobs including
                                                                                       lobbyists for oil and coal interests.
  been repeatedly granted to private-          some in Alabama.
  sector employees over the past ten            The bill appears to have strong
  years and makes the law work.                                                        A REPORT ON THE MEDICAL DEVICES
                                             bipartisan support and the backing of
                                             automobile dealer groups across the       LEGISLATION
• The House bill also recognizes the
  special circumstances of intelligence      country. Among its provisions, the leg-
                                                                                         Patients’ health and safety should not
  and national security workers, pro-        islation aims to preserve affected GM
                                                                                       be compromised because of the on-
  viding safe channels for disclosure of     and Chrysler dealers' franchise agree-
                                                                                       going questions surrounding the Food
  wrongdoing without compromising            ments as protected by state laws.
                                                                                       and Drug Administration and its over-
  our national security.                     Hopefully, the bill will pass and
                                                                                       sight of medical devices. Recently, a
                                             become law.
  I hope all of our readers will help                                                  hearing by the U.S. Energy and Com-
                                             Source: Birmingham News
federal employees uphold the public                                                    merce Subcommittee on Health exam-
trust! You can do this by asking your                                                  ining the regulation of medical devices
Senators to support the strongest pos-       CONGRESS LEAVING THE PRESIDENT ON         took place only a week after another
sible protections for federal employees      ENERGY BILL                               Medtronic device – 37,000 pacemak-
who keep the government transparent                                                    ers – were recalled because the
and accountable. It’s time for the             Last month, newspapers across the       devices were found to seriously, even
Senate to improve the bill and add           country printed an important story        fatally, injure patients. Medtronic has
these two provisions! It’s our govern-       from the Associated Press with this       recommended the removal of the
ment – so take action today so that it       headline: “Congress         abandoning    pacemakers, further putting patients’
will work for you in the immediate           Obama clean energy goals.” Congress is    health at risk by subjecting them to
future.                                      currently considering an energy bill      invasive surgery. Earlier this year, thou-
Source: Public Citizen                       that has been opposed by the oil          sands of patients were denied their day
                                             industry and some Republicans. The        in court for another Medtronic medical
                                             bill does have good parts, but the pow-   device that was recalled, the Sprint
ARTUR DAVIS ATTEMPTS TO HELP                 erful oil industry, with help from coal   Fedelis defibrillator lead. Sue Stein-
AUTOMOBILE DEALERS
                                             interests, has severely weakened it.      man, Director of Policy for the Ameri-
  Alabama auto dealers rejected by           The following is a recap of where Con-    can Association for Justice, had this to
Chrysler LLC and General Motors              gress is at present on the energy bill:   say:
Corp. could see their franchise agree-                                                   Manufacturers must play a role
                                             • Oil and coal lobbyists have badly
ments restored if U.S. Representative
                                               weakened the energy bill, even            in ensuring their products are
Artur Davis has his way. Davis, D-Birm-
                                               though it still has good parts.           safe and that when their prod-
ingham, was among 14 members of
                                                                                         ucts fail, they must be held
Congress who introduced H.R. Bill            • The current bill wouldn't require         accountable. Patients of faulty
2743, called the Automobile Dealer             any more clean energy than is             medical devices should not have
Economic Restoration Act. The bill             already in the works. Wind and solar      to suffer when manufacturers
aims to force GM and Chrysler to               create more than twice as many jobs       rush-to-market a product, putting
restore franchise agreements that              as coal and oil, so the current bill
existed with dealers prior to each                                                       profits over patients’ safety.
                                               won't create the new jobs needed in
automaker's bankruptcy filing. He


                                       www.JereBeasleyReport.com                                                              11
   Currently, makers of medical devices      claims that arise from single vehicle         dents. If the occupants can survive
have complete immunity for their             accidents. A product liability claim          crash forces without serious injury, so
devices because of a 2008 Supreme            focuses on whether or not a product is        should the fuel system. For years, the
Court ruling in Riegel v. Medtronic.         defective. The purpose of this series is      automobile industry has known that
The High Court ruled that because the        to educate our readers on the many            simple shielding of the gas tank can
FDA had approved the medical                 different kinds of product liability          prevent fuel-fed fires.
devices, the manufacturer cannot be          claims. In automobile cases, the defec-         Obviously, if a manufacturer makes a
held accountable if the device is defec-     tive product could be the entire              conscious decision not to implement a
tive, even in cases when the device has      vehicle, or a component part such as          safety design because of a profit
been recalled. As we all know, in            the seat belt or tires. Unfortunately, the    motive then that manufacturer should
March 2009, the Court ruled in Wyeth         average motorist has no idea how              be subject to a substantial punitive
v. Levine that manufacturers bear the
                                             unprotected he will be in an accident         award. In a 1981 case, Grimshaw v
responsibility for the safety of prescrip-
                                             as a driver or passenger in a defective       Ford Motor Co., Ford’s internal docu-
tion drugs and do not have immunity.
                                             vehicle. Our attorneys are trained to         ments showed that the placement of
   The Medical Device Safety Act has
been introduced in Congress to restore       recognize defect claims in motor              the gas tank of the Pinto over the axle
the rights of injured consumers to           vehicle accident cases. Any single            surrounded with a protected barrier
hold negligent medical device manu-          vehicle accident involving serious            would have cost $9.95 per car and that
facturers accountable for the safety of      injury or death, including paralysis, loss    equipping the car with a reinforced
their products in state tort actions.        of limb or brain damage, should be            rear structure, smooth axle, improved
The legislation, introduced by Rep.          carefully analyzed for possible product       bumper and additional crush space
Frank Pallone (D-NJ) and House Energy        liability claims. Last month, we looked       would have cost only $15.30 per car.
and Commerce Committee Chairman              at tire failures and the injurious conse-     Despite this information, management
Henry Waxman (D-CA), has over 90 co-         quences of those defects. This month,         decided to defer these “fixes” based on
sponsors in the U.S. House.                  we look at fuel-fed fires.                    cost savings. The court noted:
   The FDA’s oversight of medical               Almost everyone remembers the
devices has been called into question        infamous Ford Pinto (discussed in               There is evidence that Ford could
by the GAO, members of Congress, and         great detail below). That vehicle had a         have corrected the hazardous
even the FDA’s own doctors and scien-        fuel tank mounted behind the rear               design defects at minimal cost
tists. They sent a letter to President       axle. This position allowed for danger-         but decided to defer correction of
Obama in April outlining numerous            ous and often explosive consequences            the shortcomings by engaging in
instances where “wrongdoing and              in rear impact accidents. Similarly,            a cost benefit analysis balancing
cover-up is nothing new but is part of       there are GM trucks with gas tanks              human lives and limbs against
a longstanding pattern of behavior.”         mounted on the sides of the truck               corporate profits. Ford’s institu-
The scientists call on manufacturers to      outside the structure of the frame.             tional mentality was shown to be
revisit medical devices that were not        These “sidesaddle” tanks leave the              one of callous indifference to
made in accordance with the laws,            vehicle vulnerable to fuel-fed fires that       public safety. There was substan-
rules and regulations that govern the        result from a side impact. The overall          tial evidence that Ford’s conduct
process. The legislation needed to           safest positioning of a gas tank is             constituted a conscious disregard
protect consumers must be passed.            between the front and rear axles of the         of the probability of injury to the
Please contact your U.S. Senators and        vehicle. However, manufacturers do              members of the consuming
House members and urge them to               not always follow this guideline and            public.
push this act and help make it law.          many vehicles do not provide the                In 1999, a Los Angeles jury awarded
Source: AAJ                                  proper structural protection for the          $4.9 billion to the Anderson family as a
                                             tank.                                         result of GM’s defectively-designed
                                                It is not always the location of the       Malibu vehicle. When the Andersons’
IX.                                          fuel tanks that can lead to fuel-fed fires.   1979 Malibu was rear-ended in an acci-
PRODUCT                                      Design defects related to fuel-fed fires      dent, the fuel tank was punctured,
                                             can involve several different vehicle         causing the car to explode into flames.
LIABILITY UPDATE                             systems. The design issues range from         The Plaintiffs,Trisha Anderson and her
                                             fuel filler cap design and fuel line          four children, suffered horrible and
                                             design to fuel tank design and fuel           debilitating third-degree burns over
THE SINGLE VEHICLE ACCIDENT: A SERIES
HIGHLIGHTING OFTEN OVERLOOKED                pump design. Fuel systems should be           their bodies as a result of that acci-
PRODUCT CLAIMS                               designed to maintain their integrity          dent. The worst part of this story is
                                             during reasonably foreseeable acci-           that the injuries were preventable. GM
  Three months ago, we began a series        dents so that occupants do not lose           knew years before the accident that
of articles discussing product liability     their lives in otherwise survivable acci-     there were defects in the fuel system


12                                      www.JereBeasleyReport.com
and yet it placed the Malibu on the           separate NHTSA investigations, one          would have to interrupt the sequence
market anyway.                                consumer advisory and six recalls.          of events that lead to engine fires. But,
   In fact, GM had performed a cost-          These rolling recalls have added up to      until 2005, Ford rejected basic design
benefit analysis comparing the cost of        the largest automotive recall to date.      fixes, in favor of merely replacing the
human life, in a dollar amount, to the        Ford’s most recent and final attempt to     switch.
cost of redesigning the fuel tank             tackle the problem – an August 2, 2007         Ford first began recalling vehicles in
system. This cost-benefit analysis            recall for 3.6 million more Ford vehi-      May 1999, with a small campaign to
became known as “the Ivey Memo,”              cles, has not been entirely successful at   replace the switches in 279,000 1992-
named for GM engineer Edward Ivey             removing the risk from millions of          93 Lincoln Town Car, Crown Victoria
who conducted the cost-benefit analy-         affected vehicles.                          and Grand Marquis vehicles. But prob-
sis at the request of his GM superiors.          These fires have caused hundreds of      lems with the cruise control deactiva-
In that memo, Mr. Ivey found that the         thousands of dollars in property            tion switch in vehicles with a
estimated 500 fatalities per year caused      damage, and to date, are alleged to         powered-all-the-time configuration sur-
by fuel fires would cost the company          have caused three injuries and three        faced a year earlier, when Ford and its
on average, $200,000 per fatality. He         deaths. In May, an Iowa man was             supplier launched an internal investi-
further concluded that, based on the          injured and his wife was killed in a fire   gation to determine what was causing
numbers of such anticipated fatalities,       that started in their F-150 truck and       them to fail. According to documents
divided by the number of GM automo-           spread from their garage to their           submitted by Texas Instruments and
biles on the road, that “fatalities related   home, the family alleges in a lawsuit. A    Ford in one NHTSA investigation, early
to accidents with fuel-fed fires are          separate lawsuit maintains that a four-     on, Texas Instruments identified the
costing General Motors $2.40 per auto-        year-old Woodstock, Ga. girl died in a      powered-all-the-time configuration as a
mobile in current operation.” This            house fire on New Year’s Day 2004,          key factor in the scenario that led to a
amount is much less than the $8.59 it         allegedly caused by the family’s F-150      short circuit and fire. It suggested that
would cost to use the safer over-the-         pick-up truck, which was parked in the      Ford install a relay circuit to disrupt
axle alternative design.                      family’s garage. In 2007, the family of     the continuous power to the switch.
   Unfortunately, manufacturers often         Al Gavegan Sr. alleged that the San         Ford resisted this suggestion as too dif-
choose to place profits over the safety       Antonio man died in a house fire that       ficult for technicians to implement.
of their consumers. To determine if a         originally ignited in his 1994 Mercury      Instead, it turned its attention to the
fuel-fed fire was the cause of death, our     Marquis parked in an attached garage.       robustness of the switch. Texas Instru-
firm routinely reviews all automobile            Ford literally has studied ignition in   ments insisted that its switch met and
accidents in which an occupant was            this switch for eight years. Over that      exceeded the design specifications.
killed or seriously injured by the fire       time, its public explanation regarding      The issue became so contentious that
and suffered no skeletal or other life        these fires has shifted from, first,        the two companies severed their long-
threatening injuries. If you would like       placing the blame on defective              standing business relationship.
more information or have a question,          switches damaged in the manufactur-            The 2006 Office of Defects Investiga-
you can contact Greg Allen                    ing process to, second, blaming a sys-      tion report showed that switches
(Greg.Allen@beasleyallen.com) or Cole         temic problem caused by a series of         would be prone to short-circuit in
Portis (Cole.Portis@beasleyallen.com)         related events influenced by the            vehicles where braking released
in our office at 800-898-2034.                switch’s position in the engine com-        vacuum pressure on the switch power-
                                              partment and the electrical architec-       ful enough to invert the seal. Over
                                              ture of the speed control system, to,       many braking cycles, this action
FORD CRUISE CONTROL DEACTIVATION              finally, an age issue.                      fatigued the Teflon-coated Kapton seal,
SWITCHES                                         The basic elements of switch fires--     causing it to develop cracks that
                                              leaking brake fluid, corrosion, an elec-    allowed water to seep in and corrode
   Since 1998, Ford Motor Co. and the
                                              trical short and melting plastic--have      the electrical elements. If the switch
National Highway Traffic Safety Admin-
                                              been known since 1999. But until the        was mounted vertically, or angled
istration (NHTSA) have known that the
                                              most recent NHTSA investigation in          downwards on the master cylinder,
cruise control deactivation switches in
                                              August 2006 closed with a comprehen-        over time, those corrosive products
some Ford vehicles fail, igniting fires
                                              sive analysis, the automaker had been       could form dendrites that would com-
that have destroyed hundreds of
                                              unable to tease out the nuances of the      plete the path from circuit to ground
trucks, SUVs and luxury vehicles while
                                              scenario:Why are some vehicles with         and short the switch. The continuous
parked with the engine off. In the last
                                              this speed control system more prone        power allowed the short to heat up to
11 years, this alleged defect has
                                              to switch fires than others? What has       the point of ignition, even when the
affected more than 9.6 million vehicles
                                              also been clear, since Ford and Texas       vehicle had been turned off and
in eight different models, has been
                                              Instruments began digging into the          parked for hours.
blamed for 1,500 fires, sparked five
                                              problem, is that any effective solution        Ford phased out the powered-all-the-



                                        www.JereBeasleyReport.com                                                               13
time design in most vehicles by 2003.       shops immediately to have the cruise         for which there is currently no cure.
(Only the Econoline and the Expedi-         control switch disconnected.” The               Mike Andrews handles mesothe-
tions still employed that strategy.) On     agency said that only half –about 5          lioma cases for our firm. If you would
January 27, 2005, Ford finally came         million – of the affected vehicles had       like more information or have any
around to the Texas Instruments point       been repaired in the five previous           questions about asbestos exposure, you
of view. It launched a recall of some       recall campaigns. If you want more           can contact Mike at 800-898-2034 or by
vehicle models with a history of            information or need to discuss the           email at Mike.Andrews@beasleyallen.com.
reported switch failure problems that       above referenced subject matter, contact
would address the powered-all-the-          Rick Morrison at 800-898-2034 or by
time issue. (In previous recalls, Ford      email at Rick.Morrison@beasleyallen.com.     THREE TEENS KILLED AND SIX HURT IN SUV
blamed the component and simply                                                          ROLLOVER
replaced the switch.) It announced
                                            ILLINOIS JURY RETURNS $2 MILLION                Hardly a day passes that a report
that it would install a fused wiring
                                            ASBESTOS INJURY VERDICT                      doesn’t appear on the nightly news
harness on the speed control system
                                                                                         saying that an SUV went out of control
on 1.2 million Econolines, F-Series
                                               A McLean County, Illinois jury            and crashed somewhere in the U.S. In
(excluding the F-150), Excursions,
                                            returned a $2 million verdict recently       most of these reports, either deaths or
Explorers, Mountaineers and the E450.
                                            in favor of the family of a woman who        serious injuries are involved. On June
Ford followed up in September 2005
                                            died from asbestos exposure-related          5th, three Jacksonville, Fla. Ed White
with another recall to install the fused
                                            cancer. Leslie Corry, of Bloomington,        High School students died and six
wiring harness in 3.8 million F-Series
                                            Ill., died from mesothelioma lung            other young people were hospitalized
pick-ups, Lincoln Navigators, Ford
                                            cancer after she laundered the work          after an SUV rolled several times and
Expeditions and Bronco SUVs roughly
                                            clothes of her first husband, a former       crashed on an interstate highway. The
covering model years 1994-2002.
                                            worker at Union Asbestos & Rubber            victims, all teenagers, had skipped
   This latest recall represented
                                            Company.                                     school that day and were headed for a
another twist in the saga of the cruise
                                               The jury heard testimony stating          day at the beach rather than attending
control deactivation switch. Now the
                                            Corry was exposed to toxic asbestos          their last day of school. Their trip
problem is not caused by the unique
                                            fibers when she washed the work              ended when a rear tire blew out on
combination of a powered-all-the-time
                                            clothes of her first husband. Her            the SUV. The driver lost control and
electrical architecture coupled with an
                                            spouse was employed at the former            the SUV rolled over and crashed with
upside down position on the master
                                            UNARCO Industries, Inc., Bloomington         tragic consequences. It has been
cylinder, but by age. In its Defect and
                                            plant in the 1950s. The lawsuit named        determined that the left rear tire on
NonCompliance Report to NHTSA,
                                            Union Asbestos & Rubber Company,             the vehicle separated; the driver then
Ford said that an investigation initiated
                                            UNARCO Industries Inc., Pneumo               lost control; the vehicle traveled over
in February 2007 found that switches
                                            Abex, LLC, Honeywell International,          onto the shoulder of the roadway and
were leaking in vehicles older than 13
                                            Inc., Johns-Manville, Raybestos-Manhat-      struck a light pole. Everyone except
years,“indicating that a long term dura-
                                            tan, Owens-Illinois, Owens Corning           the driver was ejected from the SUV.
bility issue may be affecting the speed
                                            and Metropolitan Life Insurance                 Source: News4Jax.com
control switch.”While the mechanism
                                            Company as Defendants.
of failure was different, the outcome
                                               The Plaintiffs proved at trial that the
was the same: “leakage causing
increased electrical resistance within
                                            company conspired, with a long list of       X.
                                            product manufacturers and other busi-
the leaking switch, and the potential
                                            nesses, to conceal information about
                                                                                         MASS TORTS
for an unattended vehicle fire.”
                                            the hazards of asbestos. The compa-          UPDATE
   Ford, however, launched the cam-
                                            nies involved in the concealment of
paign without actually having suffi-
                                            information agreed not to warn
cient jumper harnesses available to                                                      BAUSCH & LOMB SETTLES 600 EYE FUNGUS
                                            employees, consumers, and area resi-
make the repair. Despite the success                                                     LAWSUITS
                                            dents about the dangers of direct and
of the final campaign, NHTSA was con-
                                            secondary exposure to asbestos mate-           Contact lens maker Bausch & Lomb
cerned that too few vehicle owners
                                            rials. The jury also returned $100,000       Inc. has settled close to 600 fungal-
had taken advantage of the repair. On
                                            in punitive damages against Pneumo           infection lawsuits. As you may recall,
February 28, 2008, the agency issued a
                                            Abex and $400,000 in punitive                the company went private in 2007 in
Consumer Advisory, urging owners of
                                            damages against Honeywell Interna-           an effort to handle a devastating recall
certain unrepaired Ford, Lincoln and
                                            tional. Exposure to asbestos fibers can      of MoistureLoc, its flagship lens
Mercury SUVs, pickup trucks, and vans
                                            cause asbestos-related illnesses and dis-    cleaner. Over the past year – away
to “bring their vehicles to dealer repair
                                            eases like mesothelioma lung cancer,


14                                    www.JereBeasleyReport.com
from the glare of public scrutiny – the      been buried going back to the               half years that the women took either
optical products company attempted           beginnings of the outbreak. All             the drug or the placebo and for more
to settle these lawsuits without being       settlements were predicated on              than two years afterward. Dr. Rowan
monitored in a court of law. While it        silence about the clinical findings         Chlebowski of the Harbor-U.C.L.A.
was largely successful, there are still      and blame and so forth. My hope             Medical Center in California and lead
dozens of individual claims yet to be        was that what actually happened             author of the study, which was pre-
resolved. The cost of the settlements        would become part of public                 sented at the annual meeting of the
thus far is more than $250 million. It’s     record in a courtroom. That way,            American Society of Clinical Oncology,
estimated the lens cleaner debacle           we'd be able to learn from it and           observed:“We shouldn’t be using both
could wind up costing the company as         move on and make sure it never              combined hormone therapy and
much as $500 million.                        happened again.                             tobacco at the same time.” Dr. Chle-
   More than 700 lens wearers in the                                                     bowski said there was one avoidable
                                              While Bausch & Lomb told USA
United States and Asia were exposed to                                                   lung cancer death over eight years for
                                           Today that it has settled "the vast
a potentially blinding infection known                                                   every 100 women who both smoked
                                           majority of fungal infection cases," the
as Fusarium keratitis while using ReNu                                                   and took hormone therapy.
                                           company is defending another 500-
with MoistureLoc, a new-formula multi-                                                     Our law firm represents over 600
                                           plus lawsuits where it is alleged that
purpose solution for cleaning, storing                                                   women who have suffered breast
                                           MoistureLoc is linked to assorted bac-
and moistening soft contact lenses.                                                      cancer caused by hormone replace-
                                           terial, viral and parasitic afflictions. A
The damage was irreparable in some                                                       ment therapy. There are currently
                                           pretrial hearing was held last month in
instances. For example, seven people                                                     between 9,000 and 10,000 lawsuits
                                           New York. Orders from the court may
in Florida, Maryland, New York,                                                          pending across the United States
                                           well establish that there's a reliable sci-
Oregon, Tennessee and West Virginia                                                      against Wyeth, Pfizer and other
                                           entific basis for the Plaintiffs’ allega-
had to have an eye removed. At least                                                     hormone replacement therapy manu-
                                           tions. Bausch & Lomb was acquired by
60 more Americans needed vision-                                                         facturers. Hopefully, these companies
                                           private equity firm Warburg Pincus for
saving corneal transplants. There have                                                   will step up to the plate soon and pay
                                           $3.67 billion in October 2007. If you
been a number of incidents where the                                                     these victims fair compensation for
                                           need more information contact Chad
victims’ eye problems ended careers.                                                     their injuries and suffering. If you need more
                                           Cook at 800-898-2034 or by email at
   The U.S. Centers for Disease Control                                                  information, contact Frank Woodson in
                                           Chad.Cook@beasleyallen.com.
and Prevention confirmed 180 cases in                                                    our firm at 800-898-2034 or by email at
                                           Source: USA Today
35 states from June 2005 through Sep-                                                    Frank.Woodson@beasleyallen.com.
tember 2006, when the agency's dedi-                                                     Source: New York Times
cated surveillance stopped, according
                                           NEW WARNING ON HORMONE REPLACEMENT
to Dr. Benjamin Park, a CDC epidemiol-
ogist. In an interview, Dr. Park told         In addition to other health problems,      OTHER HORMONE REPLACEMENT NEWS
USA Today that the CDC continued to        it’s now being reported that hormone
                                                                                            Wyeth Pharmaceutical Company has
hear of sporadic, unconfirmed cases in     therapy taken by women to counter
                                                                                         manufactured hormone replacement
the months after MoistureLoc was           the effects of menopause can increase
                                                                                         drugs and promoted therapy since the
withdrawn from the market in April of      the risk of dying from lung cancer.
                                                                                         1960s. The company has been very
2006. Victims typically complained of      These findings from a recent study rep-
                                                                                         aggressive with the marketing of these
eye irritation that progressed to a        resent the latest black mark against the
                                                                                         medications. Wyeth has argued in
sudden onset of searing pain. Many         therapy that is already being used
                                                                                         trials to the jury that a scientist or
were mistakenly treated with antibi-       much more sparingly than it once was.
                                                                                         physician should get a Nobel Prize for
otics and steroids — a delayed diagno-     Researchers pointed out that women
                                                                                         being able to figure out that hormones
sis that worsened the condition – and      should not be using hormone therapy
                                                                                         could cause cancer. One of our law
by the time the real problem was dis-      and smoking cigarettes at the same
                                                                                         partners, Russ Abney, recently discov-
covered, in many cases, the damage         time. This new analysis used data from
                                                                                         ered a Nobel lecture on December 13,
was already done.                          The Women’s Health Initiative Study.
                                                                                         1966 given by Charles Huggins enti-
   Dr. Arthur Epstein, who was chair-      In that study, women took either
                                                                                         tled Endocrine – Induced Regression
man of the American Optometric Asso-       Prempro, a drug combining estrogen
                                                                                         of Cancers.
ciation's contact lens and cornea          and progestin, or a placebo.
                                                                                            Little did Wyeth know that the state-
section during the highly-publicized          The study was discontinued in 2002
                                                                                         ment by its lawyers to some of the
crisis, had this to say in an interview    after it was found that the hormone
                                                                                         juries would actually turn out to be
with USA Today:                            therapy increases the risk of breast
                                                                                         true. Dr. Huggins received his Nobel
                                           cancer. The new analysis looks specifi-
  The truth has been very carefully                                                      Prize for discovering that a subset of
                                           cally at lung cancer for the five and a
  buried, and it appears to have                                                         certain types of cancer was promoted


                                     www.JereBeasleyReport.com                                                                      15
by hormones. These specified cancers        device industry has argued that over-       on the heels of a massive recall of
were hormone positive prostate, breast      riding the decision would allow state       Medtronic's Sprint Fidelis Defibrillator
and uterine cancer.                         courts to second-guess the FDA’s            leads because of reports of fractures in
  Pharmaceutical manufacturers have         medical experts. The Medical Device         the leads which can result in the defib-
a duty and responsibility to doctors        Safety Act is needed to restore patients’   rillators   unnecessarily     shocking
and patients to stay current on all         rights.                                     patients or failing to work altogether.
science related to the drugs the com-       Sources: Associated Press                   To date, the Sprint Fidelis Defibrillator
panies are selling to the public. The                                                   leads defects have been blamed for at
entire hormone replacement fiasco                                                       least 13 deaths. If you need more
may have been prevented if Wyeth had        MEDTRONIC INFORMS DOCTORS OF FAULTY         information on this subject, contact
done a thorough investigation of the        PACEMAKERS                                  Leigh O’Dell in our firm at 800-898-
science involving hormone replace-                                                      2034       or      by      email       at
                                               Medical device maker Medtronic
ment in the 1960s. In fact, it could                                                    Leigh.Odell@beasleyallen.com.
                                            sent a letter recently to doctors world-
have taken advantage of Dr. Charles                                                     Source: www.Medtronic.com
                                            wide warning that nearly 37,000 of its
Huggins’s Nobel Prize winning
                                            Sigma and Kappa pacemakers, most of
research. The Wyeth lawyers can now
                                            which were manufactured between             A REPORT ON ZYPREXA LITIGATION
tell juries that someone did in fact win
                                            November 2000 and November 2002,
the Nobel Prize long ago for figuring
                                            could have faulty wiring that can cause        Some 30,000 lawsuits have been
out that hormones can cause cancer.
                                            the pacemakers to work improperly or        filed against Eli Lilly by persons suffer-
But, do you really believe they will
                                            not at all. This defect can be deadly for   ing from psychiatric problems who
ever tell that bit of news to any jury?
                                            the estimated 1.7 million people who        were treated with the anti-psychotic
                                            have the pacemakers implanted in            drug Zyprexa. Those persons princi-
MEDICAL DEVICE LOBBYING                     their chests. The defect involves a sep-    pally allege in their complaints that
                                            aration of wires that connect the elec-     Zyprexa caused side effects of hyper-
   According to a recent disclosure         tronic circuit to the pacemaker             glycemia and diabetes. Litigation
report, medical         device     maker    components. Patients with the defec-        involving this drug was initiated in
Medtronic, Inc. spent more than $1.2        tive devices reported feeling faint or      2003 with a Multi-District Litigation
million lobbying Congress in the first      lightheaded. Medtronic has received         (MDL) being formed in 2004. Many of
quarter. The company lobbied lawmak-        two reports of patient deaths that may      the cases have been settled.
ers on a bill aimed at updating the U.S.    be a result of the faulty pacemakers.          While most of the Plaintiffs elected
patent system and on legislation that          An estimated 15,200 active Kappa         to resolve their individual claims, there
would increase the regulation of            devices and 6,100 active Sigma devices      are still issues to be resolved in other
medical devices manufactured in             are affected by the issue. Many of the      cases that remain in court. A series of
foreign countries.                          devices have been implanted in              summary judgment motions filed by
   Additionally, Medtronic lobbied          patients for five years or longer and       Lilly against individual Zyprexa-user
against efforts in the House to make it     may be nearing what Medtronic calls         actions are now pending. Expert testi-
easier for patients to sue medical          normal elective replacement time. Of        mony is critically important in these
device companies. The Medical Device        the active Kappa and Sigma devices,         cases. The MDL judge has excluded
Safety Act was recently introduced          Medtronic has observed 285 Kappa            some proposed expert testimony sub-
and, if passed, will restore the right to   devices and 131 Sigma devices with          mitted by Plaintiffs’ lawyers and has
pursue state court claims for injuries      the failure mechanism. The company          approved other expert testimony. But,
caused by defective medical devices.        predicts failure rates of 1.1% for the      on May 29, 2009, the MDL Court issued
   Last year the United States Supreme      Kappa pacemaker and 4.8% for the            an order in one individual’s case grant-
Court ruled in Riegel v. Medtronic that     Sigma pacemaker over the remaining          ing summary judgment.
manufacturers of class III medical          lifetime of the pacemakers because of          The Plaintiff in that case was Lewis
devices that have been approved by          the defect.                                 Ortenzio, a 56-year-old resident of Har-
the FDA’s pre-market approval process          In accordance with the HRS recom-        rison County, West Virginia, who was
are essentially immune from liability.      mendations on device advisory com-          formerly a medical doctor licensed to
Medical device companies are shielded       munications, Medtronic will begin           practice in the state of West Virginia.
from patient lawsuits at the state court    informing patients with registered          The court made several significant
level, and the immunity could apply         devices that fall within the above-men-     findings in the Ortenzio case, including
even in instances when a company            tioned parameters with a letter dated       the following:
actually knew that a device was defec-      May 27, 2009. The letter will advise
tive and dangerous and when the             patients to contact their physician for     • A finding that there was no evidence
device has been recalled. The medical       more information. The warning comes           that Dr. Ortenzio read the warning



16                                    www.JereBeasleyReport.com
  label. Thus there was no evidence           dangers in marketing a drug for an          tember 1999 through March 2001,
  from which a jury could find that a         unapproved use, called off-label pro-       while denying such practices beyond
  different warning by Lilly would            motion, according to Dr. Sidney Wolfe,      that date. All of this is bad news for
  have prevented him from taking              head of the health research group at        Lilly, and unfortunately is typical of
  Zyprexa;                                    Public Citizen in Washington. Dr.Wolfe      how the powerful drug industry oper-
                                              had this observation:                       ates.
• There was also no evidence that his
                                                                                          Source: Bloomberg
  doctor even knew Dr. Ortenzio was             By definition, off-label means
  taking Zyprexa during the relevant            there is no clear evidence that the
  time periods; and                             benefits of a drug outweigh the           THE FDA FAILED TO SHUT DOWN A
                                                risks. The reason why off-label           TROUBLED PLANT
• There was no evidence presented of
                                                promotion is illegal is that you
  a causal connection between                                                               Natalie Fullerton died a tragic death
                                                can greatly magnify the number
  Zyprexa and Dr. Ortenzio’s pancre-                                                      at a tender age. Natalie, a one-year-old
                                                of people who will be harmed.
  atitis, which made the case impossi-                                                    child, underwent a double-lung trans-
  ble to prove.                                  In 1999, when Lilly began its market-    plant and had a remarkable recovery
                                              ing push, Zyprexa’s only approved use       after the surgery. Her father carefully
   I don’t believe that the ruling will
                                              was for patients suffering from schizo-     tended to Natalie, following an intri-
affect many – if any – of the other
                                              phrenia, according to the FDA. In           cate regimen to keep her healthy, and
pending cases. Each case should stand
                                              2008, Zyprexa was Lilly’s best-selling      never suspected any real difficulties.
on its own from a factual perspective.
                                              drug, with $4.7 billion in sales, while     After doctors implanted a tube in
The MDL Court appears ready to rule
                                              antipsychotics as a group topped U.S.       Natalie's chest to give her intravenous
on additional Zyprexa cases and has
                                              drug sales last year, with $14.6 billion.   medication, her father dutifully used
issued orders that some of the cases
                                                 In a request for a December 2003         fluid-filled syringes to clean it. A few
should be ready for trial very soon. If
                                              meeting over a proposed label change,       days after he started using the
you need more information on
                                              Lilly told the FDA that data from seven     syringes, the child was back in a Texas
Zyprexa, contact Frank Woodson in our
                                              studies showed Zyprexa didn’t allevi-       hospital, breathless and feverish, and in
firm at 800-898-2034 or by email at
                                              ate symptoms of Alzheimer’s or other        real trouble. Bacteria had infected her
Frank.Woodson@beasleyallen.com.
                                              dementia. The studies showed that           blood, the first in a cascade of compli-
                                              death rates among older dementia            cations over a period of four months.
                                              patients taking Zyprexa were “signifi-      Sadly and inexcusably, Natalie died on
LILLY SOLD ZYPREXA FOR DEMENTIA
KNOWING IT DIDN’T HELP                        cantly greater” than those who didn’t       March 12, 2008.
                                              get the medicine, and the company             Natalie's father had used syringes
   In a related matter, it was reported       knew it.                                    from a contaminated lot made in a
last month that Eli Lilly & Co. urged            The internal documents also              North Carolina factory. That batch and
doctors to prescribe Zyprexa for              revealed Lilly officials wrote medical      another have since been linked to four
elderly patients with dementia, an            journal studies about Zyprexa and then      deaths and 162 illnesses nationwide,
unapproved use for the antipsychotic,         asked doctors to put their names on         including 22 in Illinois. Moreover, an
even though the drugmaker had evi-            the articles, a practice called “ghost-     examination of inspection reports and
dence the drug didn’t work for such           writing.” Lilly employees actually com-     other documents reveals that the U.S.
patients. This revelation came about          piled a guide to hiring scientists to       Food and Drug Administration had
when unsealed internal company doc-           help promote drugs and combat unfa-         several chances to stop the tainted
uments were made public because of            vorable information about Lilly drugs.      syringes from being used by patients
litigation. In 1999, four years after Lilly   Documents, including a 2002 business        and failed to act.
sent study results to the FDA showing         plan, called for expanding prescrip-          Three months before the prefilled
Zyprexa didn’t alleviate dementia             tions in off-label use. They also           syringes were shipped in October
symptoms in older patients, it began          pointed to notes from Lilly sales repre-    2007, an FDA inspector visited the
marketing the drug to those very folks,       sentatives through 2003 recording           plant in North Carolina where they
according to documents unsealed in            efforts to press doctors to prescribe       were made. She investigated reports
insurer suits against the company for         Zyprexa to elderly patients for mood        of red, brown and black particles in
overpayment. In April 2005, regulators        symptoms, irritability and insomnia.        syringes and reported that managers at
required Lilly and other antipsychotic           Lilly pleaded guilty in January to a     the plant had a plan to deal with rust.
drug-makers to warn that the products         federal misdemeanor charge of illegally     But the inspector failed to note that
posed an increased risk to elderly            marketing Zyprexa for off-label uses to     the plant had switched to an unreliable
patients with dementia.                       elderly consumers. The company              sterilization method. A week later, the
   The documents show the health              admitted illegal promotions from Sep-       FDA learned that a distributor was



                                        www.JereBeasleyReport.com                                                               17
recalling 1.3 million of the syringes.          This incident underscores my             psychiatric symptoms.”
The agency’s own operations manual              belief that it is critically impor-         Merck said in a prepared statement
required that a thorough inspection be          tant for the FDA to take an              that it was confident in the safety of
done, but that didn't happen. An FDA            aggressive approach to inspec-           Singulair. It said the drug has been pre-
spokeswoman now says that, because              tions and maintain vigilance in          scribed to tens of millions of patients
the agency is so understaffed, it no            ensuring that manufacturers              with asthma and allergies since its
longer follows the policy. That is,             fully comply with their regula-          approval in 1998. But the company
unless the recalled product poses a             tory, legal and moral obligations        said it would revise the drug label as
reasonable probability of serious               to ensure that the products they         requested.
injuries or deaths. The conditions at           produce for the American people             The types of problems the FDA cited
the syringe manufacturing plant cer-            are safe and effective.                  already were mentioned in a less-
tainly should fit within the criteria. It’s                                              prominent section of the prescribing
difficult to understand why follow-up           The Obama Administration and Con-
                                                                                         instructions.      Singulair is Merck's
investigations by the FDA didn’t take         gress must make an overhaul of the
                                                                                         biggest product with annual sales of
place.                                        FDA a top priority and make sure that
                                                                                         $4.5 billion. The drug's generic name
  Finally, after receiving reports of         it happens. It will take increased
                                                                                         is montelukast. The FDA announced in
harm in late 2007, FDA inspectors did         funding and authority to deal with the
                                                                                         March 2008 that it was reviewing
go back to the plant, called AM2PAT,          health and safety issues that the FDA is
                                                                                         safety data that raised concerns Singu-
and discovered a "gummy brown" sub-           charged with upholding. The death of
                                                                                         lair might be linked to suicidal behav-
stance on the syringe-filling machine         this small, innocent child should never
                                                                                         ior or mood-related side effects.
and brown water flowing from taps,            have occurred. Nothing like this
                                                                                            AstraZeneca says it is adding a pre-
among other safety-related problems.          should happen in the future.
                                                                                         caution about reports of depression
The plant was closed in January 2008.         Source: Chicago Tribune
                                                                                         and insomnia to the label for Accolate,
Federal prosecutors went after                                                           which had sales of $73 million world-
Dushyant Patel, the president of                                                         wide in 2008. The drug's generic name
AM2PAT, who lived in Chicago. He had          FDA ASKS FOR CAUTION ON MERCK
                                              ASTHMA DRUG                                is zafirlukast. So far, officials at Corner-
commuted from his home to operate                                                        stone Therapeutics haven’t made any
the plant. An indictment on fraud, con-          Singulair, Merck & Co Inc.'s top-       comment on Zyflo, known generically
spiracy and other charges alleges that        selling drug, and similar medicines,       as zileuton.
Patel’s firm lied about performing            should come with a caution about           Source: Reuters
sterility tests and produced prefilled
                                              reports of psychiatric problems in
syringes laced with bacteria.
                                              some patients, according to the federal
  In an effort to avoid prosecution,
Patel fled the country. Two employees,
                                              government. The Food and Drug              XI.
                                              Administration has requested a precau-
including the plant manager, were sen-
                                              tion in the prescribing instructions for
                                                                                         AN UPDATE ON
tenced in February to prison terms for
                                              Singulair, Accolate (AstraZeneca) and      SECURITIES
fraud and for allowing tainted drugs
into the marketplace.         For some
                                              Zyflo and Zyflo CR (Cornerstone Ther-      LITIGATION
                                              apeutics). Of course, a precaution is a
reason, the syringe case has not
                                              less-serious alert than a warning. Prob-
received much media attention. It’s
                                              lems that were reported to the FDA         MORGAN KEEGAN BROKERAGE REPORT
clearly another example of the FDA
                                              include agitation, aggression, suicidal
dropping the ball on a serious safety                                                      Morgan Keegan & Co., the stock bro-
                                              thinking, suicide, depression, insomnia
issue.     Consumer advocates and                                                        kerage unit of Regions Financial Corp.,
                                              and irritability.
experts who follow the FDA say safety                                                    has been involved in a great deal of liti-
                                                 The FDA says that psychiatric prob-
breakdowns at the agency are the pre-                                                    gation brought by investors who were
                                              lems were uncommon in clinical trials
dictable result of a long-term shift from                                                victims of fraud. The company has
aggressive enforcement to "partner-           of the drugs but those data were
                                              limited because the studies were not       spent the past ten months fighting
ship" with the industries the FDA over-                                                  these claims.      Unfortunately for
sees. That sort of thing – historically –     designed to evaluate those issues.
                                              Some post-approval reports of psychi-      Morgan Keegan, there appears to be
has never worked for any regulatory                                                      no letup in sight. At the heart of the
agency.                                       atric events "included clinical details
                                              consistent with a drug-induced effect,"    current disputes are seven investment
  Margaret Hamburg, the newly-                                                           pools operated by Morgan Keegan, all
appointed FDA Commissioner, has               the FDA added. The agency says that
                                              doctors should be aware that “mental       of which operated under some varia-
pledged to make product safety a "top                                                    tion of the name "RMK Fund." These
priority." She had this to say about the      issues could arise and consider discon-
                                              tinuing the drugs if patients develop      were mutual funds that invested in
Patel plant:                                                                             bonds. Investors who were hurt


18                                      www.JereBeasleyReport.com
contend that these were risky bonds        SEC CHARGES EX-COUNTRYWIDE CEO                  "But the real Countrywide, which
that speculated on the odds that           WITH FRAUD                                   could only be seen from the inside,
people and companies with bad credit                                                    was buckling under the weight of dete-
ratings would pay their high-interest         Former Countrywide Financial CEO          riorating mortgages, lax underwriting
debts such as equipment leases and         Angelo Mozilo and two other former           and an increasingly suspect business
home mortgages.                            officials of the mortgage giant have         model," Khuzami said. As proof that
   Morgan Keegan stockbrokers led          been charged with fraud by federal           the executives knew of Countrywide's
their clients to believe the funds con-    regulators. This is the first government     increasingly risky financial condition,
tained safe, highly-rated corporate        lawsuit against top corporate execu-         the SEC lawsuit cited a corporate e-
bonds suitable for retirees. Some of       tives for actions related to the financial   mail in which Mozilo allegedly told
the funds lost more than half their        crisis. The Securities and Exchange          Sambol the firm was "flying blind" on
value when the housing market got in       Commission accused Mozilo, former            how some risky loans would perform
deep trouble in 2007, leaving investors    Countrywide CFO Eric Sieracki, 52,           amid rising unemployment and
with more than $2 billion in losses that   and David Sambol, 49, former presi-          slowing home sales.
year. Currently, there are hundreds of     dent, of falsely leading investors to           In a separate e-mail to Sambol, Sier-
cases pending against Morgan Keegan        believe the mortgage giant had               acki and others, Mozilo allegedly wrote
over the funds.                            avoided subprime-lending mistakes,           that subprime mortgages had been
   Morgan Keegan and Regions claim         even as Countrywide issued "riskier          originated "through our channels with
there was nothing improper about the       and riskier" loans.                          disregard for process (and) compliance
management, promotion or selling of           Those loans generated billions in         with guidelines." The SEC charged that
the funds. They say the assets that        profits for Countrywide, a major player      Mozilo, while aware of non-public red
backed the funds were entirely proper      in the national subprime mortgage            flags in the firm's operations, estab-
given the prevailing economic condi-       market that collapsed in 2007, helping       lished four stock sales plans, exercised
tions and that the risks were properly     start a global financial meltdown. As        more than 5.1 million Countrywide
disclosed. But our experience in han-      we have reported, Bank of America            options and sold the underlying shares
dling cases against Morgan Keegan and      acquired Countrywide last year.              for nearly $140 million. The SEC seeks
Regions indicates otherwise. We            Mozilo, a Countrywide co-founder             unspecified fines against the three
believe the cases brought by our           renowned for his high salary and other       individuals. The Commission also
clients have merit and will be success-    corporate perks, was also charged with       seeks repayment of allegedly improper
ful.                                       insider trading that allegedly produced      stock gains by Mozilo and Sambol, who
   The Morgan Keegan disputes are          profits of nearly $140 million on sales      allegedly got at least $40 million in
handled in arbitration under the Finan-    of the stock in the nation's largest         profits.
cial Industry Regulatory Authority         mortgage lender. The Los Angeles                It’s good to see the SEC going after
(FINRA) which is based in Washington.      federal civil court lawsuit accused the      the “bad guys” who have knowingly
FINRA is authorized by the govern-         three Defendants of failing to tell          committed fraud. We have known
ment as a "self regulatory" organiza-      investors that Countrywide was:              about the wrongdoing by Country-
tion, meaning its members agree to         • Matching any mortgage offered in           wide for a long time. Our firm has
abide by certain rules and accept            the marketplace, even risky loans          been suing Countrywide in fraud cases
whatever penalties are levied by the         offered by subprime specialists.           for about five years, representing
group if these rules are broken.                                                        clients who were victims of the fraud.
Investor disputes are heard in arbitra-    • Approving a high percentage of             Source: USA Today
tion by a three-person panel. The            loans with risks above the firm's
panel is chosen from a pool of people        "increasingly lax" guidelines.
by mutual consent of the lawyers rep-                                                   SEC AND ALABAMA REGULATORS SUE
                                           • Defining "prime" loans as mortgages        AURA FINANCIAL SERVICES
resenting aggrieved investors and the
                                             approved for borrowers whose
lawyers representing the FINRA-
member company. There were about             credit scores were "well below" any           The Securities and Exchange Com-
5,000 claims filed against FINRA             definition of prime credit quality.        mission and the Alabama Securities
members last year. If you need more                                                     Commission have sued Aura Financial
                                             According to SEC enforcement direc-
information on this subject, contract                                                   Services Inc., a Birmingham-based
                                           tor, Robert Khuzami, evidence shows
Scarlette Tuley or Jay Aughtman at 800-                                                 firm, and six of its employees over
                                           the three executives painted a cheerful
898-2034       or     by    email     at                                                what was described as "rampant
                                           "mirage" that falsely characterized
Scarlette.Tuley@beasleyallen.com or                                                     churning" of customer accounts. ASC
                                           Countrywide as operating under
Jay.Aughtman@beasleyallen.com.                                                          Director Joe Borg gave Aura 28 days to
                                           "prudent business practices and tightly
Source: Birmingham News
                                                                                        show why its registration should not
                                           controlled risk."
                                                                                        be revoked. The agencies allege that


                                     www.JereBeasleyReport.com                                                               19
Aura and its brokers used fraudulent        since February 2006.                         CIGNA SUBSIDIARY TO SETTLE OVERTIME
sales practices and high-pressure sales        The suits claimed that Wal-Mart vio-      CLASS ACTION
tactics to convince customers to open       lated wage and hours laws by denying
and invest money in brokerage               workers’ rest breaks and manipulated            The lead Plaintiff and Cigna unit
accounts, which the brokers subse-          time cards to “shave” their pay. The         Connecticut General Life Insurance
quently churned.                            suits were filed as class actions, or        Co. (CGLIC) have asked a Court to
   The SEC alleges that Aura Financial      group lawsuits, on behalf of all hourly      approve a settlement on behalf of
Services, Inc., and six registered repre-   workers in the individual states, includ-    approximately 6,500 current and
sentatives used fraudulent sales prac-      ing Alabama, Michigan, Maryland,             former employees to resolve alleged
tices and high-pressure sales tactics to    Oregon and Texas. The lawsuits are           violations of federal and state overtime
convince customers to open and              combined in the U.S. District Court,         wage laws. The suit alleged CGLIC
invest money in Aura brokerage              District of Nevada (Las Vegas).              failed to pay hourly employees for time
accounts, which the brokers subse-          Source: Bloomberg
                                                                                         spent booting up and down their com-
quently churned. Aura and the brokers                                                    puters before and after signing into the
enriched themselves with approxi-                                                        electronic time keeping system of the
mately $1 million in commissions and        SETTLEMENT IN WAGE-AND-HOUR LAWSUITS         companies. It was contended that the
other fees paid by the customers while      AGAINST WAL-MART                             employees were entitled to compensa-
largely depleting the customers'                                                         tion for that time because the booting
                                               A Minnesota judge has given final         up and down of the computer was a
account balances through trading
                                            approval to a settlement of a wage-and-      task they were required to perform
losses and excessive transaction costs.
                                            hour lawsuit against Wal-Mart Stores,        and thus constituted hours worked.
   Churning is a fraudulent practice
                                            Inc., the world’s biggest retailer, valued   Source: Law360
that occurs when a broker engages in
                                            at an amount up to $54.25 million.
excessive trading without regard to the
                                            Previously, in a non-jury trial, the judge
customer's investment objectives for
                                            held that Wal-Mart required hourly           HALLMARK TO SETTLE OVERTIME CLASS
the purpose of generating commis-
                                            employees to work off-the-clock and          ACTION
sions and other revenue.
                                            denied full rest or meal breaks in viola-
Source: Birmingham News
                                            tion of state wage-and-hour laws. The           A judge has preliminarily approved a
                                            judge ruled that Wal-Mart broke labor        class action settlement under which
                                            laws more than two million times and         Hallmark Marketing Corp. agreed to
XII.                                        owed the employees back pay. The set-        pay current and former hourly employ-
                                                                                         ees in California to settle their claims.
EMPLOYMENT AND                              tlement concludes seven years of litiga-
                                            tion over Wal-Mart’s employment              It was alleged that the employees were
FLSA LITIGATION                                                                          denied overtime pay. A final hearing is
                                            practices in Minnesota. Wal-Mart has
                                            faced dozens of similar lawsuits across      scheduled for October 16, 2009. The
                                            the country.                                 Plaintiffs alleged that Hallmark encour-
WAL-MART WINS INITIAL APPROVAL FOR
                                                                                         aged certain hourly employees to work
WAGE SETTLEMENTS                            Source: Associated Press
                                                                                         off the clock, failed to reimburse them
   Wal-Mart Stores Inc., the world’s                                                     for business expenses, and denied
biggest retailer, will pay as much as $85   FORMER FREEDOM EXECUTIVE AWARDED $4          them rest periods. The class is esti-
million to settle 30 lawsuits claiming      BILLION IN AN EMPLOYMENT CASE                mated to include up to 3,900 current
the company didn’t pay employees for                                                     and former employees who worked as
all hours worked. The settlement              A California court issued a $4.1           retail merchandisers, territory assis-
covers cases filed in federal courts in     billion judgment last month against          tants, installation leaders, administra-
29 states and Puerto Rico. The settle-      China's iFreedom Communications              tive assistants and casual laborers.
ment, which is part of a global $640        International Holdings Ltd., its U.S.        Source: Law360

million resolution of wage-and-hour         affiliate, and its founder. This result
claims reached between Wal-Mart and         came after an arbitrator found the
workers in December, has received           Defendants liable in an employment           SUNTRUST REACHES SETTLEMENT IN FLSA
                                            dispute with a former executive. Judge       ACTION
preliminary court approval. The settle-
ment is “fair, reasonable, and adequate,”   Teresa Sanchez-Gordon of the Superior
                                            Court of California in Los Angles              SunTrust Banks, Inc. has reached a
U.S. District Judge Philip M. Pro said in                                                settlement with technical support spe-
granting tentative approval, adding that    County confirmed the final award for
                                            former Chief Marketing Officer Paul          cialists employed by the company in a
the agreement was a “hard-fought com-                                                    Fair Labor Standards Act collective
promise of claims that have been            Thomas Chester, who had been fired.
                                            Source: Law 360
                                                                                         action accusing the financial institu-
actively litigated before this court”                                                    tion of failing to pay the employees


20                                    www.JereBeasleyReport.com
overtime wages. In March 2007, the             cation policy violated California         is put into safes at each Starbucks and
court certified a class of all current and     law. The applicable statutes do           apportioned weekly to eligible
former client technology specialists           not prohibit Starbucks from per-          employees based on the number of
who worked for SunTrust from March             mitting shift supervisors to share        hours they work. It was reported that
14, 2004 to March 14, 2007, and were           in the proceeds placed in collec-         the average tip distributed to baristas
paid on a salary basis without getting         tive tip boxes.                           and supervisors last year was $1.71 an
premium pay for hours worked over                                                        hour. It would be interesting to see
                                               It was reported that lawyers for the      what position Starbucks would be
40 hours a week.
                                             baristas will appeal the decision to the    taking if the case was one involving a
  The technical support specialists
                                             California Supreme Court. David             supervisor in an “overtime” lawsuit.
were classified as exempt from over-
                                             Lowe, one of the lawyers for the baris-
time pay requirements before the Fall                                                    Source: Los Angeles Times
                                             tas, had this to say:
of 2006, but were reclassified as non-
exempt.       The employees duties             Up to this point, every court that
included installing telephones, relocat-       has addressed this issue has              XIII.
ing equipment, providing computer              found that an employer cannot             INSURANCE AND
and server support and providing               pay supervisors from a tip pool.
installation and support of network            This is the first case that goes in a
                                                                                         FINANCE UPDATE
communication equipment.                       different direction. We will be
Source: Law360                                 looking to the California                 OBAMA BACKS A FEDERAL INSURANCE
                                               Supreme Court to fix this error.          OFFICE
STARBUCKS WINS REVERSAL OF THE $100            Lowe, of San Francisco law firm              The Obama Administration has
MILLION TIPS VERDICT                         Rudy, Exelrod, Zieff & Lowe, said           called for a new U.S.Treasury Depart-
                                             Section 351 of the state labor code         ment office on insurance, but the presi-
   Starbucks Corp. won a major victory       states that an employer or agent can't      dent won't propose federal regulation
last month when a California appeals         take or receive any part of tips left for   of the industry as a part of the sweep-
court reversed a ruling that had             employees. The legal definition of an       ing financial reform plan laid out on
ordered the coffee giant to pay more         agent, he said, is “anyone who has          June 17th. The Office of National Insur-
than $100 million in restitution for         authority to supervise, direct or           ance, as proposed, would monitor all
allowing shift supervisors to share          control workers.”                           aspects of the industry and flag any
baristas' tips. The class-action lawsuit       Starbucks had argued that its super-      risks that could contribute to a future
was brought on behalf of more than           visors spend most of their workdays --      financial crisis. The Office could rec-
100,000 current and former baristas in       as much as 95% -- performing the very       ommend to the Federal Reserve that
2004 by former barista Jou Chau, who         same jobs as baristas, including making     large insurers be subjected to strict
complained that shift supervisors were       coffee and taking orders. They say          capital and risk rules that would apply
illegally getting a cut of employee tips.    that, although supervisors have some        to large financial holding companies
San Diego County Superior Court              authority to supervise or direct baris-     under other aspects of the Obama
Judge Patricia Cowett ruled in favor of      tas, they can't enforce those directions    plan. It also would coordinate industry
the baristas last year after a bench trial   and can't hire, discipline or terminate     policy, but it would stop short of being
and awarded $86 million in restitution       them. At a Starbucks location in Los        a direct regulator.
plus about $20 million in interest. Star-    Angeles, baristas and shift supervisors        As you may know, the nation's 6,000
bucks called the decision "fundamen-         work side-by-side to serve customers,       insurers are now regulated by state
tally unfair and beyond all common           according to Tameko Aubry, a supervi-       and territorial governments. The indus-
sense and reason.” It appealed the deci-     sor, who worked as a barista for five       try has been divided for years about
sion.                                        years. Ms.Aubry had this to say:            changing this. Large life insurers and
   The State Court of Appeals in San                                                     some large property-casualty firms
Diego reversed the trial court’s ruling,       We do the same thing the baristas
                                                                                         favor creating an optional federal
saying that the original decision was          do. That's why we supervisors
                                                                                         charter. Many smaller firms, state regu-
improperly based and that supervisors          think we should get tips too. . . . If
                                                                                         lators and other segments of the indus-
at the nation's largest coffeehouse            they took the tips away, I would
                                                                                         try want to keep the present system. I
chain "essentially perform the same            have to work extra hours or get
                                                                                         tend to favor keeping regulation at the
job as baristas." The Court said in the        another job.                              state level. The Administration's plan
decision:                                                                                represents limited centralization, and
                                               On average, Ms. Aubry said supervi-
  We conclude the trial court erred          sors make about $3 more an hour than        postpones further any final decision
  in ruling that Starbucks' tip allo-        baristas do. Money collected in tip jars    on federal oversight.
                                                                                         Source: Reuters




                                       www.JereBeasleyReport.com                                                              21
MAINE SETTLES WITH BANKERS LIFE AND           penalty and refund aspect, Bankers Life         We're trying to do what we can to
CASUALTY IN IMPROPER SALES PRACTICES          has also agreed to an independent               get some kind of redress.
LAWSUIT                                       audit that will identify all sales of other
                                                                                               Lawyers for the City filed 20 exhibits
                                              products that resulted from Medicare
  Maine Insurance Superintendent                                                            with the court, including the employee
                                              appointments after the cross-selling
Mila Kofman has entered into a settle-                                                      affidavits, ten studies about reverse
                                              law took effect. This will identify
ment with Bankers Life and Casualty                                                         redlining, and statements from Balti-
                                              affected consumers, giving them the
Company. Under the agreement, the                                                           more residents about the problems of
                                              opportunity to cancel these transac-
company will pay a $500,000 civil                                                           living near foreclosed-upon, vacant
                                              tions, and making them whole for any
penalty for improper sales practices                                                        homes. There was a hearing on June
                                              adverse tax consequences or other
and inadequate sales force training.                                                        29th in the case before U.S. District
                                              financial losses. Finally, Bankers Life
Additionally, the Company has agreed                                                        Court Judge Benson E. Legg. The Judge
                                              has agreed to provide training in the
to offer refunds plus incurred interest                                                     was to rule on whether the case will
                                              new law for all of its sales representa-
to any consumers who answered                                                               go forward or be dismissed. We did
                                              tives.
Medicare solicitations and were then                                                        not have his order at press time.
                                              Source: Associated Press
sold other Bankers Life insurance prod-                                                        Former loan officer Tony Paschal said
ucts. Superintendent of Insurance                                                           in his affidavit that Wells Fargo targeted
Kofman stated:                                                                              black communities for bad loans by
                                              XIV.                                          focusing        on     African-American
  We do not tolerate unlawful
                                              PREDATORY                                     churches, using black employees as its
  insurance sales practices in
  Maine, and we find it especially            LENDING UPDATE                                public face, and using software to
                                                                                            translate marketing materials into
  egregious when seniors or other
                                                                                            various languages, including something
  vulnerable populations are tar-
                                              FORMER EMPLOYEES CLAIM RACISM IN              called "African American." He also said
  geted. In this case, the improper
                                              WELLS FARGO SUBPRIME LOAN PUSH                that other employees called subprime
  sales practices were the result of
                                                                                            loans in predominantly minority neigh-
  inadequate training and the                   Wells Fargo loan officers guided            borhoods "ghetto loans" and used
  company has accepted responsi-              minorities toward high-rate mortgages         racial slurs, including "mud people."
  bility and agreed to make all               and joked that they were "riding the          Paschal worked for the bank between
  affected consumers whole.                   stagecoach to hell" for routinely steer-      1997 and 2007 with a two-year hiatus
                                              ing prime-loan-qualified customers            beginning in 1999.
   The agreement concludes an investi-
                                              toward subprime loans, according to              Another former bank employee, Eliz-
gation by the Bureau of Insurance and
                                              sworn testimony by two former                 abeth Jacobson, a top Wells Fargo sub-
the Office of the Attorney General
                                              employees which has been filed in a           prime loan officer, outlined techniques
resulting from a complaint to the
                                              federal court. The affidavits were            in her affidavit that she and others
Bureau of Insurance by an 80-year-old
                                              offered as evidence in a lawsuit filed        used to turn prime borrowers into sub-
woman who had answered a mailing
                                              on behalf of the City of Baltimore last       prime borrowers, including talking
from Bankers Life offering “an impor-
                                              year. This lawsuit alleges that "tens of      them into borrowing the full amount
tant booklet concerning your latest
                                              millions" of dollars in losses from           even if they could actually afford a
Medicare Hospital and Medical bene-
                                              racist, predatory lending, known as           large down payment. Loan officers
fits and deductibles.” After meeting
                                              "reverse redlining" – the targeting of        employed other methods to steer
with two Bankers Life agents in her
                                              minority borrowers, regardless of             clients into subprime loans, according
home, the woman was persuaded to
                                              credit history, for unfavorable sub-          to the affidavits. Some officers told the
use $37,000 of the $42,000 in her
                                              prime loans – took place. The City says       underwriting department that their
bank account to purchase an annuity.
                                              the practice led to increased foreclo-        clients, even those with good credit
   Concerns about these “cross-selling”
                                              sures, vacant properties and crime in         scores, had not wanted to provide
tactics led the Maine Legislature to
                                              black communities. City Solicitor             income documentation. That flipped
pass a law in 2007 prohibiting insur-
                                              George Nilson told the Baltimore Sun          those loans from prime to subprime. It
ance agents from making appoint-
                                              in an interview:                              was also stated in the Jackson affidavit
ments to discuss Medicare products
and using them to solicit business for          Our minority residents and                  that loan officers cut and pasted credit
annuities, life insurance or health insur-      homeowners, many of whom                    reports from one applicant onto the
ance products. Bankers Life admitted            were first-time buyers, were led            application of another customer.
that it failed to properly train its agents     down a disastrous primrose path             These practices were said to have
about Maine’s cross-selling law.                by Wells Fargo, one of the biggest          taken a great toll on customers.
   In addition to the $500,000 civil            lenders in the city of Baltimore.              For a homeowner taking out a
                                                                                            $165,000 mortgage, a difference of


22                                      www.JereBeasleyReport.com
three percentage points in the loan         bust, affecting millions of Americans.      trapped underwater or struggling to
rate - a typical spread between conven-     Interestingly, Bank of America has          stay afloat are more likely to be
tional and subprime loans - adds more       dropped the Countrywide name from           noticed by lifeguards or other pool
than $100,000 in interest payments.         its mortgage operations, renaming the       users if the parents fail to notice.
   The lawsuit, filed in January of 2008,   business Bank of America Home Loans.          Data collected by the CPSC from
was among the first in a number of          While that’s a smart move, it doesn’t       1999 to 2008 reveals that 83 incidents
similar suits filed in states across the    take away Bank of America’s exposure        of pool and spa entrapments were
country, including Alabama,Texas,Ten-       since it assumed all liabilities of Coun-   reported which resulted in 11 deaths
nessee and California. In the California    trywide. The case is pending in the         and 69 injuries. CPSC Acting Chairman
case, earlier this year, a federal court    Southern District of California.            Nancy Nord, who appeared with other
judge allowed the National Association      Source: Reuters                             safety advocates, including Scott Taylor,
for the Advancement of Colored                                                          whose daughter received fatal injuries
People to pursue its lawsuit against                                                    from an evisceration incident in a
nearly two dozen mortgage lenders.          XV.                                         wading pool, reminded parents, care-
Hopefully, the judge will allow the Bal-                                                givers, and pool owners to make safety
timore case to go forward.
                                            PREMISES                                    a top priority this swimming season.
Source: Baltimore Sun                       LIABILITY UPDATE                            She stated:
                                                                                          Preventing child drownings is a
COURT RULES AGAINST COUNTRYWIDE IN          CPSC RELEASES NEW POOL AND SPA                key part of CPSC's mission. I call
MORTGAGE LAWSUIT                            SAFETY DATA                                   upon all parents, caregivers and
                                                                                          pool and spa operators to ensure
  A federal judge in San Diego has             Memorial Day marked the beginning          that fencing and other layers of
rejected Countrywide Financial Corp's       of summer fun and activities for folks        protection are in place; that there
attempt to dismiss a lawsuit accusing it    all across the country. For millions of       is constant supervision of chil-
of steering borrowers into risky mort-      Americans, summer fun involves clean-         dren in and around the water;
gages to maximize profit. The class-        ing the back yard pool for the season's       and that new, safer drain covers
action complaint accuses Countrywide        first use or heading to the community         that prevent entrapment inci-
of inappropriately convincing borrow-       pool with the children. This is why the       dents are installed.
ers to take on subprime mortgages           U.S. Consumer Product Safety Commis-
they could not afford, violating federal    sion released its latest pool and spa          The Virginia Graeme Baker Pool and
racketeering and conspiracy laws, as        safety report just before the Memorial      Spa Safety Act (P&SSAct), which was
well as state laws barring unfair com-      Day weekend. The report contains            signed into law in December of 2007,
petition and unjust enrichment. As we       updated data on child drowning              went into effect last December. This
                                            deaths and injuries in pools and spas.      badly needed legislation boosts pool
have previously reported, Country-
                                            The CPSC's records reveal that approx-      safety by requiring all public pools and
wide was the nation's largest mortgage
                                            imately 300 children under the age of       spas to have anti-entrapment drain
lender before being acquired last July
                                            five drown in swimming pools and            covers, and in some cases, an addi-
by Bank of America Corp.
                                            spas every year, while some 3,000           tional     anti-entrapment        system.
  U.S. District Judge Dana Sabraw
                                            others receive injuries that require        Because most fatalities and injuries
rejected Countrywide's argument that
                                            emergency medical attention. Pool           involve young children, the CPSC has
the Plaintiffs did not show sufficient
                                            and spa-related accidents often cause       made regulation and enforcement of
evidence of a "racketeering enterprise"
                                            serious, debilitating and lifelong          safety measures in public wading
among independent mortgage brokers
                                                                                        pools, kiddie pools, and in-ground spas
to warrant dismissal of that part of the    injuries.
                                                                                        its highest priority. To learn what you
case. Judge Sabraw also denied Coun-           About two-thirds of those deaths and
                                                                                        can do to make sure your children
trywide's motion to strike the state        injuries involved the youngest children
                                                                                        remain safe this summer, you can visit
claims. But the judge did dismiss           between one and two years of age, and
                                                                                        the CPSC's new website about pool
claims by one Plaintiff because he          80% of all the fatalities happened in a
                                                                                        and spa safety. You can also receive
lacked standing to pursue his case.         residential pool, be it at the victim's
                                                                                        information on safety issues by sub-
  Bank of America has faced a good          home, or in a pool belonging to
                                                                                        scribing at no cost to the pool/spa
number of lawsuits and regulatory           friends, other family, or neighbors.
                                                                                        information e-mail list. This is available
investigations relating to Countrywide.     According to the CPSC, "drowning            by going to the agency’s Website at
As we all know, the name Countrywide        occurs more commonly when children          www.cpsc.gov.
became synonymous with the risky            get access to the pool during a short       Source: CPSC
lending practices that helped fuel the      lapse in adult supervision." In commu-
U.S. housing boom and subsequent            nity or public pools, children who are



                                      www.JereBeasleyReport.com                                                                23
DISNEY AND TRAM-INJURED WOMAN REACH         of $2.2 million. Firefighter Warren         fications. The new testing will begin in
SETTLEMENT                                  Payne died instantly, and his co-worker,    September and the regulation will go
                                            Paul Cahill, died from smoke inhalation     into effect on January 1st. This regula-
   A Chinese woman who fell out of a        in the August 2007 fire. It was said that   tion should provide a high standard for
moving Disneyland tram and suffered         the fire was fueled by grease buildup       individuals involved in cleaning hood
injuries that left her needing 24-hour
                                            that had seeped from a kitchen              systems and hopefully reduce fires and
medical supervision for the rest of her
                                            exhaust pipe into the ceiling of the Tai    prevent a tragedy similar to the one
life has reached a settlement in the
                                            Ho Restaurant on Centre Street. Fire-       that took the lives of firefighters in
lawsuit filed against the Walt Disney
                                            fighter Kenneth Gibson was injured.         Boston.
Co. The settlement was reached
                                               The families of Cahill and Payne filed   Source: Boston Globe
between Disney and Qi Zhao, the
                                            wrongful death suits last year against
Plaintiff, while the trial of the case in
                                            Continental Realty, the Tai Ho Corp.,
Los Angeles County Superior Court
                                            and J & B Cleaning. It was alleged that     A BELATED VICTORY FOR A SICK GROUND
was in its second week.                                                                 ZERO WORKER
   Mrs. Zhao, who is now 48, filed her      all of the Defendants "knew or should
suit in 2007, alleging the tram driver      have known that dangerous and defec-
                                                                                          After a year-long struggle, the state's
was going too fast. She was riding the      tive conditions existed” at the restau-
                                                                                        Workers' Compensation Board ruled in
tram with two sisters and a niece. One      rant “created by the carelessness,
                                                                                        favor of Daniel Arrigo, an ailing Ground
of the sisters fell from the King tram as   negligence, and/or gross negligence of
                                                                                        Zero worker, forcing insurance giant
it moved toward a parking lot. React-       the Defendants." Gibson filed a similar
                                                                                        Zurich North America to finally pay his
ing to the fall, the other two sisters      suit against the same Defendants for
                                                                                        just claim. Arrigo, the married father of
also fell out. The sisters suffered rela-   his injuries.
                                                                                        three, has now received a check for
tively minor injuries. But Mrs. Zhao hit       A Fire Department investigation
                                                                                        nearly $20,000 in back payments from
her head on the pavement, suffering         found explosive conditions in the
                                                                                        Zurich. The New York Daily News
severe traumatic brain injuries and         restaurant's kitchen, with grease built
                                                                                        highlighted his plight in May and that
skull fractures. She was in a coma for      up to dangerous levels. Restaurant
                                                                                        must have gotten the public’s attention
three weeks.                                employees had placed a container on
                                                                                        as well as that of the insurer. The
   Mrs. Zhao and her husband were           the stove to catch drippings from the
                                                                                        deserving claimant said after his
born in China, but were living in           exhaust hood overhead. State fire
                                                                                        ordeal:
Northern California when they visited       codes mandate that restaurants have
the Anaheim theme park in February          their exhaust ducts cleaned quarterly         It's despicable how the govern-
2007. Mrs. Zhao is now being cared          and cleared of grease buildup. Tai Ho         ment and insurance companies
for in Beijing. Her husband, Zuchun         had hired J & B Cleaning just months          make sick people fight so hard
Wang, had a claim for loss of consor-       before the fire, but a cleaning receipt       and wait so long for what is due
tium.                                       indicated the company cleaned the             them. Thank God and thank the
   Disney, which says safety is its top     stove and the hood, but did not clean         Daily News.
priority, contended the tram was not        the duct. Both the city of Boston and
moving too fast and had a device limit-     the state have since enacted tough reg-        Zurich insured Tishman Construc-
ing its top speed to 11 mph. This was       ulations for commercial kitchen grease      tion, which employed the construction
disputed during the trial. The settle-      cleaners. In Boston, cleaners now           worker at a location at Ground Zero
ment came just as lawyers had started       must pass a certification test and regis-   for four months after the Sept. 11
their closing arguments. The judge          ter with the Fire Department before         attacks. The worker was later diag-
then dismissed the jurors. Mrs. Zhao's      they are cleared to work in city restau-    nosed with severe lung disease from
two sisters had settled their claims        rants.                                      the toxic dust and vapors he inhaled at
against Disney before the trial.               The state Board of Fire Prevention       the site. He finally gave up his job in
Source: Associated Press                    Regulations has given final approval to     January 2008 when he could no longer
                                            a measure that would require commer-        bend down to tie his boots without
                                            cial kitchen grease cleaners across the     gasping for breath. Sick and unem-
FIREFIGHTERS’ FAMILIES SETTLE THEIR         state to pass tests administered by the     ployed, Arrigo fell behind on his rent
LAWSUITS                                                                                and he and his family were evicted
                                            state fire marshal before they are
                                            allowed to clean restaurant kitchens.       from their Staten Island home. They
  The families of two Boston firefight-                                                 were forced to move into two
ers killed in a restaurant fire and a       In the past, the fire code specified only
                                            that the cleaning be done by a "prop-       cramped rooms with the worker’s
third firefighter injured in the blaze                                                  brother.
have settled their lawsuits brought         erly trained, qualified, and certified
                                            company or person." Many local fire            In addition to the $20,000, Zurich
against the restaurant, its landlord, and                                               has to pay over $400 a week to Arrigo
a grease-cleaning company, for a total      officials never checked cleaners' certi-
                                                                                        and provide health coverage. This man


24                                    www.JereBeasleyReport.com
is far from out of the woods health-        investigation, the state has ordered that    treated after inhaling fumes from
wise and must undergo a lung biopsy         the train be shut down.                      ammonia, which is used in the plant as
in August. It’s a shame and disgrace for      The lawsuit is seeking monetary            a refrigerant. Some workers in and
an insurance company to treat a man         damages, as well as a temporary court        near the pump room reported smelling
who needs help in this manner. Arrigo       injunction preventing the zoo from           gas in the hours before the blast,
called himself a “poster boy” for thou-     altering or destroying the train or any      Woodham said.
sands of sick 9/11 responders who           photographs, videos, reports or state-          On the day of the explosion, workers
have been caught between the slow-          ments taken after the derailment. The        were installing a new piece of equip-
moving state compensation board and         lawsuit is seeking a jury trial and com-     ment in the room, but it's not clear if
insurance firms that skillfully “game       pensatory and punitive damages.              that played a role, according to Agent
the system” to fight claims.                Source: Courier Journal                      Woodham. Omaha-based ConAgra says
Source: New York Daily News                                                              it will assist the state Department of
                                                                                         Labor, OSHA, and the U.S. Chemical
                                            GAS LEAK CAUSED NORTH CAROLINA PLANT         Safety Board as they take over the
FAMILY SUES ZOO OVER TRAIN ACCIDENT         EXPLOSION                                    investigation. The company also says it
                                                                                         has no timetable on when the plant
   A lawsuit has been filed in Jefferson       An explosion that killed three
                                                                                         could be reopened. The plant has 900
Circuit Court against the Louisville        workers at a North Carolina Slim Jim
                                                                                         employees in the town of 25,000, just
Zoo. The suit arises out of the derail-     plant is said to have been caused by a
                                                                                         south of Raleigh.
ment of a zoo train on June 1st that        natural gas leak that ignited in a room
                                                                                         Source: Insurance Journal
resulted in a number of injuries.           housing vacuum pumps used for
Indiana resident Darren Bamforth and        sealing the snacks. It will now be up
his wife, Amy, and their two-year-old       to state and federal workplace investi-      LAWSUIT FILED IN FATAL LANDFILL ACCIDENT
son filed the lawsuit over the derail-      gators to determine how the leak hap-
ment that sent 22 people to the hospi-      pened and what caused it to ignite in          The widow of one of the four men
tal. It was alleged in the complaint that   the blast last month at the ConAgra          killed in a Superior landfill accident
the zoo was "grossly negligent" in its      Foods Inc. plant in Garner.                  has filed a wrongful death lawsuit
maintenance and operation of the               Earl Woodham, an agent with the           against J. Kimmes Construction, a con-
train.                                      U.S. Bureau of Alcohol, Tobacco,             struction company located in Superior,
   The Bamforths allege that they were      Firearms and Explosives, is involved in      Wisconsin. The lawsuit alleges that the
sitting in the middle of the train with     the investigation. ATF agents believe        company was negligent in failing to
their son and other family members          the gas was sparked by a piece of            provide a safe workplace at the con-
when the female driver approached           equipment such as a fan motor or ther-       struction materials landfill. Forty-
them and appeared to be "flustered."        mostat, but they said another cause,         seven-year-old Tim Olsen, an employee
The train’s driver was 18 – the             like static electricity, couldn't be ruled   of Lakehead Blacktop & Materials,
minimum age required by state law for       out. Agent Woodham observed:                 managed the landfill. He and the three
those operating such rides – and inex-                                                   other men died on November 1, 2007
                                              Such electrical equipment would
perienced. It was further alleged that                                                   when they were overcome by hydro-
                                              be capable of catching natural
the train began accelerating into the                                                    gen sulfide gas, lost consciousness and
                                              gas on fire even if it were operat-
tunnel and continued to gain speed                                                       fell into a water-filled pit. The men
                                              ing normally. It could have been
before the train tipped over and over-                                                   had, one after another, climbed inside
                                              anything that could have created
turned.                                                                                  the confined space trying to assist
                                              a spark. By the very nature of the
   The train derailed as it made a turn                                                  each other.
                                              fact that whatever caused it is no
behind the zoo's popular Gorilla Forest                                                  Source: Associated Press
                                              longer there due the destructive
exhibit. The engine and cars, contain-
                                              explosion, we're never going to be
ing about 30 passengers on board,
                                              able to say, 'yes this motor' or 'yes      SOUTH CAROLINA JURY RETURNS A RECORD
flipped on their sides. Seventeen chil-
                                              this thermostat' did that.                 VERDICT
dren were taken to Kosair Children's
Hospital. All but two were treated and        The ATF concluded the explosion              A Darlington County jury has
released on the day of the incident.        was an accident and closed its criminal      returned a verdict of $9 million against
Five adults were taken to University        investigation. The explosion ripped          Progress Energy, finding the company
Hospital, where three received treat-       through the 500,000-square-foot plant        responsible in the wrongful death of
ment for several days. The crash is         in Garner while 300 people were at           21-year-old Allen Toney. The jury
under investigation by the state            work. Officials said 38 employees            awarded the victim’s mother $3.5
Department of Agriculture, which over-      were injured, four of them suffering         million in actual damages and $5.5
sees amusement rides. During the            critical burns. Three firefighters were


                                      www.JereBeasleyReport.com                                                               25
million in punitive damages. This was       pay a $500,000 fine and to serve a year    of last year, a federal jury in Greenville
the largest award in Darlington County      on probation for the death of a            found that Target defamed Rita Cantrell
history. Toney died as the result of        Texarkana worker overcome by poi-          when a Target employee distributed an
being electrocuted by a downed              sonous fumes at a rendering plant. The     e-mail to other businesses and law
power line at his home.                     Occupational Safety and Health Admin-      enforcement agencies characterizing
   Evidence at trial was that Progress      istration won the maximum fine in          her as a potential shoplifter and as
Energy was negligent in responding to       federal court for a willful violation of   someone who had tried to pass a coun-
numerous inspection notifications of        worker safety regulations. OSHA said       terfeit $100 bill. The U.S. Secret
the hazardous condition of the utility      maintenance worker Jason Kelley was        Service arrested Cantrell at her work-
pole in the months prior to the inci-       overcome by hydrogen sulfide gas gen-      place, a Belk store, before determining
dent. Jurors also heard evidence that       erated by decomposing poultry feath-       that her $100 bill was authentic. The
Progress Energy was negligent in            ers. Five other people were injured.       jury awarded her $100,000 in actual
responding to numerous phone calls             The federal regulators said Spring-     damages and $3 million in punitive
made to the utility’s Energy Call Center    dale,Arkansas-based Tyson didn't take      damages.
after a storm and prior to the electro-     sufficient steps to reduce exposure to     Source: Greenville News
cution incident. Those calls provided       the gas after a March 2002 incident at
notification and warning to Progress        the River Valley Animal Foods Plant in
Energy about the downed power line
situation and the dangerous conditions
                                            Texarkana. Tyson Foods pleaded guilty      XVII.
                                            in January. But the company said then
present. The jury found that Progress       that the incident was an accident, and
                                                                                       TRANSPORTATION
Energy was negligent and that its negli-    that steps had been taken to prevent
gence caused the tragic death of the        additional accidents.
victim.                                                                                HIGH COURT OVERTURNS WORKER’S $5
                                            Source: Associated Press                   MILLION AWARD
Source: Hartsville Messenger

                                                                                          The U.S. Supreme Court says that a
                                            TARGET APPEALS $3.1 MILLION VERDICT        Tennessee railroad worker isn't enti-
XVI.                                                                                   tled to the $5 million awarded him by
                                              Target Corp. is appealing a federal
WORKPLACE                                   court jury's decision to award a Greer
                                                                                       a jury for being exposed to asbestos.
                                                                                       The High Court ruled against Thurston
HAZARDS                                     woman $3.1 million after the super-
                                                                                       Hensley, who sued CSX Corp. for mon-
                                            store wrongly accused her of trying to
                                                                                       etary damages based in part on his fear
                                            pass a counterfeit bill in Greenville
MASSACHUSETTS MAN KILLED AT SEAFOOD                                                    of developing cancer in the future.
                                            three years ago. The appeal is being
PROCESSING PLANT                                                                       The railroad contended that the jury
                                            heard in the Court of Appeals for the
                                                                                       instructions in the case were too favor-
  Federal workplace safety regulators       Fourth Circuit. U.S. Magistrate Bruce
                                                                                       able to the worker. The railroad
are investigating the death of a 20-year-   Howe Hendricks ruled in May that the
                                                                                       wanted the jurors to be instructed that
old man at a food processing plant in       amount awarded was “necessary” to
                                                                                       it was Hensley's responsibility to show
Fall River, Massachusetts.        Justin    deter Target from similar future behav-
                                                                                       his cancer fears were “genuine and
Cordeiro, an employee at Blount Fine        ior. In his order denying Target’s
                                                                                       serious,” but that request was denied
Foods, died last month from injuries he     request to overturn or alter the jury’s
                                                                                       by the lower court. In a 7-2 ruling, the
sustained when a container full of          decision, Judge Hendricks said:
                                                                                       Supreme Court sided with CSX, saying
clams and ice fell on him. The accident       Target engaged in moderately             the trial judge erred in delivering the
happened on the soup production               reprehensible behavior, which            jury instructions. The Court's opinion
floor. The Occupational Safety and            can only be deterred through an          stated:
Health Administration has opened an           award of a moderately large
investigation and the company says it                                                    Although Plaintiffs can seek fear-
                                              magnitude. Because of the Defen-
will cooperate. Blount makes chow-                                                       of-cancer damages in some …
                                              dant's financial strength, a
ders, soups, sauces and other seafood                                                    cases, they must satisfy a high
                                              number not unlike the one
products.                                                                                standard in order to obtain them.
                                              returned by the jury seems neces-
Source: Insurance Journal
                                              sary to accomplish that end.               The Plaintiff, former CSX Corp. rail-
                                                                                       road worker Thurston Hensley, suf-
                                              Target also sought a new jury trial to
                                                                                       fered from brain damage and the lung
TYSON FOODS FINED $500,000 FOR A            consider damages in the absence of
WORKER’S DEATH                                                                         disease asbestosis. At trial, Hensley’s
                                            overturning the verdict. Judge Hen-
                                                                                       lawyer sought pain and suffering
                                            dricks denied that motion. In October
  Tyson Foods has been ordered to                                                      damages that included fear of develop-



26                                    www.JereBeasleyReport.com
ing lung cancer. The trial judge refused   New York Times, in a recent article, dis-    changes in FAA procedures were rec-
to submit jury instructions proposed       closed that a federal inspector pre-         ommended and carried out. But the
by CSX that would have required            dicted danger long before the crash.         FAA told the Times it didn’t find any
jurors to find the fear was “genuine       The Times reported that, more than a         “major regulatory issues.”That appears
and serious” and outlining standards of    year before the twin-engine turboprop        to be in conflict with the claims by
proof established in the Supreme           flown by Colgan Air crashed on               Monteleon relating to safety concerns.
Court decision, Norfolk & Western v.       approach to Buffalo, a Federal Aviation         The Office of Special Counsel
Ayers.                                     Administration inspector complained          doesn’t settle safety issues, but sends
  The Tennessee court said little          to his superiors about problems the          them on to the inspector general of
would be served by issuing the pro-        airline was having with that model           the department in question if it finds a
posed jury instruction because “the        plane. According to the Times, the           “substantial likelihood” that they are at
mere suggestion of the possibility of      inspector, Christopher J. Monteleon,         least partly accurate. The Office did
cancer has the potential to evoke raw      was actually in the cockpit when the         send Monteleon’s complaints to the
emotions,” and “any juror who might        airline got its first such plane, a Bom-     inspector general of the Department of
be predisposed to grant a large award      bardier Dash 8 Q400, and put it              Transportation (the parent agency of
based on shaky evidence of a fear of       through a series of test flights.            the FAA), but the inspector general’s
cancer is unlikely to be swayed by the       The Times article reveals that Colgan      office hasn’t completed its investiga-
language of Ayers.”                        was aware that its pilots had experi-        tion.
  Justice John Paul Stevens dissented      enced difficulties with this airplane.          It should be noted that the claims by
from the ruling, saying the per curiam     Monteleon told the Times that when           Monteleon, a 40-year veteran of the avi-
opinion was premised on a footnote in      he reported problems to his FAA supe-        ation industry who joined the FAA in
the Ayers case that he did not read as     riors,“he was suspended from impor-          1997, rely mostly on documents he
requiring the “genuine and serious”        tant portions of his job overseeing          himself wrote when the events
instruction. Justice Stevens suggested     Colgan’s acquisition of the Dash 8 and       occurred, and on his memory. But
this ruling will raise more questions.     given a desk job.” His complaints about      apparently, there have been other
In the dissent, he wrote:                  Colgan, which, according to the Times,       inspectors who were penalized by
                                           were repeated three months later to          their supervisors who overruled them
  For instance, if it is per se error
                                           the Office of Special Counsel, a federal     in favor of the airline. The Times
  for the trial court to deny a
                                           agency established to hear whistle-          reports that in 2008, two FAA inspec-
  request for a genuine-and-serious
                                           blower complaints, foreshadowed              tors assigned to Southwest Airlines tes-
  instruction, is it also per se error
                                           some of the issues that emerged 13           tified before Congress that their
  to fail to employ particularized
                                           months later at the National Trans-          managers let Southwest fly its Boeing
  verdict forms? After all, that too is
                                           portation Safety Board hearings on the       737s without inspections for cracks
  a verdict control device listed in
                                           crash near Buffalo. Monteleon said           that the safety agency required.
  footnote 19. The risk that the
                                           that Colgan crews were flying                   Office managers referred to the
  Court’s opinion will generate
                                           fatigued, and were not fully focused on      airline as the regulatory agency’s “cus-
  more confusion than clarity is
                                           the tasks in front of them. These are        tomer.” Top FAA officials eventually
  inherent in a summary deci-
                                           two factors that are allegedly being         conceded that the inspectors were
  sional process that does not give
                                           looked into in the Buffalo crash. All 49     right and the middle managers were
  the parties an opportunity to
                                           people on board the flight, which took       wrong. It should be undisputed that
  brief and argue the merits.
                                           off from Newark, were killed, along          FAA inspections are critically impor-
  It does appear that the majority of      with one man on the ground.                  tant to safety in the airline industry. If
the Court has gone much farther in its       While the safety board usually takes       the agency isn’t paying attention to
requirements of proof than Congress        about a year to issue a final report on      reports from their own inspectors, it
intended. Hopefully, this issue will be    crashes like the one in Buffalo, its hear-   appears there is a serious problem.
revisited by the Court.                    ings in May made it clear that the           Either the supervisors are too cozy
Source: UPI.com                            quality of the FAA’s regulation of           with the airlines or the inspectors are
                                           Colgan was one of the areas under            not good at their job, according to the
                                           investigation. The FAA, through a            Times. In any event,neither is acceptable!
FAA INSPECTOR PREDICTED DANGER             spokeswoman, told the Times that             Source: New York Times
BEFORE BUFFALO CRASH                       “after Monteleon made his allegations,
                                           the agency called in a team made up of
  We have written in previous issues       inspectors from around the country,          PILOTS IN CRASHES FAILED MULTIPLE TESTS
about the tragic crash of a commuter       who could review the issues with an
airplane in Buffalo, New York, that                                                      It was reported by USA Today last
                                           impartial eye.” Apparently, some
resulted in 49 people being killed. The                                                 month that in nearly every serious


                                      www.JereBeasleyReport.com                                                                27
regional airline accident during the           considering employing that pilot. After     versity of North Dakota Aerospace
past ten years, at least one of the pilots     a meeting on June 15th, the FDA said it     Foundation and the pilot were all neg-
had failed tests of his or her skills mul-     plans to:                                   ligent in the crash that killed the pilot
tiple times. This conclusion came from                                                     and a passenger on January 18, 2003.
an analysis of federal accident records.       • Write new regulations on how many         The jury found Cirrus and the Univer-
In eight of the nine accidents during            hours pilots can work. Several            sity of North Dakota Aerospace Foun-
that time, which killed 137 people,              efforts in recent decades have failed,    dation to be 37.5% negligent, and
pilots had a history of failing two or           but Babbitt said, "We will get a new      found the pilot to be 25% negligent in
more "check rides," tests by federal or          rule."                                    the cause of the plane crash.
airline inspectors of pilots' ability to fly   • Pressure all airlines to adopt safety        Jurors awarded the pilot’s family $6
and respond to emergencies. In the               programs that closely monitor data        million for loss of counsel, guidance,
lone case in which pilots didn't have            from every flight. All the major carri-   aid, advice, comfort, assistance, protec-
multiple failures since becoming                 ers use such programs, but many           tion and companionship they experi-
licensed, the co-pilot was fired after           regional carriers do not.                 enced as a result of his death, and $6
the non-fatal crash for falsifying his job                                                 million for economic losses, which
application. Pilots on major airlines          • Improve the ability of airlines to        would include past and future wages
and large cargo haulers failed the tests         research the flying records of pilots     lost. Because the pilot was found to be
more than once in only one of the ten            before they are hired. Currently, air-    25% negligent, the award will be
serious accidents in this country over           lines are only required to look at a      reduced to $9 million. The passenger’s
the past ten years, according to a USA           prospective pilot's records at other      family was awarded $6 million for loss
Today review of National Transporta-             carriers for the past five years. USA     of counsel, guidance, aid, advice,
tion Safety Board accident reports.              Today reported last week that at          comfort, assistance, protection and
   Regional carriers have had four fatal         least one pilot in eight of the last      companionship, and $1.4 million for
aviation accidents since 2004, com-              nine regional airline accidents had       economic losses. His family sued
pared with one by a major airline. It            previously failed multiple flight         Cirrus, the pilot’s estate, and the Uni-
was reported that regional airlines fly          tests.                                    versity of North Dakota Aerospace
roughly half of all airline flights, carry-                                                Foundation. The pilot’s family sued
                                               • Conduct a review by airlines and
ing about 20% of passengers. As men-                                                       Cirrus and the University of North
                                                 pilot unions into pilot training.
tioned above in the Colgan story, the                                                      Dakota Aerospace Foundation.
issue of pilot qualifications on regional        The FAA will continue to schedule            A National Transportation Safety
carriers was at the center of the NTSB         meetings with airlines on safety in the     Board investigation concluded that the
hearing into the Buffalo crash. It             coming months, according to Trans-          probable cause of the accident was
appears that the pilot at the controls         portation Secretary Ray LaHood. While       “disorientation experienced by the
when the plane crashed had failed five         safety experts said airlines deserve        pilot, due to a lack of visual references,
checks, according to records revealed          credit for making many voluntary            and a failure to maintain altitude.’’
at the hearing. Three of the accidents         improvements, they said the FAA also        Weather conditions varied from mostly
in which pilots had repeatedly failed          needs to follow up with tough enforce-      cloudy to clear, depending upon their
tests involved a single airline conglom-       ment. It seems pretty clear that the        location, according to the NTSB report.
erate, Pinnacle Airlines. Interestingly,       regional airlines need to improve           The pilot had 248 hours of flight time
the Buffalo crash was on Colgan Air,           safety practices without further delay.     — 18.9 in the SR-22. Daniel O’Fallon
which is owned by Pinnacle. The                Also, there must be strong FAA over-        of the Robins, Kaplan, Miller and Ciresi
captain on a Pinnacle jet that crashed         sight. Regional airlines, which mostly      law firm in Minneapolis, who repre-
in 2004, after accidentally killing both       operate under contract to major carri-      sented the passenger’s family, says
engines, had failed seven checks.              ers, fly half of all flights and carry      Cirrus omitted required training neces-
   The NTSB has voiced concern about           about 20% of passengers.                    sary to sell the airplane to the pilot.
a loophole in a law requiring airlines to      Source: USA Today                           Cirrus contracted with the University
check pilots' records when hiring. The                                                     of North Dakota Aerospace Foundation
1996 Pilot Records Improvement Act                                                         to provide the pilot training. The pilot
orders airlines to check pilot records         JURY RETURNS $19 MILLION VERDICT IN         hadn’t receive an “IFR Flight [non-
from previous employers, but that              AIRPLANE CRASH CASE                         rated]’’ lesson, which was part of the
does not cover failures that occurred                                                      Cirrus training sold and promised.
while a pilot was in flight school.              An Itasca County, Minnesota, jury has        The lawsuit contended that if the
Airline pilots receive dozens of written       awarded more than $16 million —             pilot had been provided the omitted
and flying tests during a career. When         originally more than $19 million — to       training, he would have had critical
a pilot fails multiple tests that should       the families of two Grand Rapids men        information necessary to handle the
send up a red flag to anybody who has          who died in a crash of a Cirrus Design      conditions he faced on the morning of
safety responsibility for both the FAA         Corp. airplane near Hill City in 2003.      the crash. The victims were flying in a
and the airline either employing or            Jurors determined that Cirrus, the Uni-     Cirrus SR22 on their way to St. Cloud,


28                                       www.JereBeasleyReport.com
Minn., to watch their sons play in a        in 2007 to end a lawsuit against the        The Complaint, filed in San Mateo
hockey tournament when the crash            nursing home’s corporate owner. It          County Superior Court, alleges Glad
occurred south of Hill City. As men-        adds the bus manufacturer and opera-        had taken OxyContin earlier in the day.
tioned above, Daniel O’Fallon repre-        tor, as well as several parties who         He has been the managing partner at
sented the passenger’s family. Ed           designed or fixed components on the         Sonnenschein's San Francisco office
Matonich, a lawyer from Hibbing, Min-       1998 Motor Coach Industries bus, as         for several years and chairs the insur-
nesota, represented the pilot’s family      parties to the settlement.                  ance practice group. While Paul Glad
and did a good job. Each of these              Those added as Defendants were           is a very good lawyer, that doesn’t
lawyers did a very good job for their       MCI, the bus manufacturer;ArvinMeri-        excuse him for causing this incident.
clients.                                    tor Inc., the designer of the axle and      Hopefully, Glad and his insurance
Source: Duluth New Tribune                  rear wheel assembly; SKF Industries, a      carrier will make sure the injured
                                            component maker; Global Charter, the        parties are fully compensated for their
                                            bus broker;The Bus Bank; Global Limo,       injuries, impairments and other
HURRICANE RITA BUS FIRE CASES SETTLED       the bus operator; Valley Volvo, which       damages.
                                            serviced the bus shortly before the trip    Source: Law.com
   Nearly four years after 23 Bellaire      to Houston; and K&S Towing, which
nursing home residents died in a fiery      changed a tire in the wheel area where
bus while evacuating from Hurricane         the fire began, just hours before it
Rita, their families have reached an $80                                                XVIII.
                                            erupted. The lawyers representing
million settlement with the Defen-          Plaintiffs in the case bought a similar     ARBITRATION
dants. The bus caught fire just 35 miles    bus for their own investigation into the    UPDATE
from its destination in Dallas. In the      fire. This allowed them – during
week leading up to Hurricane Rita,          testing – to learn that too much heat
Brighton Gardens, a Bellaire nursing        was generated in the hub assembly,          REPORT ON THE ARBITRATION FAIRNESS ACT
home owned by Sunrise Senior Living         which showed a design defect.
Services of McLean, Virginia, ordered          The investigation of the incident led       We have written on several occa-
buses for its residents and staff so they   the Plaintiffs’ lawyers to conclude         sions about the problems experienced
could evacuate to a sister facility in      there was more to the cause of the fire     by Jamie Leigh Jones, an employee of
Dallas. On September 23, 2005, as Rita      than just insufficient lubrication of an    KBR, a division of Halliburton, while
moved through the Gulf of Mexico,           axle. Richard Mithoff was the lead          she was working in Iraq. The woman’s
nursing home residents and staff            lawyer in the litigation, and he, along     post-incident problems came about
boarded two buses provided by Global        with Randy Sorrels, represented the         because of a pre-dispute mandatory
Limo Inc., of Pharr,Texas. On the way       families of the deceased passengers.        binding arbitration clause in her
to Dallas, one of the buses caught fire     Source: Houston Chronicle
                                                                                        employment contract. This young
and 23 persons on board died.                                                           woman had a harrowing experience as
   The National Highway Traffic Safety                                                  a private contractor in Iraq when she
Administration later determined the         VICTIMS SUE LAWYER-DRIVER IN MOTOR          was raped and beaten by several of her
probable cause of the accident was          VEHICLE CRASH                               coworkers. When criminal charges
insufficient lubrication of a rear axle,                                                could not be filed, Jamie sought to
which overheated and caused a fire in         Paul Glad, a partner in the law firm      hold KBR / Halliburton accountable
the wheel well that quickly filled the      of Sonnenschein Nath & Rosenthal, is        for their misconduct. But the arbitra-
1998 bus with flames and heavy              being sued over a March motor vehicle       tion clause buried in her employment
smoke. The settlement was disclosed         accident in Burlingame, California, that    contract was constructed to mean she
on June 4th to a South Texas court by       resulted in a mother losing a leg. The      could not have a jury trial. Instead, she
Richard Mithoff, the Plaintiffs’ lead       suit alleges Glad was under the influ-      would have to go to arbitration, on the
liaison lawyer.                             ence of OxyContin when he pulled            corporation's own terms, for a secret,
   The families claimed Brighton            into the handicapped space of a             one-sided tribunal. Jamie’s lawyer is
Gardens’ corporate parent and its bus       grocery store, started getting out of his   Todd Kelly of the Kelly Law Firm, and
broker failed to screen Global Limo         car without putting it in park and          her appellate counsel is John Vail who
properly before contracting with them       rammed a group of parents and girls         is with the Center for Constitutional
and that Global Limo then used a bus        selling Girl Scouts cookies. One of the     Litigation. Hopefully, they will be suc-
that was unsafe. The Plaintiffs con-        mothers was pinned against a wall.          cessful and be able to obtain justice for
tended that Motor Coach Industries,           The civil suit was filed against the      Jamie.
the bus manufacturer, along with com-       lawyer by the victims, 49-year-old Holly       In the meanwhile, there are two bills
ponent makers, were aware of a design       Rogers, who lost one leg above the          pending in Congress that should
defect in the hub and axle system that      knee after both were broken, and her        become law. The Arbitration Fairness
could fail and result in injuries. The      eight-year-old daughter, Caroline           Act and the Fairness in Nursing Home
settlement includes a prior agreement       Schoustra, whose leg was also broken.       Arbitration Act are the names of the



                                      www.JereBeasleyReport.com                                                               29
bills, and each should be passed. These      and neglect. According to the lawsuit,       family member on which was marked
bills would put an end to binding            the home and owner failed to exercise        the option, "I DO WANT CPR" in an
mandatory arbitration clauses in             "reasonable care'' when they hired the       emergency situation. Nursing person-
certain consumer, employment, fran-          staff member who had a previous              nel who were present at the time of
chise, and nursing home care con-            criminal record.                             the resident’s death were no longer
tracts. On Arbitration Fairness Day,         Source: Associated Press                     employed by the time state officials
over 30 victims of forced arbitration                                                     investigated.
from targeted states traveled to our                                                        In the second case, according to
Nation’s Capitol to lobby for the            ORANGE COUNTY NURSING HOMES FINED            state officials, a licensed vocational
passage of the bills. The day was            FOR PATIENT DEATHS                           nurse called to inform a family
marked with a noon press conference                                                       member that the resident had died.
at which the sponsors of the Arbitra-           State officials have fined two nursing    The nurse reportedly told the family
tion Fairness Act, Senator Russ Fein-        homes in Orange County, California, for      member that the resident was dead
gold and Representative Hank                 providing care so inadequate to two          and that paramedics were not called
Johnson, spoke about urgent need for         residents that it led to their deaths. In    because the facility had orders not to
the passage of legislation. Also speak-      one case, a woman died from dehydra-         resuscitate him. The family member
ing at the press conference were Jamie       tion. In the other, staff failed to          told the nurse to hang up and call 911.
Leigh Jones and other individuals who        provide CPR to a man suffering a heart       By the time paramedics arrived, they
have suffered terrible consequences as       attack because they mistakenly               found the resident in bed with no
the result of forced arbitration. While      believed he was under orders not to          heartbeat. He was covered with a
that was back in April, so far neither of    be resuscitated. In the first case,Alami-    sheet with no signs that CPR had been
the bills have been passed. If you are       tos West Health Care Center in Los           initiated. This was a tragic occurrence
against mandatory, binding arbitration       Alamitos was fined $100,000. State           that ended horribly.
and believe folks like Jamie Leigh Jones     officials levied an $80,000 fine on the      Source: Los Angels Times
deserve to have their day in a real          Huntington Valley Healthcare Center in
court, let your Senators and House           Huntington Beach in the other one.
members in Washington know. Unless              At Alamitos West, the California
                                             Department of Public Health found            XX.
folks back home get involved and put
pressure on the lawmakers, nothing           that the nursing home failed to give an      HEALTH CARE
will happen. We can’t afford to miss         82-year-old woman sufficient fluids,         ISSUES
the opportunity to get something done        causing her to suffer dehydration and
on the arbitration issue.                    acute kidney failure. On December
Source: American Association For Justice
                                             19th, the woman's condition had deteri-      ZICAM NASAL SPRAY CAN CAUSE LOSS OF
                                             orated so much that she was trans-           SMELL
                                             ferred to a hospital. Upon admission,
                                             she was diagnosed with a urinary tract         The Food and Drug Administration
XIX.                                         infection, dehydration and an "altered       says Zicam nasal spray can perma-
NURSING HOME                                 mental status." That resident died six       nently damage users' sense of smell.
UPDATE                                       days later, on Christmas Day.                The FDA says consumers should stop
                                                The woman had been admitted to            using Zicam Cold Remedy nasal gel
                                             the nursing home in late November. A         and related products immediately. All
WOMAN WINS SUIT AGAINST VIRGINIA             doctor ordered that the patient's fluid      of the over-the-counter products
ASSISTED LIVING HOME                         intake and urine output be monitored         contain zinc. According to scientists,
                                             during every shift. But a registered die-    that ingredient may damage nerves in
  A jury in Virginia has awarded             titian at the nursing home could not         the nose needed for smell. The FDA
$750,000 in damages against an               prove to state officials that nurses had     says about 130 consumers have
assisted living facility located in          made sure that the resident was drink-       reported a loss of smell after using
Newport News. A former staffer had           ing enough fluids every day. In some         Zicam products since 1999. Manufac-
been accused of sexually assaulting a        cases, review of her intake and output       turer Matrixx Initiatives is facing law-
mentally disabled resident. The verdict      of fluids was blank or illegible.            suits over the product, but claims
came in a lawsuit filed against Cote De         At Huntington Valley Healthcare           “there is no known causal link
Neige Home for Adults and its owner          Center, the nursing home's administra-       between the use of Zicam Cold
by the sister of a 55-year-old man who       tor told state officials that on March 2nd   Remedy nasal gel and impairment of
was a resident at the facility.              a registered nurse supervisor failed to      smell." This situation will be followed
  The staffer is accused of sexually         call 911 as a patient was dying              closely.
assaulting the man while working at          "because she thought the resident had        Source: Associated Press
the home as a certified nursing assis-       orders" not to be resuscitated. In fact,
tant. He is charged with forcible            the patient's medical record included
sodomy, carnal knowledge and abuse           an advance directive form from a


30                                         www.JereBeasleyReport.com
STUDY SHOWS POSSIBLE LINK BETWEEN             the sludge (conveniently named              to landfills.
DEATHS AND ADHD DRUGS                         “biosolids”) contains high levels of per-      The EPA has collected and per-
                                              fluorochemicals (PFC) - specifically        formed testing of public drinking
   A recent study involving children          perfluorooctanoic acid (PFOA) and           water, private wells, ponds and soil
taking stimulant drugs such as Ritalin        perfluorooctyl sulfonate (PFOS).            near fields with high levels of biosolid
to treat attention-deficit hyperactivity         These chemicals are used as fire-        application from November 2008
disorder has caused a stir in the             fighting foams, grease and water repel-     through February 2009. In 2008,
medical community.          The study         lants, and precursors to Teflon,            results from the EPA Office of
revealed that children are several times      Scotchguard, and other non-stick con-       Research found relatively high levels of
as likely to suffer sudden, unexplained       sumer goods. PFOA’s are considered          PFCs from two biosolid application
death as children who are not taking          toxicants, likely human carcinogens         sites as well as from the DU facility.
such drugs. The study, published on           and are linked to birth defects,            Although Decatur drinking water PFC
June 16th, was funded by the Food and         increased cancer rates, and changes to      samples are below the EPA limit, high
Drug Administration and the National          lipid levels and the immune system in       PFC levels were discovered in two
Institute of Mental Health. It should be      high exposure cases. 3M recently            private wells and numerous grazing
noted that researchers stopped short          halted its production of PFOS due to        ponds. Additionally, the USDA and the
of suggesting a cause and effect. This        concerns of the chemical’s persistence      FDA are conducting investigations on
study is the first to rigorously demon-       in the environment and long-term            what the contamination means for live-
strate a rare, but worrisome connec-          health and environmental effects.           stock and food products in the
tion, between ADHD drugs and sudden              The EPA has requested information        Decatur area.
death among children. The research            from numerous Decatur area indus-              In response to the contamination
adds to the evolving puzzle parents           tries that use PFC chemicals in their       findings in Decatur, the EPA issued a
and doctors face in deciding whether          operations. According to a 2007 article     health advisory in January 2009 that
to treat children with medication.            in the American Christian Society           limits the amount of PFOS and PFOA in
   Doctors have speculated about such         Journal, “Environmental Science and         drinking water. The EPA advises
a connection in the past because stim-        Technology,” 3M produced PFC chemi-         people who are concerned that their
ulants increase heart rate and have           cals at its Decatur plant from 1999 to      wells are contaminated to use bottled
other cardiovascular effects. Physi-          2000, and until 2004 through its            water or point-of-use filters, installed at
cians are currently advised to evaluate       wholly-owned subsidiary, Dyneon LLC.        the faucet, with granulated, activated
patients for cardiac risks before pre-        Furthermore, Japanese-based chemical        carbon. On June 2nd, 2009, the EPA
scribing the drugs. FDA officials said        manufacturer Daiken and Toray               hosted a public meeting in Moulton,
that those guidelines do not need             Flurofibers use PFCs in their opera-        Alabama, to inform residents about the
strengthening in light of the new             tions in and around the Decatur area.       status of the investigation. In addition
study. About 2.5 million children in the      In January 2008, a spokesman for            to the FDA and participants at the
United States take ADHD medications           Daiken stated the company would             meeting, representatives from the U.S.
such as Ritalin and Adderall.                 cease using PFOAs to manufacture            Department of Agriculture, the U.S.
Source: Washington Post                       water and oil repellant products by         Food and Drug Administration, the
                                              2012.                                       Alabama Departments of Environmen-
                                                 Each of these companies reportedly       tal Management,Agriculture and Indus-
XXI.                                          discharges waste and water into the         tries, and Public Health, and Decatur
ENVIRONMENTAL                                 Decatur Utilities wastewater treatment      Utilities were present. The parties
                                              plant. According to the U.S. Environ-       reported at the public meeting that
CONCERNS                                      mental Protection Agency, one of the        additional sampling results would be
                                              manufacturers notified the EPA in 2007      forthcoming.
                                              that it had unknowingly discharged             Lawyers in our firm have success-
UPDATE ON TOXIC SEWAGE SLUDGE
                                              PFCs into the DU wastewater treat-          fully represented clients in PFC cases
CONTAMINATION
                                              ment plant. This action prompted the        nationwide. We will continue to
  Our firm continues to investigate           EPA to investigate whether biosolids        monitor the situation in Decatur on
claims on behalf of Alabama farmers           originating from the treatment plant        behalf of those affected by the contam-
and other property owners affected by         contained elevated levels of PFCs.          ination. If you need additional infor-
contaminated sewage sludge in fertil-         Upon further analysis the EPA notified      mation on this subject, contact Rhon
izer in Lawrence, Morgan, and Lime-           the DU wastewater treatment plant in        Jones or David Byrne in our firm at
stone counties. Local wastewater              November 2008 that fields where DU          800-898-2034 or by email at
treatment plants often provide human          applied the sewage sludge from its          Rhon.Jones@beasleyallen.com             or
sewage sludge to farmers, who then            treatment process contained alarm-          David.Byrne@beasleyallen.com.
utilize the sludge as a fertilizer on their   ingly high PFCs. DU immediately             Source: Environmental News Source

properties. In the Decatur area, envi-        stopped supplying biosolids to farms
ronmental officials recently found that       and instead diverted the sewage sludge


                                        www.JereBeasleyReport.com                                                                 31
TEXAS SUING BP FOR POLLUTION                Recently, health officials warned           railcars loaded with toxic coal ash
VIOLATIONS                                  Kingston residents that dust associated     beginning on June 16th. As of the
                                            with the spill would hamper cleanup         writing of this article, there is still no
   The Texas Attorney General has filed     efforts as well as pose a respiratory       word on whether the Perry County,
suit against BP Products North America      threat to workers and residents alike.      Alabama landfill will be a final resting
Inc. and accuses the oil giant of 46 sep-   Nearly one third of residents located       place for the coal ash.
arate pollution violations at its Texas     near the spill are already experiencing       As of mid-April, TVA had paid $20
City refinery. One of the violations        breathing issues.                           million dollars to purchase over 220
relates to an explosion we have               On October 20, 2008, inspectors           acres of land affected by the spill.
written on in several prior issues that     deemed the Kingston Fossil Plant’s fly      Over two-thirds of these 70 parcels
killed 15 workers and injured 170           ash pond structurally sound. Interest-      have houses, trailers, or other struc-
others four years ago. The suit, filed in   ingly, the inspectors were not even         tures on them. TVA’s buyout program
state court in Austin, alleges the BP       afforded the opportunity to finish their    requires landowners to give up their
Texas City refinery, about 35 miles         investigation before the pond col-          right to pursue legal recourse against
southeast of Houston, spewed hun-           lapsed. Based on prior annual reports,      TVA, and it is unclear whether resi-
dreds of thousands of pounds of unau-       leaks, erosion, seepages, waterlogged       dents, in their desperation to leave the
thorized pollutants in a "pattern of        walls and failed attempts to reconcile      hazardous conditions, are getting fair
unnecessary and unlawful emissions."        stability issues dot the history of the     deals.
The emissions, according to the suit,       Kingston Plant’s retaining pond. To           In addition to the hardships that
were the result of poor operational         put these issues in perspective, the        individual landowners suffer when
practices and inadequate maintenance        dam was attempting to retain ash piles      relocating from their property, the
at the refinery.                            and sludge that towered 70 feet high        County also is affected due to lost rev-
Source: Associated Press                    alongside the Emory River. Jack             enues. As property values decline due
                                            Spadaro, a retired mining engineer          to the spill, so do the tax revenues
                                            who investigated a 1972 coal dam            associated with those properties.
UPDATE ON TVA COAL ASH SPILL                break in West Virginia that killed 125      Therefore, Roane County likely will
   As previously reported, our firm filed   people, believes TVA’s inspection           suffer from a lower tax base even
a class action lawsuit on behalf of         agency was “irresponsible” for failing to   though TVA has assured county offi-
property owners damaged by the Ten-         see the stability issues that plagued the   cials that it will pay taxes on the prop-
nessee Valley Authority coal ash spill in   dam.                                        erty TVA purchases. As a tax-exempt
Kingston,Tennessee. The spill, which          While cleanup, waste disposal and         entity,TVA normally is not required to
garnered national attention in Decem-       costs are still speculative,TVA recently    pay property taxes. Diminished prop-
ber 2008, occurred when the TVA             increased its estimates to range from       erty values and the resulting loss in tax
slurry retaining pond failed and            $675 million to $975 million, an            revenue affects all of the citizens of
released 5.4 million cubic yards of coal    increase of $150 million from previous      Roane County.
ash.                                        estimates. In addition, there does not        Our firm is working on behalf of
   The visual devastation resulting from    appear to be a firm estimate on how         individuals and a class of clients in this
the coal ash spill was mindboggling. In     long the cleanup will take or where it      lawsuit to accomplish the following:
total, nearly 300 acres were obliterated    will send the coal ash and other debris
                                            generated by the cleanup activities.        • Bring about a complete clean-up of
by 1 billion gallons of toxic sludge that                                                 the area;
measured nine feet deep in some             The State of Pennsylvania has already
areas. The Environmental Integrity          rejected plans to deposit the coal ash      • Ensure that our clients are fully com-
Project estimated that 124 million          in their state because the substance is       pensated for the damage to their
gallons of coal ash were deposited at       too contaminated. Unfortunately, it is        property (including their property
the TVA plant between 2000 and 2006         looking more likely that poor citizens        values); and,
at 2.2 million pounds per year.             in Alabama will bear the cost of TVA’s
                                            poor judgment.                              • Obtain long-term medical monitor-
   The environmental ramifications
                                              Recently, the Alabama Department of         ing relief for area residents who have
from the spill are even more disturb-
                                            Environmental Management reported             been exposed to the toxic contami-
ing. Before the spill, the Kingston
                                            that it received notice from the TVA          nants in TVA’s coal ash sludge.
plant was named to a list of the top 50
worst toxic chemical sites. Toxins          that 3 million cubic yards of the sludge
                                                                                          While still in its infancy, quite a bit of
within the coal ash include arsenic,        would be deposited in a Uniontown,
                                                                                        work has already been accomplished
lead, chromium, manganese, and              Perry County, Alabama landfill. The
                                                                                        in this litigation. Corporate Represen-
barium. Associated with these toxins        area is predominately inhabited by
                                                                                        tative depositions have already com-
are the following health problems:          some of Alabama’s poorest residents. If
                                                                                        menced, and lawyers from our firm are
cancer, liver damage and neurological       the Environmental Protection Agency
                                                                                        assisting in the various discovery
problems among a host of other issues.      agrees,TVA will begin shipping the 85
                                                                                        issues that a case of this magnitude



32                                    www.JereBeasleyReport.com
involves. If you need additional infor-     alleges that Krispy Kreme damaged its          Hopefully, this declaration will be a
mation on this subject, contact Rhon        sewer system by dumping yeast and           reminder to others of the serious con-
Jones or David Byrne in our firm at         grease, specifically including “excessive   sequences of mismanaging hazardous
800-898-2034 or by email at                 quantities of highly corrosive wastes,      material. Six million dollars from the
Rhon.Jones@beasleyallen.com         or      doughnut grease and other pollutants.”      Department of Health and Human Ser-
David.Byrne@beasleyallen.com.               The damages claimed include clogged         vices will go to local health care
  Sources: Knoxville News Sentinel          pipes which caused raw sewage leaks         providers to screen, diagnose and treat
and Associated Press                        and required a part of the system to be     asbestos-related illnesses, while $125
                                            shut down. Krispy Kreme reportedly          million will go toward cleaning up
                                            refused to pay the County’s repair          contaminated areas. The new commit-
NEW APPRAISAL FINDS ELEVATED HEALTH         costs of $1.9 million one month before      ment brings the total amount the EPA
RISKS RELATED TO SOOT PARTICLES             the suit was filed.                         has designated for the Libby area to
                                               The allegations of this suit have        $333 million.
   A recent analysis of existing studies
                                            created a variety of media quips               In 1919, the Libby operation began
on the link between tiny soot particles
                                            remarking on what effect doughnuts          producing vermiculite – a mineral
and premature death due to cardiovas-
                                            must have on the human body if they         often used in insulation – and dust
cular problems has revealed that mor-
                                            can actually destroy a sewer system.        from the plant covered patches of
tality rates are twice as high as
                                            That’s a scary thought for fans of          grass, dusted the tops of cars and
previously believed. Health Effects
                                            Krispy Kreme doughnuts.             This    drifted through the air in a hazy smoke
Institute, a nonprofit organization
                                            includes my wife Sara, who can spot         that became a part of residents' daily
created by the EPA to provide unbi-
                                            the blinking red light at a Krispy          lives. But the product was contami-
ased studies of the health effects of air
                                            Kreme shop blocks away.                     nated with tremolite asbestos, a partic-
pollution, released its findings on June
                                                                                        ularly toxic substance that has been
4th. Birmingham and Atlanta were
                                                                                        linked to mesothelioma, a cancer that
among the cities included in the study.     ASBESTOS CLEANUP EMERGENCY DECLARED         can attack the lining of the lungs,
According to the new evaluation, the        IN MONTANA TOWN                             abdomen, or heart.
risk of having a condition that is a pre-
                                                                                        Source: CNN
cursor to heart attacks goes up by 24%        Libby, a northwest Montana town
as opposed to 12% as particle concen-       where asbestos contamination has
trations increase. These particles,         killed more than 200 people, will get
which have a diameter of less than a        more than $130 million in cleanup and       XXII.
30th of a human hair, are produced by       medical assistance from the Obama           TOBACCO
diesel engines, automobile tires, coal-     Administration, according to the Envi-      LITIGATION
fired power plants, and oil refineries,     ronmental Protection Agency. This is
among other things.                         the first declaration issued by the         UPDATE
   The link between these particles and     agency, which has grappled with the
cardiopulmonary disease has been            "toxic legacy" of a mine outside Libby,
known for twenty years. The EPA             Montana, since 1999. As we and many         PENSACOLA WOMAN WINS $30 MILLION
                                                                                        LAWSUIT AGAINST BIG TOBACCO
began regulating their emissions in         others have repeatedly reported, the
1997 but declined to lower chronic          town was heavily contaminated with             A Florida jury has awarded $30
exposure limits in 2006 despite evi-        asbestos-laced dust. Federal prosecu-       million to a Pensacola widow in a
dence that the particles were deadlier      tors have said it resulted in more than     ruling against R.J. Reynolds Tobacco.
than once believed. The United States       200 deaths and 1,000 illnesses. EPA         Lawyers for Benny Martin, who died of
Court of Appeals for the District of        Administrator Lisa Jackson, in making       lung cancer in 1995, proved that the
Columbia found that decision to be          the announcement, stated:                   tobacco company conspired to make
inadequate. The Obama Administration                                                    their products more addictive to cus-
is now considering what levels are            For decades, the disease and
                                              death rate from asbestosis in the         tomers and withheld information
appropriate. Hopefully, this study will                                                 about the dangers of smoking. The
provide the necessary stimulus to get         Libby area was staggeringly high
                                              -- much higher than the national          decedent started smoking 20 years
something done.                                                                         before cigarettes had warning labels.
Source: Associated Press
                                              average. Not only did dust from
                                              the mine spread all over Libby            The case is one of the first to be tried
                                              and the neighboring town of Troy          after the 2006 Florida Supreme Court
                                              for decades, but tailings from the        ruling that threw out a massive class
KRISPY KREME SUED FOR CLOGGING SEWER                                                    action award to thousands of smokers
SYSTEM                                        facility also were used as fill for
                                              driveways, gardens and play-              and required the cases be proven indi-
  Officials in Fairfax County, Virginia,      grounds. Literally no matter              vidually. Matt Schultz, the lawyer who
have sued Krispy Kreme doughnuts for          where these residents turned, they        tried the case, wants the jury verdict to
clogging its sewer system. The lawsuit        were being exposed yet again.             help "deter these kinds of corporate



                                      www.JereBeasleyReport.com                                                               33
activities in the future." Hopefully, it       children. Do not allow children to           The task force’s work will be compli-
will have that effect.                         play in a pool or hot tub/spa with        cated and rather difficult. Agency con-
Source: Associated Press                       missing or broken drain covers.           fidentiality decisions are governed by
                                                                                         several interconnected laws, including
                                             • Look in the Pool First: Precious time
                                                                                         the Federal Trade Secrets Act. Making
THE FEDERAL GOVERNMENT WILL REGULATE           is often wasted looking for missing       all of the needed changes – which will
TOBACCO                                        children anywhere but in the pool.        take legislative action – won’t be easy.
                                               Since every second counts, always         The goal is to open up a system in
  A bill has now been passed in both           look for a missing child in the pool      which the agency failed to inform the
the U.S. Senate and House of Represen-         or spa first. Be prepared for an emer-    public about health and safety hazards.
tatives that will regulate tobacco for         gency by having rescue equipment          For example, the public should have
the first time. At press time, the bill        and a phone near the pool. Also,          been alerted that a widely-prescribed
hasn’t been signed into law by the             parents should learn cardiopul-           heartburn drug was especially toxic to
President. He is expected to sign the          monary resuscitation (CPR).               babies; that a diabetes medicine and a
bill. We don’t have the details of this
                                             • Drowning is Silent: Parents may           painkiller increased heart attack risks;
Act and will hold off until next month
                                               think that if their child falls in the    and that antidepressants increased sui-
to discuss it.
                                               water, they will hear lots of splashing   cidal thoughts and behavior in chil-
                                               and screaming, and that they will be      dren and teenagers. Dr. Steven Nissen,
                                               able to come to the rescue. Many          a cardiologist at the Cleveland Clinic
XXIII.                                         times, however, children slip under       who has campaigned for the release of
THE CONSUMER                                   the water silently. Even people in        such information, had this to say:
CORNER                                         the pool have reported hearing              Many people have been harmed
                                               nothing out of the ordinary during          over the last decade because the
                                               drowning incidents.                         FDA has treated clinical trial
THE CPSC WORKS TO PREVENT DROWNING
                                             • Never leave a child unattended –            results of drugs and devices as
  June is the start of summer and that         even for a minute – with access to a        trade secrets.
means families are headed to the pool.         pool, spa, bathtub or bucket. If you
                                                                                            In 2007, Dr. Nissen published a study
But all pools, everything from small           have to leave, designate a “Water         showing that Avandia, a popular dia-
backyard inflatables to commercial             Watcher,” someone who can concen-         betes medicine made by GlaxoSmithK-
water parks, are dangerous and tempt-          trate on kids in the water without
                                                                                         line, increased the risk of heart attack
ing to young kids. There are about 300         distraction.
                                                                                         by 42%. The data Dr. Nissen used was
pool and spa related fatalities per year       All of this is very good advice for
                                                                                         made public, but only because of a
for children younger than five years of      parents and other adults who care for
                                                                                         lawsuit. The FDA had known of the
age. To protect your loved ones from         children. Let’s all strive to make this     possible risk for nearly two years, but
drowning, the Consumer Product               summer the safest ever for children!        had not revealed that knowledge to
Safety Commission says keep following        Source: CPSC
                                                                                         the medical community or the public.
in mind:                                                                                    Dr. Catherine DeAngelis, editor of
• Have Layers of Protection: Barriers,                                                   The Journal of the American Medical
                                             THE FDA MAY REVEAL MORE DATA ON
  such as a fence with self-closing, self-   ACTIONS                                     Association, told the New York Times
  latching gates, completely surround-                                                   that greater disclosure would allow
  ing pools prevent unsupervised                For years, the Food and Drug Admin-      researchers and publications like hers
  access by young children. If the           istration has withheld information          to help the FDA fulfill its mission. The
  house forms a side of the barrier, use     about drugs and medical devices from        agency “can’t possibly know of every-
  alarms on doors leading to the pool        the public when their makers cite           thing going on,” Dr. DeAngelis said,
  area and/or a power safety cover           trade secrecy — even in cases where         adding, “If they could be more trans-
  over the pool.                             the agency suspects that the products       parent, we could really help them.” Dr.
                                             are causing serious illness or death.       Hamburg and Dr. Sharfstein, in an
• Beware of Entrapments: Suction             Hopefully, the new leadership at the        opinion article in The New England
  drains in pools and spas can cause         FDA will change that. The Obama             Journal of Medicine signaling the new
  entrapments involving hair, body           Administration has set up a task force      effort, wrote:
  parts, clothing and jewelry, which         within the agency to recommend ways
  can lead to death and serious injury.                                                    Whenever possible the FDA
                                             to reveal more information about FDA
  The suction can be so powerful that                                                      should provide data on which it
                                             decisions, possibly including the dis-
  it can hold an adult under water, but                                                    bases its regulatory decisions.
                                             closure of now secret data about drugs
  most entrapment incidents involve          and devices under study.


34                                     www.JereBeasleyReport.com
  The task force will be led by Joshua       vue, of paying hotel taxes based on a         makers. Thousands of cats and dogs
Sharfstein, the agency’s principal           room's lower wholesale price but col-         became sick or died after eating the
deputy commissioner, and will include        lecting based on its higher retail price.     tainted food. ChemNutra and the
other top officials. It will seek outside    Also, Expedia was accused of bundling         Millers were charged with 13 misde-
comment, including the views of sup-         an additional service-fee charge with         meanor counts of introduction of adul-
porters of strong protection for trade       taxes into a single line item on a hotel      terated food into interstate commerce,
secrets. The task force is required to       bill, making the taxes appear higher          13 misdemeanor counts of introduc-
submit a written report to FDA Com-          than their actual amounts.                    tion of misbranded food into interstate
missioner Margaret A. Hamburg in six            The Plaintiffs alleged that Expedia        commerce and one felony count of
months. The New York Times reported          charged service fees under false pre-         conspiracy to commit wire fraud.
in its article:                              tenses in violation of its "Terms of Use"        Xuzhou Anying Biologic Technology
                                             agreement with consumers from Feb-            Development Co., Suzhou Textiles, Silk,
  Trade secrets can include                  ruary 2003 through December 2006.             and Light Industrial Products Arts and
  company plans to test experimen-           In the summary judgment ruling, the           Crafts I/E Co. were also indicted. The
  tal medicines, the complete                judge agreed with the Plaintiffs that         indictments alleged that Suzhou Tex-
  results of most clinical trials, and       Expedia charged service fees to add to        tiles, an export broker, mislabeled 800
  even the FDA’s reasons for reject-         its profit, as well as to defray its costs.   metric tons of tainted wheat gluten
  ing a company’s application to             Since a summary judgment order is not         manufactured by Xuzhou to avoid
  market a product. Researchers              a final judgment, there will be a trial to    inspection in China. According to the
  have long complained that                  determine damages.                            indictment, Suzhou then did not prop-
  keeping such information secret               Upon a final judgment being                erly declare the contaminated product
  can harm the public. A 2008                entered, the company will be ordered          it shipped to the U.S. as a material to
  study published in The Journal of          to post a bond or another security for        be used in food. ChemNutra allegedly
  the American Medical Association           the full amount. The judge denied the         picked up the melamine-tainted
  found that in the 1990s, five dif-         Plaintiffs' motion for summary judg-          product at a port of entry in Kansas
  ferent companies tested similar            ment on claims that the company vio-          City, then sold it to makers of various
  blood substitute products that             lated the Washington Consumer                 brands of pet foods.
  were each found to increase the            Protection Act. Expedia will defend              The indictment states further that
  risk of death. Had the findings            those charges in a trial. The judge           Xuzhou added the melamine to artifi-
  been made public, the authors              ruled that Expedia should return $184         cially boost the protein content of the
  argued, some of the companies              million in service fees to customers          gluten to meet the requirements speci-
  might have known sooner that               who booked a hotel stay from mid-Feb-         fied in Suzhou's contract with Chem-
  their products were dangerous,             ruary 2003 to mid-December 2006.              Nutra. Prosecutors said adding the
  sparing the lives of some patients         Expedia says it will appeal the deci-         melamine, which would allow it to
  in the studies.                            sion.                                         pass chemical inspections for protein
  Hopefully, the work of the task force      Source: The Seattle Times                     content, was cheaper than actually
will increase the availability of informa-                                                 adding protein to the gluten. The
tion that the public needs to know                                                         Millers and ChemNutra were aware
about. It’s a worthy undertaking and         GUILTY PLEAS IN TOXIC PET FOOD CASE           that the product had been shipped
one that’s long overdue. The new                                                           into the U.S. under false pretenses and
                                                A Las Vegas-based company and its          failed to notify their customers.
administration is to be commended for
                                             owners have entered guilty pleas in a
making the people’s interest a top pri-                                                    Source: WJLA.com
                                             case involving tainted pet food that
ority.
                                             killed thousands of dogs and cats in
Source: New York Times
                                             2007. The co-owners of ChemNutra              BAN ON BPA IN PLASTICS MOVES FORWARD
                                             Inc., who are a married couple named          IN CALIFORNIA LEGISLATURE
                                             Miller, reached a plea agreement with
EXPEDIA ORDERED TO PAY $184 MILLION IN
                                             prosecutors and entered a guilty plea           We have written on the bisphenol A
LAWSUIT OVER HOTEL TAXES AND FEES
                                             at a hearing last month. ChemNutra            (BPA) in prior issues. Last month, the
  A judge in the state of Washington         also pled guilty.                             California State Senate approved a pro-
has ordered Expedia to pay $184                 The Millers and ChemNutra, along           posal that would ban the use of the
million in a four-year-old class-action      with two Chinese companies, were              substance in baby bottles, toddler
lawsuit against the Internet travel          indicted in February 2008 on charges          sippy cups and food containers. BPA is
agency. The lawsuit, filed in 2005 on        alleging they imported wheat gluten           said by some independent scientists to
behalf of Expedia customers, accused         tainted with the chemical melamine,           pose a threat to childhood develop-
the company, which is based in Belle-        which was then sold to pet food               ment. The bill prohibiting the use of



                                       www.JereBeasleyReport.com                                                               35
BPA next goes to the Assembly, where        toys. The companies deny having will-       congressional action and a new law
it is expected to face tough resistance     fully violated the ban.                     last summer — called the Consumer
from manufacturers of the infant prod-         The penalty stems from a series of       Product Safety Improvement Act —
ucts that contain the controversial         recalls by Mattel and Fisher-Price in       that restricts the amount of lead
chemical.                                   2007, when the companies recalled           allowed in children’s products. Lead
   It was reported that industry leaders    nearly 2 million popular Big Bird, Elmo,    poisoning in children can cause neuro-
targeted California for an orchestrated     Dora and other toys because of exces-       logical damage, delayed mental and
lobbying and grassroots public rela-        sive levels of lead found in the paint on   physical development, learning defi-
tions campaign to turn back efforts by      the toys. Barbie doll accessories and       ciencies, and other problems. If Mattel
health and consumer groups to ban           “Sarge” toy cars were also part of the      acted as responsibly as it appears that
the use of BPA, a chemical component        recalls. According to the CPSC, the fine    it did, the company’s bosses should be
in the manufacture of plastic contain-      is the biggest for a lead paint violation   commended.
ers. Researchers from the chemical          involving children’s toys. Mattel and       Source: Associated Press
industry continue to claim the public       Fisher-Price were among dozens of
health threat has been vastly               manufacturers that yanked millions of
overblown. But, as we have reported,        Chinese-made toys from store shelves        LAWSUIT FILED AGAINST AETNA FOR LOSING
more than 200 independent scientific        in the months leading up to the 2007        DATA
studies have linked BPA to brain devel-     holiday shopping season. The recalls
                                                                                          A lawsuit has been filed against
opment and behavioral problems in           made parents uneasy as they shopped
                                                                                        Aetna Insurance Co., alleging the
young children, early puberty and the       for gifts for small children. Acting
                                                                                        insurer failed to protect personal infor-
eventual onset of some types of             chairman Thomas Moore had this to
                                                                                        mation of employees and job appli-
cancer. Scientists say the chemical can     say:
                                                                                        cants. The lawsuit comes after Aetna,
leach into a liquid, particularly when a
                                              These highly publicized toy               of Hartford, Conn., was struck by com-
bottle or cup is heated.
                                              recalls helped spur congressional         puter hackers to access a company
   The goal of the California legislation
                                              action last year to strengthen            Web site holding personal data for
is to protect "the most vulnerable,"
                                              CPSC and make even stricter the           450,000 current and former employ-
according to Senator Fran Pavley, a
                                              ban on lead paint on toys. This           ees, as well as job applicants.
Democrat, who is the bill’s sponsor.
                                              penalty should serve notice to toy          The suit, filed by former employee
She correctly says that affordable alter-
                                              makers that CPSC is committed             Corneilus Allison, in U.S. District Court
natives are already available to the
                                              to the safety of children.                in Pennsylvania, charges the insurer
chemical industry. In March, Connecti-
                                                                                        with negligence, breach of implied
cut Attorney General Richard Blumen-          The Mattel and Fisher-Price fine is       contract, negligent misrepresentation
thal said that six companies had            the commission’s first penalty result-      and invasion of privacy. The Plaintiff is
stopped manufacturing baby bottles          ing from those recalls. It appears that     seeking certification of the lawsuit as a
containing BPA in response to a             Mattel’s outstanding issues with the        class action. An Aetna spokeswoman
request from his office and attorneys       CPSC, involving certain matters that        says the company did the right thing in
general from Delaware and New               arose in 2007, will be resolved with        notifying employees that their informa-
Jersey. Those companies are Avent           this settlement. It was reported that       tion had been hacked and in offering
America Inc., Disney First Years,           after discovering compliance issues         free credit monitoring for a year to
Gerber, Dr. Brown's, Playtex Products       with some of their toys in a timely         about 65,000 people who had Social
Inc. and Evenflo Co.                        fashion Mattel took a series of steps.      Security numbers on the site's data-
Source: Los Angeles Times                   Mattel said in its statement:               base. Nevertheless, this appears to be
                                              We were able to effectively mini-         a serious matter, and this lawsuit will
                                              mize any potential concerns by            be watched closely.
MATTEL FINED $2.3 MILLION FOR TOY                                                       Source: UPI.com
HAZARD                                        launching a fast-track recall of
                                              the affected product in conjunc-
   Toy maker Mattel Inc. and its Fisher-      tion with the CPSC and other
                                              global regulatory agencies, and           MEDICAL BILLS SAID TO CAUSE MOST
Price subsidiary have agreed to pay a                                                   BANKRUPTCIES
$2.3 million civil penalty for importing      by taking several steps to
and selling toys with excessive levels        enhance our product compliance               It was reported recently that nearly
of lead. The penalty is part of a settle-     protocols and procedures to               two out of three bankruptcies come
ment the companies reached with the           confirm that every Mattel toy is          about as a result of medical bills. Even
Consumer Product Safety Commission.           safe for children to enjoy.               people with health insurance face
It was announced last month that the                                                    financial disaster if they experience a
                                              Mattel, based in El Segundo, Califor-
toymaker had knowingly violated a 30-                                                   serious illness, according to a new
                                            nia, has not had any lead paint recalls
year-old federal ban on lead paint in                                                   study. The study data, published online
                                            since the 2007 cases, which spurred


36                                    www.JereBeasleyReport.com
on June 4th in The American Journal        Alabama State Bar put members on           until the bank on which the cashier's
of Medicine, may understate the full       notice to exercise extra diligence         check is drawn clears the check. To
scope of the problem because the data      when presented with circumstances          report a scam, contact your local FBI
was collected before the current eco-      similar to those described below.          office.
nomic crisis. In 2007, medical prob-       According to the Bar Association, the      Source: Alabama State Bar
lems contributed to 62.1% of all           scam works like this:
bankruptcies. Between 2001 and
2007, the percentage of all bankrupt-        A law firm receives a referral from      INJURIES ON THE BASEBALL DIAMOND
cies attributable to medical problems        someone posing as an out-of-state
rose by about 50%. The study authors         attorney to enforce a simple con-          While baseball is a fairly safe sport,
wrote:                                       tract dispute or collect a debt from     participants can still get hurt and
                                             a local corporation owed to a            sometimes seriously. Over a 13-year
  The U.S. health care financing             foreign company. The firm, believ-       period more than one and a half
  system is broken, and not only             ing it is exercising due diligence,      million players under 18 were injured
  for the poor and uninsured.                confirms that the prospective            seriously enough to be treated in emer-
  Middle-class families frequently           client is a real company, then           gency rooms. Estimates of the number
  collapse under the strain of a             enters into a fee agreement. It          of children involved in baseball vary,
  health care system that treats             sends a demand letter, and later         but the Consumer Product Safety Com-
  physical wounds, but often                 receives a cashier's check made          mission says there are 6 million in
  inflicts fiscal ones.                      payable to the law firm. The client      leagues and another 13 million playing
                                             is pleased and directs the law firm      on their own. Researchers analyzed a
   The data on medical bankruptcy,           to wire the money, after deducting       nationally representative sample of
compiled by researchers at Harvard           its fees and costs. The law firm         emergency room visits for baseball
Law School, Harvard Medical School           deposits the money in its client         injuries from 1994 to 2006, using data
and Ohio University, is based on a           trust account, waits for the check       gathered by the CPSC. Their study
survey of 2,314 randomly selected            to clear the local bank, and wires       appears in the June electronic edition
bankruptcy filers during early 2007.         the money to the client. Things          of Pediatrics.
Among families who were bankrupted           fall apart when the bank on which          Most of the injuries were minor, and
by illness, those with private insurance     the check is drawn notifies every-       more than 98% of patients were
reported average medical bills of            one that the check is a counterfeit      treated in the emergency room and
$17,749 compared to those who were           fraud - by which time it is too late     released. But 24,350 required hospital-
uninsured, who faced an average of           to stop the wire transfer, and the       ization, mostly with fractures and con-
$26,971 in medical costs. Those who          law firm's client trust account is       cussions. The number of injuries
had health insurance, but lost it in the     now out the proceeds, which the          declined to 110,602 in 2006 from
course of their illness, reported            firm has to replace. The scam            147,357 in 1994; one possible reason,
average medical bills of $22,568.            works because the law firm erro-         the authors say, is improvements in
   The Times reports that hospital           neously believes that the check is       equipment. The most common injuries
costs accounted for about half the           good when it clears the law firm's       were caused by being hit by a ball, but
expenses (48%), followed by prescrip-        bank. That is not the case. The          softer safety baseballs now offer
tion drugs (18.6%), doctor’s bills           first clearance is only provisional.     increased protection. Breakaway bases
(15.1%) and insurance premiums               The bank on which the check is           have lowered the number of strains,
(4.1%).      Medical equipment and           drawn has additional time under          sprains and broken bones. In a sepa-
nursing home care rounded out the            the law to verify the check.             rate study, the product safety commis-
list. Hopefully, Congress will deal with     All lawyers should beware of similar     sion found no facial injuries to batters
the healthcare issue and reform a          circumstances. The economic reces-         wearing helmets with face guards. Dr.
broken system. Everybody in this           sion is making law firms become more       Gary A. Smith, the senior author and an
country deserves health insurance and      susceptible to this type of fraud. It      associate professor of pediatrics at
hopefully that will become a reality       should be recognized and understood        Ohio State, said mouth guards were
very soon.                                 that those engaged in these schemes        particularly important. Dr. Smith had
Source: New York Times
                                           are devious and will use the names of      this observation:
                                           actual companies, client contacts, and
                                           referring attorneys in an effort to sell     They’re low tech, low cost and
INTERNET SCAM TARGETS LAWYERS                                                           easily available. They’re used in
                                           the scam.
                                             Lawyers who suspect they have              many sports, and yet they’re not
  An internet scam targeting lawyers                                                    part of the culture of baseball.
in Alabama and across the country has      encountered a similar situation should
                                           independently verify the names and           But they should be used rou-
prompted warnings from bar associa-                                                     tinely.
tions and federal authorities. The         contact information provided to them.
                                           Do not disburse the deposited funds


                                     www.JereBeasleyReport.com                                                             37
  I am by no means discouraging the          unexpectedly or fail to turn off,            CAMPBELL HAUSFELD RECALLS AIR
playing of organized baseball by             posing a risk of injury. The Star-           COMPRESSORS
youngsters. But I am encouraging the         bucks Barista Blade Grinders and
use of good protective equipment and         Seattle's Best Coffee Blade                     Campbell Hausfeld has recalled
competent adult supervision of young-        Grinders that are being recalled             about 16,000 air compressors. The
sters in organized baseball leagues.                                                      compressor’s thermal overload,
                                             were sold in Starbucks and
Source: New York Times                                                                    which shuts the unit off when it
                                             Seattle's Best Coffee stores
                                             between March 2002 and March                 overheats, can fail. This can lead to
                                             2009. The Seattle-based coffee               overheating, melting of parts and a
XXIV.                                        company said it had received 176             risk of fire. Thus far, no injuries
RECALLS UPDATE                               reports of the grinders malfunc-             have been reported. The recall
                                             tioning, including three reports of          involves the Campbell Hausfeld
  We don’t have as many recalls to                                                        model HU200099AV air compres-
                                             hand lacerations because the
report this month, which I consider to                                                    sor with a 20-gallon tank. The
be good news. The following are those        grinders turned on unexpectedly
                                             during cleaning.                             recall includes date codes ranging
recalls that have occurred since the
                                                The coffee grinders cost about            from January 2009 through June
June issue of this Report.
                                             $30 and were manufactured in                 2009. The model number and date
                                             China. Starbucks said customers              code can be located on the back
     HOME DEPOT RECALLS PATIO                should stop using the grinders               of the tank. Consumers should
     UMBRELLAS                                                                            immediately stop using the
                                             immediately and contact Starbucks
                                             for a free replacement grinder.              recalled air compressor and return
       The Home Depot, of Atlanta,                                                        it to any Wal-Mart for a full refund.
     Georgia, has recalled about 60          More information is available on
                                             the U.S. Consumer Product Safety             For additional information, contact
     Offset Patio Umbrellas. The patio                                                    Campbell Hausfeld at (800) 241-
     umbrella and its pole could tip         Commission          Web       site,
                                             www.cpsc.gov.                                0448 or visit the manufacturer’s
     over and strike consumers if the
                                                                                          Web site at www.chpower.com.
     umbrella’s collar or sleeve is not
                                                                                             CPSC is still interested in receiv-
     removed prior to closing the
                                             KROGER RECALLS WINGS IN 2-POUND              ing incident or injury reports that
     umbrella, posing a risk of impact
                                             BAGS                                         are either directly related to this
     injury to consumers. Home Depot
                                                                                          product recall or involve a differ-
     has received one report of a               Kroger Co. has recalled 32-               ent hazard with the same product.
     recalled patio umbrella tipping         ounce bags of Kroger fully cooked            Please tell us about it by visiting
     over and breaking. No injuries          Buffalo-style chicken wings from             https://www.cpsc.gov/cgibin/inci-
     have been reported. The patio           stores in several states because of          dent.aspx. The air compressors
     umbrellas are beige with a brown        incorrect package labeling that              were sold exclusively at Wal-Mart
     offset pole. They stand 11 feet tall.   could endanger people with                   stores.
     The base is a brown cross about         certain allergies. The Cincinnati-
     18 inches long. The umbrellas           based grocer says the wings may
     were sold at The Home Depot             contain undeclared allergens such
     stores nationwide from January
                                                                                      XXV.
                                             as wheat, soy and dairy that could
     2009 through February 2009 for          cause a life-threatening allergic        FIRM ACTIVITIES
     about $250. For additional infor-       reaction to individuals sensitive to
     mation, contact The Home Depot          any of these allergens.
     toll free at (866) 403-5504 or visit                                             EMPLOYEE SPOTLIGHTS
                                                The recalled wings were sold at
     the company’s Web site at               some Kroger stores in Ohio, Ken-         Danielle Ward Mason Joins The Firm
     www.homedepot.com.                      tucky, Indiana, Texas, Louisiana,        As An Associate
                                             Tennessee, North Carolina, Vir-
                                             ginia, West Virginia, Arkansas, Mis-       We are pleased to welcome a new
     STARBUCKS RECALLS 530,000 COFFEE
                                             sissippi, Illinois, Missouri, Georgia,   associate, Danielle Ward Mason, who
     GRINDERS
                                             South Carolina,Alabama and Michi-        joins the firm's Mass Torts section.
       Starbucks Corp. is recalling          gan. They also were sold at Food 4       Danielle will work with section head
     about 530,000 coffee grinders           Less, King Soopers, Smith's, Jay C,      Andy Birchfield in the investigation of
     because they either can turn on         Fry's and Dillons stores.                claims involving dangerous drugs and


38                                     www.JereBeasleyReport.com
medical devices. She graduated cum         swimming, weight lifting, and aerobics.       Kimberly and Steve enjoy the water
laude from Faulkner University's           She has been a member of a local            and they visit Lake Jordan or Lake
Thomas Goode Jones School of Law in        church, but she and her family are          Martin quite often to ride their jet
2007. Danielle interned at the Federal     looking for a new church home at            skies. They are members of Cains
Defender Middle District of Alabama        present. We are pleased to have             Chapel United Methodist Church. We
during law school (November 2007-          Danielle join the Beasley Allen family.     are most fortunate to have Kimberly, a
April 2008) and worked as a court-                                                     very good employee, with the firm.
appointed defense lawyer for the           Kimberly Youngblood
Federal Defender Middle District of                                                    Ellen Royal
Alabama following her graduation. The         Kimberly Youngblood came to the
Montgomery native came to the firm         firm in July of 2007 as the System Soft-       Ellen Royal has been with us for five
in June.                                   ware Specialist. In this position, she      years. Currently she is a Legal Secre-
   Danielle attended Jefferson Davis       troubleshoots issues with any of the        tary to Chad Cook in our Mass Torts
High School and graduated from             software in the firm, researches new        Section. In this position, Ellen makes
Auburn Montgomery with a Bachelor's        software and rolls out the software         initial contacts with new clients,
degree in Economics in 1999. In 2001,      updates for the computers in the firm.      handles client and referring lawyer
she received a Masters of Business         In addition to these duties, she designs,   calls and correspondence. Because
Administration. Danielle began a           creates, implements, and administers        Chad is the lawyer who handles all
career in commercial banking, but says     Microsoft Access Databases for the          inquiries regarding injuries related to
“my heart was always calling me to the     firm. Examples are the report database      pharmaceuticals or medical devices
practice of law” and that being a          for this Report and the Vioxx informa-      not currently being investigated by the
lawyer has always been what she            tion database. Kimberly also loads doc-     firm, Ellen helps with these calls and
wanted to do. Folks who know               uments received through document            correspondence.
Danielle well tell us that she has "a      productions for cases into Concor-             Ellen was originally involved with
love for people and a genuine passion      dance for several of the departments        the Welding Rod Litigation, making
for the law.” When interviewing with       within the firm, such as the case           initial contact with new clients. In
our firm, Danielle told Cole Portis that   involving Medicaid fraud, Vioxx, 3M,        October 2004 she was moved into a
being in our firm would allow her to       Occidental and Hot Fuel. As a member        staff assistant position and in May 2005
“get really invested in a cause and        of IT, Kimberly also assists in all other   was moved to legal secretary where
work and fight for that cause.” That’s     capacities needed to ensure the techni-     she currently works.
what attracted her to the firm. As         cal aspects of the firm are maintained.        Ellen has two sons,Thomas, 21, who
Danielle says,“our work means some-           Kimberly is married to Steve, who        is serving with the 101st Airborne Air
thing” and here she could “really make     also works for the firm in the Informa-     Assault as an MP in Ft. Campbell, Ken-
a difference in the lives of people."      tion Technology Department. They            tucky, and Matthew, 13, who is now in
   Danielle is married to Dwan R.          have three children, two sons and one       heaven with his Lord and Savior. Ellen
Mason, and they have two sons, Jordan,     daughter. Stephen Jr. (21 years old)        is a member of First Presbyterian
12, and Jaxon, two and a half. She is a    graduated from the Police Academy           Church in Prattville where she serves
member of the Alabama State Bar.           earlier this year; Christopher (19 years    as secretary of the WIC Board, on the
Danielle enjoys spending time with         old) is in training for management with     Pastoral Search Committee, a member
her family in her free time. She enjoys    CVS; and April (18 years old) is            of The String Section (prayer shawl
public speaking, and while at the          working at Lowe’s in Wetumpka and           ministry), and a member of the Adult
Federal Defender’s office, Danielle        will be starting college in the fall.       Choir. She enjoys going to the theater,
spoke to a variety of groups regarding        Before coming to Beasley Allen, Kim-     listening to classical music, knitting,
the importance of public interest law,     berly worked for Regions Financial          exploring antique shops and flea
particularly public criminal defense.      Corporation in the Technology Divi-         markets and serving in her church.
She also serves as a guest judge for the   sion for nearly ten years. She has          Ellen is a very good employee and we
Jones School of Law intra-school mock      received specialized training in several    are blessed to have her with the firm.
trial competitions, including the Greg     aspects of IT and business, including
Allen Mock Trial Competition that is       but not limited to Project Manage-          Sarah Martinez
held at the school every year. Danielle    ment, Microsoft Office Products, and
is an avid reader, writes poetry, and      recently, SQL Database and Microsoft          Sarah Martinez, who has been with
enjoys physical activities including       System Center training.                     the firm for four years, currently serves



                                     www.JereBeasleyReport.com                                                               39
as Secretary to Clay Barnett in our Con-       In February 2008, in an effort to raise   and attend the San Francisco meeting.
sumer Fraud Section. Sarah is working       awareness in the public about                If you have any questions or comments
on the Medicaid fraud cases in several      mesothelioma and the dangers of              concerning this group or AAJ, please
states, including in Alabama. She is        asbestos exposure, Beasley Allen estab-      contact Jay Aughtman in our office at
married to Cutberto Martinez and they       lished a web log (or “blog”) at              800-898-2034.
have two daughters, Esperanza (three        www.myMeso.org. The site provides a
years old) and Yolanda (seven months).      forum for those affected by mesothe-
Sarah enjoys spending time with her                                                      LAWCALL
                                            lioma, and creates a network of infor-
family & friends, traveling and being       mation and resources expanding hope             We are in our sixth month of hosting
outdoors. Sarah is a very good              for a cure.                                  the widely popular LawCall, which is
employee and we are fortunate to have          In June, Beasley Allen’s communica-       broadcast live at 11:00 p.m. each
her with us.                                tions director and writer for                Sunday night on WSFA. Gibson Vance
                                            www.myMeso.org, Wendi Lewis, trav-           hosts the show each week, along with
Bilinda Hines                               eled to Washington, D.C. to attend the       a guest lawyer from central or south
                                            2009 International Symposium on              Alabama. Kendall Dunson, from the
   Bilinda Hines, who has been with         Malignant Mesothelioma, presented by         firm, hosts the show in Gibson’s
the firm for over six years, currently      the Mesothelioma Applied Research            absence. Each week a different topic
works on updating and maintaining           Foundation (MARF), June 25-27th. The         is discussed and phone lines are
the Beasley Report mailing list. The list   conference brings together patients,         opened to take questions from callers
now consists of 54,000 people. Before       caregivers, family members, and those        in the WSFA viewing area.
taking on the mailing list project,         with mesothelioma or individuals who
Bilinda worked first as a secretary and     have lost a loved one to meso, as well
then as a legal assistant in our Con-       as advocates, and medical and scien-         XXVI.
sumer Fraud section.                        tific experts.                               SPECIAL
   Bilinda is married to David, who            The conference provided informa-
works at Jack Ingram as a service           tion about research and treatment, and       RECOGNITIONS
advisor. They have three children:          an opportunity for networking. High-
Haley (ten),William (two) and Joshua        lights of the conference included a
                                                                                         THE MIRIAM SHEHANE AWARD
(two months). She has served as a Girl      Tribute Ceremony to remember those
Scout Leader for the past five years.       who have lost their battle with                The Miriam Shehane Award is pre-
She also enjoys shopping, and enjoys        mesothelioma, and a Celebration of           sented annually to a person whose
weekends at Lake Martin with the            Hope gala dinner to recognize the            work is outstanding and exceptional
family. They are members of First           efforts of those working toward aware-       for victim’s rights. Over the years, the
United Methodist Church in Prattville.      ness and a cure.                             nominees have included persons in
Bilinda is a very good employee and                                                      law enforcement, prosecutors, judges,
performs a valuable function for the                                                     senators, and representatives. Miriam
                                            AAJ CLASS ACTION LITIGATION GROUP            Shehane has become a strong voice for
firm. We are fortunate to have her with     MEETING TO BE HELD IN SAN FRANCISCO
us.                                                                                      thousands of families who were too
                                               Our firm is co-chairing the newly         devastated and too frightened to stand
                                            formed Class Action Litigation Group         alone. Victims of Crime and Leniency
WENDI LEWIS ATTENDS MESOTHELIOMA            that is part of the American Association     (VOCAL) says this year’s recipient has
SYMPOSIUM IN NATION’S CAPITOL                                                            consistently supported victims and
                                            of Justice. Beasley Allen and the co-
                                            chairs of this distinguished group           victim’s rights through advocacy by
  Current statistics show as many as
                                            broke new ground by forming the              introducing and supporting passage of
3,000 people are diagnosed with
                                            organization in 2008. As co-chair,           laws for the benefit of victims in
mesothelioma in the United States
                                            Beasley Allen will co-host the upcom-        Alabama.
each year, and 10,000 Americans die
                                            ing business meeting and seminar for           VOCAL says that no person speaks
from      asbestos-related     diseases.
                                            the group in San Francisco on July 28-       for victims with greater passion and
Mesothelioma is a deadly cancer that
                                            29, 2009.       All lawyers who are          concern than this year’s recipient.
affects the lining of the lungs or, more
rarely, the lining of the abdomen           members of AAJ and are interested in         They say his strong sense of duty to
and/or the heart. There is only one         learning more about class action litiga-     protect the interest of victims and
way to develop this type of cancer –        tion are encouraged to join this litiga-     their families in the Alabama Legisla-
exposure to asbestos.                       tion group. It’s not too late to register    ture is shown in his voting for laws to



40                                    www.JereBeasleyReport.com
protect victims of crime. This year’s       lawyers at Beasley, Allen, have been        examples for younger Alabama citizens
Miriam Shehane Award recipient was          working for the past 16 years to bring      to follow.
none other than State Representative        justice both inside and outside the
Billy Beasley of Clayton, who just          courtroom to those in our state who
happens to be my brother.                   need and deserve protection. ACJF           THE JIMMY HITCHCOCK AWARDS
  The selection process for this award      was created by members of the
works like this: Nominations from           Alabama Association for Justice -              The presentation of the Jimmy
victims and folks who work in law           lawyers committed to protecting the         Hitchcock Awards each year in Mont-
enforcement from across the State of        powerless against the powerful. This        gomery is a highlight at the end of the
Alabama are sent to VOCAL, reviewed         includes supporting those organiza-         school year. Three of our lawyers, Mike
by the Board of Directors, and then         tions assisting Alabama’s elderly. We       Crow, John Tomlinson, and Navan
narrowed down to three finalists, each      know that a civil and just society pro-     Ward, had the pleasure of serving on
of whom was said to be deserving of         tects its seniors against abuse where it    the Jimmy Hitchcock Award selection
recognition. Billy was the winner and       occurs.                                     committee this year. The purpose of
we are all very proud of him.                  Chris Glover from our firm repre-        the Jimmy Hitchcock Award is to rec-
Source: VOCAL                               sented ACJF at the rally and spoke to       ognize outstanding high school senior
                                            the crowd. As a lawyer who has had          athletes in Montgomery County, who
                                            the privilege of representing elderly       by their actions have consistently rep-
MONTGOMERY LAWYER WINS A PRESTIGIOUS
AWARD                                       clients who have been victims of            resented the highest ideals of Christian
                                            abuse, Chris is very aware of the prob-     leadership in athletics. These student
   Bryan Stevenson, a lawyer from           lems faced by our elderly. Our firm’s       athletes are nominated by their
Montgomery,Alabama, has been named          motto is “helping those who need it         coaches and the administrators of their
a winner of the 2009 Gruber Justice         most since 1979.” There is no other         respective schools. There are both
Prize for his longtime work represent-
                                            area where we put that motto in prac-       male and female winners each year.
ing death row inmates, indigent Defen-
                                            tice more than when we have the                This year, our three lawyers were
dants and juveniles. The Peter and
                                            honor and privilege of helping the          charged with the responsibility of
Patricia Gruber Foundation announced
last month that it was awarding the         elderly.                                    learning about Laura Johnson, a swim-
prize to Bryan and to the European             The rally wasn’t the first opportunity   ming and cross country star at Loveless
Roma Rights Center. The two winners         that ACJF and Alabama lawyers have          Academic Magnet Program (LAMP)
will split the award's $500,000 cash        had to partner with the Department of       High School. They discovered a
prize.                                      Senior Services. We joined the Depart-      remarkable young woman who pro-
   Bryan is founder of the Equal Justice    ment in 2007 and 2008 in raising            vides a great example of leadership,
Initiative in Montgomery and is mostly      awareness about unscrupulous and            character, sportsmanship, commit-
known for representing death row            fraudulent tactics being used by insur-     ment, and hard work on the athletic
inmates, often during the final stages of   ance agents who were selling                field as well as in the classroom. Laura
their appeals. U.S. District Judge          Medicare related health insurance to
Bernice Donald of Tennessee said                                                        is also a tremendous Christian role
                                            the elderly. These tactics resulted in      model for her peers and for the com-
Bryan won the award because of his
                                            many in our state losing health cover-      munity.
work "securing justice" for those most
                                            age or paying too much for their               This year the Jimmy Hitchcock com-
likely to be discriminated against.
Bryan Stevenson is a very good lawyer       health insurance. We were proud to          mittee recognized Laura as its female
and an even better person. He truly         again have had the opportunity to join      recipient. Laura was a four-year swim
believes in what he is doing and that’s     with the Department in working with         team captain, a two-time National
quite evident. He is also my friend and     our older citizens.                         YMCA swim champion, a five-time
I am proud of him!                             ACJF and its participating lawyers       Alabama State High School swim cham-
Source: Birmingham News                     appreciate the contributions of senior      pion, an Alabama State High School
                                            citizens to our state and nation in their   record holder in the 200 individual
                                            roles as parents and grandparents.          medley, and was the fifth-ranked 17-
ELDER ABUSE RALLY AT THE CAPITOL
                                            They commit to fairness, and their          year old in the nation in the 100 and
  The Alabama Civil Justice Founda-         belief that community and family are        200 breaststroke. Laura was also a
tion and its over 2500 participating        important to our continued existence        four-time state cross country qualifier.
lawyers throughout the state, including     as a civil and just society serve as        Laura regularly attends Frazer Memor-


                                      www.JereBeasleyReport.com                                                              41
ial United Methodist Church where           young people nominated for this               draw them off track – from drugs, to
she participates in youth choir, group      award and in reality, they are all            promiscuous sex, to violence, to the
Bible study, teaches vacation Bible         winners. I am glad that the Jimmy             general state of apathy that prevails
school, and is a youth group volunteer      Hitchcock Committee finds time to             among many of our youth. We need to
for various church ministries and other     recognize outstanding Christian stu-          reach out to them with hope and love
Christian organization activities. She      dents in Montgomery County. The two           at every opportunity. These are just a
has volunteered to go on a mission trip     young people mentioned above are              few examples. The world is full of
to the Dominican Republic this              worthy recipients this year and we are        people with whom we need to share
summer. Laura is also an outstanding        very proud of them. It’s good to be           the love of Christ.
student at LAMP High School where           able to report good things about good            As I see it, there are obstacles that
she has maintained a 4.12 GPA. Laura        people, and Laura and Roscoe are to be        many of us have to sharing the Gospel.
was awarded both swimming and aca-          commended for their past accomplish-          One is the breakdown in morality in
demic scholarships to Auburn Univer-        ments. May God continue to bless              the United States as a whole but also
sity where she will attend college this     them.                                         within the church. Our tolerance of
fall.                                                                                     sin gives those who do not know
   Roscoe Anderson, a student at Mont-                                                    Christ tremendous ammunition to use
                                                                                          against the cause of Christ as we seek
gomery Catholic High School, was the        XXVII.
                                                                                          to win the world to the beliefs of
male recipient of the Jimmy Hitchcock       CLOSING                                       Christianity. We must commit our-
Award this year. Roscoe is the son of
my friend, Charlie Anderson, who was        OBSERVATIONS                                  selves to live lives that are in alignment
                                                                                          with God’s Word.
also a Hitchcock Award winner along                                                          This is most important in our
with Roscoe’s uncle James Anderson.         CHRISTIANS MUST STAND FIRM                    churches in the United States. There
Roscoe was a starting guard, long                                                         are far too many churches that are
snapper and game captain for the               Jesus’ last instruction to His disciples   compromising Christian beliefs and
varsity football team and a starting out-   before His ascension was to spread the        principles on a daily basis in an effort
fielder for the varsity baseball team.      Gospel to their families, their neigh-        to keep membership and giving up.
Roscoe regularly attends Church of the      bors and the world. (Matt. 28:18-20)          It’s possible – if not likely – to keep
Holy Spirit where he participates in        Jesus’ command today – to all those           compromising the faith away until our
numerous activities and charitable          who have placed their faith in His sac-       churches are little more than social
work, including the Church Life Teen                                                      clubs. The simple fact is that in our
                                            rifice on the cross – is the same. We
Youth Group and the Archdiocesan                                                          churches, Jesus Christ should be
                                            are to share with all those we connect
Catholic Youth Conference.                                                                exalted as Lord and as the only name
                                            with that God loves them and that He          by which anyone may be saved. (Acts
   Roscoe also served as the Coordina-      loved them so much He sent His only           4:12) There is no substitute for Jesus –
tor for Catholic Community Service
                                            Son to die for them that they might           in our churches – or in our own lives.
Project. At Montgomery Catholic,
                                            have forgiveness of sins and eternal          Jesus Christ should be honored and
Roscoe displayed great leadership as
                                            life. (John 3:16). Unfortunately, most of     loved, and His Word obeyed. If our
Class President, School Ambassador,                                                       churches as a whole would do this and
                                            us have not done a very good job of
School Peer Leader, and as a member                                                       we would do this in our own lives, our
                                            following the mandate of Matthew 28.
of several other school organizations                                                     credibility in sharing the Gospel would
                                               For example, many of us simply see
and activities while maintaining a 3.98                                                   be greatly increased.
                                            Muslims as the “enemy” and not as a
GPA. Roscoe also participated in the        fertile field for evangelism. Though ele-        We should be looking for those
YMCA Youth Legislature,Youth in City        ments of Islam may indeed be radical          around us that need to hear the hope
Government,Youth Judicial mock trial        and committed to violence, most               of the Gospel. Worrying about being
competition, and Conference on              Muslims are not, and regardless, all are      politically correct or offending folks
National Affairs. He received full aca-     created by God and are in need of the         who haven’t accepted Jesus simply
demic scholarships to Alabama,              saving grace of Jesus. There are many         won’t work. Christians are told to
Auburn, and St. John’s University.          other groups as well that we need to          spread the Gospel message to the
Roscoe will attend college at Notre         reach out to on a daily basis.                entire world and that should be our
Dame where he has been accepted.               Our young people are being bom-            mission. We should do so lovingly and
                                            barded by so many elements that can           winsomely, but boldly. We should not
   There are always many outstanding


42                                    www.JereBeasleyReport.com
be intimidated into silence by any                 A COMING ATTRACTION                                  anybody who believes that Scripture-
person or any group of folks who we                                                                     based daily lessons are needed as we
think might not be receptive. We must                My longtime friend Dr. John Ed Math-               deal with everyday life and its many
simply share the love of Christ as He              ison has agreed to write a piece for the             opportunities for service and also with
commanded and leave the results to                 August issue. As you may recall, John                its many problem areas.
Him:                                               Ed retired as Senior Pastor of Frazer                   I have known Joe for many years and
                                                   United Methodist Church in Mont-                     know first-hand that he is a Godly man
  Then Jesus came to them and                      gomery. While he has retired from his                who lives his faith daily and is an inspi-
  said, "All authority in heaven                   role as pastor of a large church, John               ration to all with whom he comes in
  and on earth has been given to                   Ed hasn’t retired from serving his Lord              contact. He and his wife Paula, and
  me. Therefore go and make disci-                 and Savior Jesus Christ. We are looking              their two children, Pete Matthew and
  ples of all nations, baptizing                   forward to hearing from John Ed next                 Abby, live in Auburn, Ala. Joe, who is
  them in the name of the Father                   month.                                               known in Alabama as “a faith and
  and of the Son and of the Holy
                                                                                                        values” political leader, is currently
  Spirit, and teaching them to obey
                                                                                                        winding up his second term as Chair-
  everything I have commanded                      XXVIII.                                              man of the Alabama Democratic Party.
  you. And surely I am with you
  always, to the very end of the
                                                   PARTING WORDS                                        I hope he continues in that role
                                                                                                        because we need folks like Joe in the
  age."
                                                                                                        political arena. But Joe, who is a busi-
  Matthew 28:18-20                                 A VERY GOOD BOOK                                     ness man by training and profession,
                                                                                                        also has a “real job.” He is currently a
                                                     My good friend Joe Turnham has
                                                                                                        strategic organizational and economic
FAVORITE BIBLE VERSES                              written a book entitled Leading From
                                                                                                        development consultant.
                                                   Our Knees, which is now available.
  For some reason we didn’t receive                Joe spent several years working on this
any Bible verses this month. Hopefully,            excellent book which is written in an
there will be some next month. We                  effort to unlock the Biblical precepts
always get lots of comments each                   of leadership. It has easy-to-read daily
month relating to this feature.                    lesson guides for leaders of faith. I rec-
                                                   ommend this excellent work to




                                         To view this publication on-line,
                                             add or change an address,
                                       or contact us about this publication,
                                     please visit our Website: BeasleyAllen.com




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




                                            www.JereBeasleyReport.com                                                                                 43
 218 COMMERCE STREET (36104)                                                                                                                      PRESORTED
     POST OFFICE BOX 4160                                                                                                                          STANDARD
MONTGOMERY,ALABAMA 36103-4160                                                                                                                    U.S. POSTAGE
        (334) 269-2343                                                                                                                              PAID
           TOLL FREE                                                                                                                            MONTGOMERY,AL
        (800) 898-2034                                                                                                                          PERMIT NO. 275
          TELECOPIER
        (334) 954-7555
           WEB PAGE
     www.BeasleyAllen.com

RETURN SERVICE REQUESTED




      W E      W I L L        B E      A N S W E R I N G                Y O U R          L E G A L         Q U E S T I O N S                L I V E
      E V E R Y                    S U N D A Y                        A T           1 1 P M                O N            W S F A 1 2

       W E      W I L L        B E      A N S W E R I N G                Y O U R         L E G A L          Q U E S T I O N S               L I V E
      E V E R Y                     S U N D A Y                       A T           1 1 P M                 O N            W S F A 1 2
       W E      W I L L        B E      A N S W E R I N G                Y O U R          L E G A L          Q U E S T I O N S               L I V E
       E V E R Y                     S U N D A Y                       A T           1 1 P M                 O N           W S F A 1 2
                                                                     Jere Locke Beasley, founding shareholder of
                                                                     the law firm Beasley, Allen, Crow, Methvin,
                                                                     Portis & Miles, P.C., is one of the most suc-
                                                                      Jere Locke Beasley, founding shareholder of
                                                                     cessful litigators of all time, with the best
                                                                      the law firm Beasley, Allen, Crow, Methvin,
                                                                     track record of verdicts of any lawyer in
                                                                      PortisLocke Beasley, founding the most suc-
                                                                      Jere &
                                                                     America. Miles, P.C., is one of shareholder of
                                                                      cessful litigators of allAllen, Crow, the best
                                                                      the law firm Beasley, time, with Methvin,
                                                                      track record of P.C., is one ofany 1979 with
                                                                     Beasley’s Miles, verdicts of the lawyer in
                                                                      Portis & law firm, established in most suc-
                                                                      America.litigators of all those who need it
                                                                     the mission of “helping time, with the best
                                                                      cessful
                                                                     most,” recordemploys 44 lawyers and more
                                                                      track now       of verdicts of any lawyer in
                                                                      Beasley’s law firm, established in 1979 has
                                                                     than 200 support staff. Jere Beasley with
                                                                      America.
                                                                      the mission of “helping those who wrong-
                                                                     always been an advocate for victims of need it
                                                                      most,” now employs 44 lawyerswho need it
                                                                     doing and has been helping those in and more
                                                                      Beasley’s law firm, established      1979 with
                                                                      than for over of “helping those Beasley has
                                                                      the 200 support staff. Jere who need it
                                                                     most mission 30 years.
                                                                      always been an advocate for victims and more
                                                                      most,” now employs 44 lawyers of wrong-
                                                                      doing 200 has been staff. Jere Beasley has
                                                                      than and support helping those who need it
                                                                      most forbeen an advocate for victims of wrong-
                                                                      always over 30 years.
                                                                      doing and has been helping those who need it
                                                                      most for over 30 years.




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




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

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:16
posted:10/3/2012
language:English
pages:44