February 2012 Distributed to over 58,000 subscribers each month www.BeasleyAllen.com I. misplaced priorities and a lack of long-range planning. Let’s take a look at a few of the The super riCh Are GeTTinG riCher CAPITOL areas where we have fallen short: The American people are beginning to OBSERVATIONS • Nobody can truthfully say that we have realize that the super rich are getting richer, and are doing so at their expense. Two-thirds ever made public education our top prior- of Americans now believe there are conflicts ity and we have suffered economically and between the rich and poor, an issue that sur- AlAbAmA Wins The nATionAl socially as a consequence. faced clearly in the Republican primary ChAmpionship • Even though we have made industrial debates. This is an issue that will carry over into the general election. The findings, While college football isn’t exactly a development a fairly high priority in reported in a recent Pew Research Center matter of life or death in Alabama, it is about Alabama, the level of emphasis there pales nationwide survey, showed that 66% of as close as it gets during the fall of each in compassion to our zeal for winning a Americans believe there are “very strong” or year. As we all know, the University of conference or national championship. “strong” conflicts between the rich and the Alabama won the BCS National Champion- • A football coach at Auburn or Alabama poor. That figure is an increase of 19% from ship game last month, making it three who fails to win will soon be soon shown 2009. Those holding that belief now include straight for my state. Alabama won the title the door. But we allow some politicians to majorities of Democrats, Republicans and in 2010, as Auburn University did last hang around even though they contribute year. Alabama totally dominated LSU in the very little to our state’s economy or to the Super Dome matchup on January 9th, leaving state’s general well-being. no doubt about the Crimson Tide being the I N TH I S I S S U E best team in the land. This made it six con- • Another prime example of neglect con- secutive national titles for the SEC. cerns our highways in Alabama. We ride I. Capitol Observations . . . . . . . . . . . . . . . 2 To say that Alabamians have become on roads in our state, including our inter- II. A Report on the Gulf Coast Disaster . . . . 4 accustomed to winning championships in states, which are in bad need of mainte- football is perhaps an understatement, but in nance and repair. There are even bridges III. Drug Manufacturers Fraud Litigation . . . 4 fact it’s a reality. We have certainly had our that are considered to be very dangerous. Iv. Purely Political News & views . . . . . . . . 5 share of titles over the years. Football domi- nates the news during the fall in Alabama • We have school buildings that are in a sad v. Recent Settlements by the Firm . . . . . . . 6 and much of what happens each weekend state of repair in many counties. vI. Legislative Happenings. . . . . . . . . . . . . . 7 revolves around football. Our universities do • It’s a sad fact that we don’t pay our teach- everything possible for their teams to be in ers on a basis comparable to other states in vII. Court Watch. . . . . . . . . . . . . . . . . . . . . . 7 the hunt for the National Championship each this part of this country. Instead, we allow year. The teams enjoy tremendous support vIII. The National Scene . . . . . . . . . . . . . . . 10 politicians to attack teachers in order to from their respective fan bases. We pay our score political points. Ix. The Corporate World . . . . . . . . . . . . . . 11 coaches ex tremely wel l. Aubu r n a nd Alabama head coaches have salaries in the • Neither do we pay police officers a decent x. Product Liability Update . . . . . . . . . . . 12 multi-million dollar range. Few consider the wage, even though they put their very xI. Mass Torts Update . . . . . . . . . . . . . . . . 14 salaries to be excessive and I suspect the lives on the line for us every day. coach at each school earns his pay. xII. Business Litigation . . . . . . . . . . . . . . . . 18 I am a huge football fan and enjoy a • Our legislature passes laws—such as HB 56 (the ill-advised immigration law)—with xIII. An Update on Securities Litigation . . . . 19 winning team as much as anybody. But I have to wonder if we don’t have our priorities a little thought or concern as to how it will xIv. Insurance and Finance Update . . . . . . 21 little bit out of kilter when it comes to the big affect our state. xv. Predatory Lending . . . . . . . . . . . . . . . . 21 picture in Alabama. Consider the fact that All of these areas of concern should rank our state ranks fairly low in a number of xvI. Premises Liability Update. . . . . . . . . . . 22 much higher on our list of priorities. Perhaps other areas, all equally as important as foot- it’s time to make something other than xvII. Employment Litigation . . . . . . . . . . . . . 23 ball to the people of our state, and it becomes winning football programs our top priority quite evident that we have neglected those xvIII. Workplace Hazards . . . . . . . . . . . . . . . 23 in Alabama. Football could still reign as “King areas. Perhaps we should take an objective of the Hill,” because it will never slide very xIx. Transportation . . . . . . . . . . . . . . . . . . . 24 look at our priorities and make a few changes far down on the list of priorities in Alabama. on the non-football side of the ledger. xx. Healthcare Issues . . . . . . . . . . . . . . . . 26 But let’s try making the essential functions of Let’s suppose we began placing the same government our top priorities on a perma- priority on our state’s public school system as xxI. Environmental Concerns . . . . . . . . . . . 28 nent basis and then see what happens. There we do on football, starting at the earliest can be little doubt but that public education xxII. The Consumer Corner . . . . . . . . . . . . . 28 stages of a student’s involvement with the is the place to start. Once we get our priori- system. If ever we were willing to do that, ties in order, starting with education, we can xxIII. Recalls Update . . . . . . . . . . . . . . . . . . . 31 lots of lingering problems in Alabama would still celebrate football championships and xxIv. Firm Activities . . . . . . . . . . . . . . . . . . . 36 be solved, both for the short and long range. I that’s good. But we would also be celebrating seriously doubt that we would ever again xxv. Special Recognitions . . . . . . . . . . . . . . 37 other top-level achievements in Alabama. hear any of our politicians saying “no new taxes this year or ever,” which has been a xxvI. Favorite Bible verses . . . . . . . . . . . . . . 38 common theme for political candidates and xxvII. Closing Observations . . . . . . . . . . . . . . 38 office holders over the years. Our state has failed to progress as it should have because of xxvIII. Parting Words . . . . . . . . . . . . . . . . . . . 39 2 www.BeasleyAllen.com Independents, as well as whites, blacks and 2007, and climaxing in 2008 when our JusTiCe depArTmenT uniT To probe Hispanics. nation’s economy was on the verge of col- morTGAGe-bACked seCuriTies Newt Gingrich and other GOP challengers lapse. One example of why folks are mad def- to Mitt Romney have been highly successful initely involves Wall Street and specifically The U.S. government has dispatched 55 in their attacks for the former governor’s the Big Banks and for good reason. Working prosecutors, FBI agents and analysts to a new work at Bain Capital, a private equit y men and women, as well as retirees, also financial crimes enforcement unit focusing firm. They have charged that Romney and started to see executives at huge corpora- on home mortgage abuses that fueled the Bain are responsible for massive layoffs at tions making salaries in the $50 million 2008 economic collapse. For the first time companies acquired by Bain. Interestingly, range, some doing things that bordered on since the crisis, federal investigators will be these attacks are coming from Republicans, criminal and avoiding prosecution, and being joined by state law enforcement officials as not Democrats. It’s obvious that the attacks paid huge severance packages when they part of a working group that will launch on Romney have paid off. were let go. what has been described as the “broadest, According to Pew Research, the changes in The housing collapse that almost brought deepest investigation” into the wrongdoing attitude “over a relatively short period of time about another Great Depression had a root that almost destroyed our nation’s economy. may reflect the income and wealth inequality cause that few people knew about at the The unit, first referenced last month by message conveyed by Occupy Wall Street time. Big Banks fraudulently packaged “bad President Obama in his State of the Union protesters across the country in late 2011 mortgages” as securities and sold them, message, is expected to dig deeper into the that led to an increase in media attention to knowing the under-collateralized mortgages, causes of “massive market failures” that, the topic.” Pew says “the changes also may made by property owners who couldn’t according to U.S. Attorney General Eric reflect a growing public awareness of under- afford them, would result in defaults. By any Holder, continue to harm homeowners. lying shifts in the distribution of wealth in standard, these were ver y bad invest- When announcing the probe, the Attorney American society.” According to the most ments. The series of events revolving around General said that he has no doubt that this recent U.S. Census Bureau data, the propor- those mortgages took place over a relatively will improve the government’s ability “to tion of overall wealth “held by the top 10% of short period of time and involved practices recover losses, to prevent fraud, to bring the population increased from 49% in 2005 that nobody outside the loop knew about and abuses to light and to hold those who violate to 56% in 2009.” few people really understood at the time. the law accountable.” The Pew survey found that among Republi- The public learned the hard way about The new effort will involve a new collabo- cans, 55% believed there were conf licts such things as subprime mortgages, collater- ration of federal and state officials with col- between the rich and poor, an increase of alized debt obligations (CDOs) and credit lective authority to investigate abuses in all 17% from 2009. Democrats were at 73%, an default swaps (CDSs). The banks sold CDSs aspects of the financial services industry, increase of 18%, while Independents were at through Goldman Sachs, which in effect including the packaging, selling and valuing 68%, a jump of 23%. Whites believing there became a middle man, making a huge finan- of residential mortgage-backed securities. a re con f l icts bet ween r ich a nd poor cial killing in the process. Insurance was Residential mortgage-backed securities are increased by 22% to 65% since 2009, while bought from AIG to protect the sellers of the the huge investment packages of what turned 74% of blacks held that view and 61% of His- CDSs when the mortgages failed. out to be near-worthless mortgages that panics. The increase among blacks and His- Goldman Sachs made the scheme work by bankrupted many investors and contributed panics was 8 and 6 points, respectively. bundling good and bad mortgages, acquiring to the nation’s 2008 financial crisis. The obvious message from all of the recent triple A ratings for the CDOs, which made Investigators recently issued civil subpoe- polling is that most Americans are greatly the instruments very attractive, and the rest nas to 11 financial institutions, and I under- concerned over the state of our nation’s is history. We now know that companies like stand that “more will follow.” Bringing full economy. But the overwhelming majority Goldman Sachs were actually betting on the enforcement resources to bear will help believe only a very small group of individuals bundled mortgages to fail. The executives at expose abuses and hopefully will hold viola- at the top of the economic ladder are doing the big banks paid themselves huge bonuses, tors accountable. It’s believed information well, with the rest of Americans doing not so made a fortune, and during all of this our sharing between federal and state investiga- well. A lesson our political leaders should get economy almost collapsed. tors should produce more far-reaching from all of this is that the demise of the Our government bailed out the banks, at a results. Hopefully those who have violated middle class is perhaps the most serious issue huge cost to taxpayers, and more bonuses any criminal laws will be prosecuted and facing this countr y. The attacks on the were paid out by the very banks that were punished. The collapse in value of mortgage- middle class must stop and those who are bailed out. Sadly, these bonuses went to the backed securities resulted in unprecedented doing the attacking must be controlled. If we very same executives. AIG received bailouts losses and badly hurt a tremendous number fail in this ongoing battle, our country will be to cover its losses and the government hasn’t of people. the loser. b e e n r e p a id by t he hu ge i n s u r a nce Source: USA Today Source: Newsmax.com company. The American taxpayers footed the bill for all of this. When people finally saw how the top executives at the big banks profited at their expense, they were “mad as AlAbAmA publiC Television revives The AmeriCAn people hAve Good heck,” and let the world know they were fed CApiTol JournAl reAson To be mAd up. This widespread discontent is being Alabama Public Television has brought reflected in all of the polls that I have seen. I The strong feelings of discontent among back Capitol Journal, its news and public- don’t believe we have seen the end of this the American people revealed in the Pew affairs program. APT shut down the program discontent and that’s bad news for those poli- survey, and in several other recent polls, in July when it closed its Montgomery studio ticians who cater to the super rich. have intensified over the past several years and laid off more than a dozen people. The for a number of reasons. I believe this discon- revived program will have a smaller staff tent has come about largely as the result of working from APT’s studio at the State House the Wall Street meltdown which started in www.JereBeasleyReport.com 3 in Montgomery. APT public information directly to the events leading up to the cata- time law claims, punitive damages, a fair cau- director Mike McKenzie had this to say: strophic event that took 11 lives and devas- sation burden on Oil Pollution Act claims, tated the Gulf of Mexico region. After medical monitoring, and many others. And We always intended to bring it back, hearing the evidence, Judge Barbier will not when the Defendants appealed those rulings, we just had to find a different way to only determine who all is responsible for the PSC won each time. All the while, eco- put the program on the air, given the causing the explosion aboard the Deepwater nomic damage and environmental commit- resources that were available to us, Horizon, but he will also apportion fault tees worked hard to assess the tremendous sharing the news of the state and between all of the wrongdoers. damages that the oil spill created. Rhon Jones what’s happening at the Legislature. We will also learn from the first phase of from our firm, a member of the PSC, has Hosts for the new Capitol Journal will be the trial whether Transocean will be entitled been a leader in that effort. Don Dailey, who for 21 years was news direc- to limit its liability solely to the value of the We look forward to the upcoming trial and tor and morning news anchor at WZZK-FM in Deepwater Horizon vessel (roughly $27 are convinced it is the first major step towards Birmingham, and Olivia Stacey, a former million), or whether the court will find that justice for all those that have been injured by anchor for public television station WUFT in Transocean ignored the problems aboard the the oil spill. BP is being forced to turn over to Gainesville, Fla. Erica Lembo, an A P T rig that caused the explosion—rendering it the PSC internal documents, including emails, reporter based in Birmingham, will report on fully liable for all damages assessed against that are extremely damaging to the company. education issues in the Legislature. Two the company. I believe Transocean will lose BP never thought this information would ever reporters from public radio station WVAS-FM on this issue. be made public. If you have any questions in Montgomery, Karen Brown and Marcus There will be quite a few witnesses who about the oil spill case or the upcoming trial, Hyles, also will cover the Legislature for will testify during the trial. Many of those please feel free to contact Rhon Jones or Capitol Journal as well as WVAS. witnesses will be experts on various issues, Sandra Walters in our firm’s Toxic Torts A P T wi l l also air hour-long Capitol including the blowout itself, the blowout pre- Section, at 800-898-2034 or by email at Rhon. Journal programs about issues and news venter, cementing, safety, oversight, and Jones@beasleyallen.com or Sandra.Walters@ each Friday, starting at 8 p.m. The shows will industry practice and procedure, among beasleyallen.com, respectively. Sandra is the feature interviews of newsmakers and panel others. Numerous individual depositions Section Head Administrator and Rhon, as you discussions by guest journalists. During the were taken, including depositions of repre- know, is the Section Head. Legislature’s regular session, APT also plans sentatives of all of the main players aboard to air 30-minute shows about the session on the rig. These witnesses, coupled with the huge number of documents produced in this Monday through Thursday nights, starting at 10:30 p.m. The first of those programs is case, will tell the full story about what led up III. scheduled for February 6 th. The 10:30 p.m. to the Deepwater Horizon’s demise. As I write this update, BP and others are DRUG programs will stop after the legislative session ends, but the Friday shows will con- trying to do what so many other large com- MANUFACTURERS tinue. The legislative session by law must pan ies do when they are caug ht red- handed—hide the information that tells the FRAUD LITIGATION end by May 21st. I really enjoyed the news programming on true story from the public under the guise APT and missed Capitol Journal when it left that those documents and information are “trade secrets” or “confidential” communica- AverAGe WholesAle priCe seTTlemenTs the air. I hope the show will now be available to Alabamians on a permanent basis. Public tions. But one way or another, the American public is going to hear the true story. Based We are pleased to announce that over the Television provides a service to the people of past several months our law f irm has Alabama and it should be supported. on what we have learned, that story is not going to be good for BP, Halliburton, Trans- obtained combined settlements of over $100 ocean and others. million on behalf of the States of Alabama, The Plaintiffs’ Steering Committee (PSC) Mississippi, Louisiana, Kansas, Utah, South II. has done a tremendous job keeping the case Carolina, Alaska and Hawaii. These settle- ments came in lawsuits filed against approxi- on track in order for it to come to trial this A REPORT ON THE quickly, while at the same time not taking m atel y 16 d r ug m a nu f ac t u r e r s. T he settlement amounts for the states were based GULF COAST any short cuts or sacrificing on discovery on drugs purchased during the relevant time efforts. Not only has the PSC expended a con- DISASTER siderable amount of time and money in period for each state. To date, we have col- pushing the litigation forward, the lawyers lected over $450 million in settlements for on the committee have reviewed over 43 the states we represented in the AWP litiga- tion. At press time, we were in negotiations JudGmenT dAy ApproAChes in neW million pages of documents, taken almost with numerous Defendants on behalf of orleAns 300 depositions—some of those in London, these states. We will periodically update our England at BP’s corporate office—and entered into the record over 6,000 deposition readers as those settlements are finalized. Judge Barbier, who is in charge of the BP oil spill litigation, will hear the first phase of exhibits. In addition, the PSC has worked to this litigation on February 27th. This may be help all Gulf Coast residents receive fairer the fastest incident of this magnitude to treatment by holding Ken Feinberg to task in Johnson & Johnson To pAy $1 billion in come to trial that I have ever seen. The first administrating the GCCF. risperdAl mArkeTinG probe phase of the trial is expected to last a couple The PSC has also fought back numerous of months with a brief intermission between important motions to dismiss by the Defen- Johnson & Johnson will pay more than $1 the first phase and the second phase. dants, which if qualified, could have been billion to the U.S. and most of the 50 states to As we have reported, the first phase will devastating to the claims. The victories are settle a civil investigation into marketing of cover “blowout liability,” in which Judge almost too many to count and include issues its antipsychotic Risperdal. J&J, the world’s Barbier will hear evidence that speaks dealing with the following: traditional mari- largest health products company, reached the 4 www.BeasleyAllen.com agreement with the U.S. Attorney in Philadel- Hundreds of Janssen salespeople sold Risp- depending on the final number of Claim- phia. Negotiations over a possible criminal erdal to doctors, nursing homes, Veteran’s ants. A further $10.5 million will be set aside plea were still under way at press time for Administration facilities and jails, according for legal costs. this issue. to documents produced in the Louisiana The Canada settlement will have to be The U.S. government has been investigat- case. Marketers gave doctors materials about approved by the courts. In 2007, our firm ing Risperdal sales practices since 2004, studies of unapproved uses for Risperdal. was directly involved in the litigation that led including allegations the company marketed Janssen sponsored clinical trials of its effects to Merck paying $4.85 billion to settle more the drug for unapproved uses. The company on other illnesses. In 1994, 1999 and 2004, than 95% of the Vioxx lawsuits in the United had been in negotiations with the U.S. Justice the FDA ordered Janssen to stop making false States. And in November, Merck agreed to Department to settle the investigation. As and misleading marketing claims about Risp- pay nearly $1 billion to the federal govern- you may recall, J&J disclosed in August that it erdal’s superiority. ment to resolve criminal and civil charges for reached an agreement to settle a misde- The FDA told J&J in 1999 that its market- wrongfully marketing Vioxx as a drug in the meanor criminal charge related to Risperdal ing materials for geriatric patients overstated U.S. To help rheumatoid arthritis. marketing. The company is discussing Risperdal’s benefits and minimized risks. A Source: Yahoo News paying another $400 million to settle that J&J business plan for the next year called for portion of the investigation. increasing the drug’s market share for elderly Risperdal, once J&J’s best-selling drug, dementia sales, an unapproved use, accord- generated worldwide sales of $24.2 billion ing to the documents brought forward in the IV. from 2003 to 2010, reaching $4.5 billion in 2007. After that, J&J lost patent protection Louisiana suit. The FDA didn’t approve Risp- erdal for bipolar disorder until 2003. In 2006, PURELY POLITICAL and sales declined. The settlement repre- the regulator approved it for symptoms NEWS & VIEWS sents 31% of Risperdal’s peak sales in 2007, related to autism in children and teens. The before generic versions of the medicine FDA approved the drug to treat bipolar chil- eroded revenue. It’s about 5.6% of the drug’s dren and teens the next year. The drug was The Gop presidenTiAl Field GeTs cumulative sales since 2003. never approved for dementia. J&J said in its T he Food a nd Dr ug Ad m i n istr ation August SEC filing: smAller approved Risperdal in 1993 for psychotic dis- The field of candidates seeking the GOP orders, including schizophrenia. Since that Discussions have been ongoing in an effort to resolve criminal penalties nominee for President this year appears to be market is very limited, J&J’s Janssen unit set the weakest since 1964, when Arizona out, without approval, to sell Risperdal for under the Food Drug and Cosmetic Act related to the promotion of Risperdal. Senator Barry Goldwater wound up with the bipolar disorder, dementia, mood and nomination. At the outset of the current anxiety disorders and other unapproved Certain issues remain open before a settlement can be finalized. The ulti- battle to pick a standard bearer, I really uses. The drug was later approved by the thought that Texas Gov. Rick Perry would FDA for other uses. Company officials said in mate resolution of the above criminal and these civil matters is not expected wind up with the nomination. But Gov. Perry an SEC filing in May that they had reserved soon took himself out of contention, as did funds to resolve the government’s claims to have a material adverse effect on the company’s financial position. Godfather’s Pizza CEO Herman Cain, who at over Risperdal marketing. The drugmaker, in one point had surged to the top in the an August filing, said that it had added an Risperdal is a member of a class of drugs, polls. Two other candidates, Rep. Michelle unspecified amount to the reserve to cover known as atypical antipsychotics, that Bachman and former Utah Governor John criminal penalties. includes Eli Lilly’s Zyprexa and AstraZeneca’s Huntsman, never seemed to get off the I understand that a majority of states will Seroquel. Lilly, AstraZeneca and two other ground and they too dropped out of the join with the federal government in this set- J&J competitors making these drugs have race. That left four candidates in the race, but tlement. Each state will have to decide paid $2.7 billion to resolve government most observers believe only two of them have whether to join the federal government’s claims that the companies pushed the drugs any real chance of getting the nomination. settlement or pursue its own case. Typically, for unapproved uses. Lilly paid more than Of the four, Texas Rep. Ron Paul may be states with cases in cour t continue to $1.7 billion to resolve state and federal inves- the most sincere and certainly speaks his pursue their own. It has been our experi- tigations over Zyprexa, and AstraZeneca has mind on all of the issues. But even with very ence that states do much better they file paid almost $590 million. Pfizer Inc. paid good support among younger voters, Dr. Paul their own claims. $301 million for its drug Geodon. is too extreme on most issues even for the J&J and Janssen have been sued by 12 Tea Party zealots. For that reason, he is unac- Source: Bloomberg News states, including Texas, South Carolina and ceptable to the top dogs in the national Louisiana, over Risperdal marketing. The Republican Party. It doesn’t appear that Attorneys General of the other states “have former Senator Rick Santorum, who won the indicated a potential interest in pursuing merCk seTTles vioxx ClAims in CAnAdA Iowa caucus, will have the money necessary similar litigation against” Janssen, J&J said to last much longer in the race. Some believe in its quarterly SEC filing in November. A Pharmaceutical giant Merck has agreed to pay up to $36.8 million to settle all lawsuits he will be out of the race by the time this jury in Louisiana, in a case involving claims issue is mailed. that the company downplayed the drug’s brought against the company in Canada over its former best-selling painkiller Vioxx. As That leaves two candidates Mitt Romney risks, awarded that state $257.7 million in and Newt Gingrich, who regardless of what 2010. A South Carolina judge last year we all know, Merck withdrew Vioxx from the market in 2004 after interim clinical happened in Florida—will likely slug it out ordered J&J to pay $327 million over Risp- right up to the convention. Since we had to erdal sold in that state. There is an ongoing trials linked the anti-inflammatory drug to a higher risk of heart attacks and stroke. Under send this issue to the printer on January 30th, trial in Texas which started on Januar y we don’t know the outcome of that state’s 9th. That case was filed by the State of Texas the settlement with the Plaintiffs in Canada, primar y. But based on recent polling I against J&J and Janssen. Vioxx users there will share in a payout of suspect Romney will emerge as a double-dig- between $11.3 million and $26.3 million www.JereBeasleyReport.com 5 its winner in Florida. But regardless of who are now are settling cases with a number of include Dee Miles, Roman Shaul, Clay wins there, the contest will continue. the companies in those eight states. We were Barnett, Chad Stewart and Alison Douil- Frankly, I am not sure which of these two pleased to announce that our firm has lard. They have done an outstanding job in men would be worse for America. Mitt recently obtained over $100 million in settle- this massive and most difficult litigation. Our Romney, who doesn’t have a job but still paid ments over the past several months in this lit- support staff also has done a tremendous job taxes on over $40 million in earnings in the igation. We are in the process of finalizing in the handling of these cases. The drug last two years, comes across as perhaps the those settlements. manufacturers have been tough opponents weakest of an extremely weak field. Never- To date, we have settled cases amounting in this litigation. They are powerful politi- theless, Romney still appears to be the leader to a total of $450 million in the AWP litiga- cally and have used their connections to full for the nomination. That’s because Gingrich, tion for the eight states we currently repre- advantage in several of the states. In fact, the who won big in South Carolina, and who up sent. We still have over $116 million worth of companies—through what I consider to have until the Florida debates had surged in the judgments either on appeal or pending in been political pressure—were able to keep at polls, is far too scary to be President. Newt is the post-trial motion stage of the litigation in least one state from filing suit. That cost the highly intelligent, quick on his feet, and two states. taxpayers of the state several hundred extremely well prepared on the issues. But These recent settlements vary in amounts million dollars. The drug companies also he has lots of things in his background that, depending upon the states usage of a particu- have access to, and can afford, the very best if he gets the nomination, would haunt him la r compa ny’s d r ugs i n the Med ica id legal talent. They also can call on highly-paid in the general election. program. These settlements involve some 16 experts to assist them in defending the AWP If Gingrich were to win in an upset in companies, but claims for the states are nego- cases. We will keep our readers posted on Florida that will virtually guarantee that the tiated separately. No settlement is dependent any new developments that occur with this campaigns will go on to March 6 when 11 on what happens in any other state. litigation, including verdicts, settlements or states will vote. Even if he loses, however, Our firm views the representation of the appellate actions. most believe the former speaker is in for the Attorneys General in each of these eight duration. That means that February—with states as a great honor and privilege. It also few states voting—will feature more candi- carries with it a tremendous responsibility to seTTlemenT in bTsi deFeCT CAse date debates and lots of campaigning in the make sure that each state is adequately com- Super Tuesday states. That is most likely pensated by the companies which falsely Our firm settled a very important case last when the real leader going into the conven- reporting prices to the states’ Medicaid pro- month just a few days before trial was set to tion will finally emerge. grams. This litigation has been tremendous start in federal court in Opelika, Alabama. I will concede that Gingrich is smart, public service for the citizens of each of the On the day she was injured, our client drove knowledgeable on issues and a fighter who states we have represented. We will continue her 2002 Mountaineer SU V to make a goes for the kill when the opportunity arises. to work to see that justice is done in each payment at her local insurance office. But this man simply has no business being state for the wrongdoing by the pharmaceuti- Because the insurance company had her President of the United States of America. cal companies to the states’ Medicaid pro- paperwork ready, our client merely had to Because Romney simply can’t connect with grams. This litigation has been extremely drop off the payment at the front desk. When ordinary folks, I believe Gingrich has a good complicated and very expensive. The drug she parked her SU V at the i nsu rance chance of winding up as the nominee. Of companies have access to the very best legal company front door, she left the vehicle course, the GOP leadership could wake up, talent as well as a group of experts who have running and left her six-month-old daughter realize neither Gingrich nor Romney can been paid millions to defend the companies. and two-year-old niece buckled in their car win, and start looking for a “good” candidate. In addition to the pharmaceutical compa- seats while she dropped off her If that happens, another name may surface nies reporting of false prices to the Medicaid payment. After she left her payment at the and that name could be “Bush” or “Daniels.” programs, our firm has also initiated litiga- desk, she walked back outside to her SUV to We may well be looking at a brokered con- tion against a pharmaceutical wholesaler, find her two-year-old niece standing in the vention. Stay tuned! McKesson, which the states have alleged driver’s seat. When the child turned to move increased prices an additional 5% on some to the rear seat, the SUV lurched forward and 1,900 different types of drugs during a pinned our client against the insurance certain time period. This was going on V. during the same time that the pharmaceuti- company building. As a result of her crush- ing injuries, our client’s left leg was ampu- RECENT cal companies were reporting false prices. We now have cases pending against McKes- tated above the knee and her right leg developed a serious swelling condition SETTLEMENTS BY son in the States of Kansas, Louisiana, Alaska known as lymphedema. THE FIRM and Hawaii. All of these Medicaid programs were During the course of our investigation, our engineering expert discovered that the SUV severely taken advantage of in terms of the was equipped with a safety device known as prices being reported by the pharmaceutical a brake transmission shift interlock (BTSI). A FurTher updATe on The AWp industry and some wholesalers during the The purpose of the BTSI is to prevent the liTiGATion p e r i o d o f t i m e f r o m 19 91 t h r o u g h gear shift lever from being moved from park 2010. These cases are just one example of into gear without the operator first stepping As we mentioned in the Capitol Observa- why healthcare costs are spiraling out of on the brake pedal. Our expert discovered tions section of this issue, our law firm has control in the country. We believe this litiga- that the BTSI in our client’s SUV suffered represented the States of Alabama, Missis- tion has been a huge step in the right direc- from a design defect that sometimes pre- sippi, Louisiana, Kansas, Utah, South Caro- tion in the fight to curb the abuse of inflated vented it from operating properly. Specifi- li na, Hawaii and A laska in their AW P costs that we must all pay for in the health- cally, on occasion, when the operator shifted (Average Wholesale Price) Litigation over the care industry. the SUV into park, the BTSI failed to lock the past several years. Fortunately, we have suc- A number of lawyers from our firm have shift lever in park. As a result, the gear shift cessfully tried a number of these cases and been actively involved in this litigation. They 6 www.BeasleyAllen.com lever could be moved from park into gear • Repeal the sales tax on groceries; for the courts. Circuit clerks were hit very without requiring that the operator first step hard by cuts in their budgets in recent years. on the brake. • Pass meaningful constitutional reform; It has been reported that hundreds of On the day she was injured, the defective • Enact a statewide ban on the use of cell workers in the clerks’ offices across the state BTSI allowed our client’s niece to inadver- phones while driving a motor vehicle; could face layoffs. Even with flat funding by tently move the shift lever into a forward the Legislature, courts would still have to cut gear. Clearly this is a very dangerous defect • Repeal the ill-advised immigration law; workers I am told. The state’s judicial system and we were prepared to present the jury could face another 25% funding cut for the with overwhelming evidence of the defect • Set an example on the state level that coming year. and safer alternative designs which would would discourage racism in our state; and Many circuit clerks’ offices are already have prevented this tragedy. operating 30% to 40% below the work force • Allow reasonable debate on all bills with The case was settled on the eve of trial levels recommended for Alabama court- full debate on the more important ones with the amount being confidential. Our houses by the National Center for State during the session. client was well-satisfied with the settlement Courts. The cuts are causing backlogs of and can now get on with her life. Mike I am reasonably sure that none of our paper filing by the clerks’ offices. In some Andrews, who represented our client, is cur- Alabama readers who keep up with the legis- counties residents getting divorced must wait rently investigating several other instances lature believe much, if any, of the above will between 18 and 24 months before their cases where a vehicle moved after being placed in actually happen. But I wonder if any of them are final. Both criminal and civil trials are park and killed or seriously injured someone have ever considered how things would be in being delayed. I believe that Gov. Robert outside the vehicle. He may be reached at our state if the legislators really worked to Bentley recognizes that the court system 800-898-2034 or at Mike.Andrews@beasley benefit all Alabamians and not just a select must be properly funded and will do every- allen.com. few? I hope that, because of the prospects of thing he can to help out. Cutting the judicial an extremely difficult session, caused by a system’s budget hurts all Alabama citizens, lack of money, members of the House and and that hurt will have a lasting effect. It’s Senate will make 2012 the year Alabama time to correct the errors of the past and VI. really turns the corner, enabling Alabama to properly fund the courts. LEGISLATIVE finally reach its full potential as a state. Source: Associated Press We have good folks throughout Alabama, HAPPENINGS who are up to any challenge, and our state has been blessed with more than its share of JurisdiCTion And venue ClAriFiCATion the nation’s natural resources. So why ACT siGned inTo lAW The AlAbAmA leGislATure Comes To haven’t we done better as a state? Why are ToWn This monTh we so far behind in so many areas of A bill passed in Congress (H.R. 394) last concern? In my opinion, the one thing that year has f lown pretty much under the In a world free of political influences, Ala- has been lacking in state government is radar. The U.S. Senate gave final passage to bama’s state legislators would come to town strong and effective leadership in both the the Federal Courts Jurisdiction and Venue on February 7th , immediately get down to Executive and Legislative branches of govern- Clarification Act of 2011, and President work, and do some good business. In fact, ment. It’s high time for our elected officials Obama signed it into law. Some believe the their performance during the Regular Session to step up to the plate, make the required Act contains the most far-reaching package of would benefit all Alabamians and not just a tough decisions, and then lead our state in revisions to the Judicial Code since the Judi- favored and select few. That approach would the right direction. I believe Gov. Robert cial Improvements Act of 1990. The changes also mean that lobbyists and special interest Bentley is a man with the courage required to deal primarily with removal and venue. We groups would no longer be able to set the take on this battle. But if he does, the gover- will write on this new law in more detail in agendas and virtually decide what bills pass nor will need lots of help. If Governor the March issue. At this juncture, I will and become law. It would be a welcomed Bentley will meet this challenge and do the mention a few of the changes made. The Act: change from the way things have worked in things necessary to right the ship of state, we past legislative sessions. The members of the can then watch Alabama grow and prosper in • revises the “separate and independent” House and Senate, in a bi-partisan effort, the years to come like never before. claim provision of §1441(c), dealing with would then be able to do all of the following: the removal of civil actions that include both federal and u n related state • Set long-range priorities for state govern- claims. The new provision requires sever- ment and follow up with sound long-range VII. ance and remand of claims not within the planning; COURT WATCH original or supplemental jurisdiction of the district court. • Make public education the real priority in our state for the first time; • codifies the “r ule of unanimit y” for • Restructure our state’s tax laws; AlAbAmA CourThouses FACe more removal in cases involving multiple Defen- lAyoFFs dants. Each Defendant is given 30 days in • Find badly-needed revenues and then ade- which to initiate removal. quately fund the essential functions of The Alabama court system has never been state government, including public educa- properly funded and things got much worse • resolves several issues relating to the deter- tion at every level; over the past several years. The prospects of mination of the amount in controversy a 25% reduction across the board in the when the Defendant removes a civil action • Cut out unnecessary corporate loopholes general fund budget for the upcoming fiscal based on diversity. It adopts a “bad faith” in our tax system; year and make matters critically worse. It exception to the statutory provision pro- appears that there will be more budget cuts www.JereBeasleyReport.com 7 hibiting removal of a diversity case more mation to the Centers for Medicare and tember 30, 2010. The judge assumed that the than one year after filing. Medicaid Services (CMS). This reporting Defendants were “primary payers” under the requirement places all who are involved in MSP statute, but recognized that the statute • completely rewrites Chapter 87 on venue, handling the proceeds of a settlement at risk of limitation defense raised by the Defen- abolishing the distinction between backup for civil penalties and damages. dants was valid. The Defendants were venue in diversity and federal-question In the case referred to above, which was subject to the three-year statute of limitations cases. before U.S. District Judge Karon Bowdre because they had no contractual relationship • eliminates §1392’s separate provision (who sits i n the Nor ther n Distr ict of with the government. The statutory obliga- dealing with “local” as opposed to “transi- Alabama, Eastern Division), the U.S Govern- tion was triggered by the underlying tort tory” actions. ment filed suit in 2009 against two insurance claim. Judge Bowdre rejected the govern- companies and several other Defendants for ment’s argument that the statute of limita- • further abrogates the Supreme Court deci- violations of the Medicare Secondar y tions could not begin to run until the sion in Hoffman v. Blaski, 363 U.S. 335 Payment Statute (MSP). This is a section of Claimants returned sufficient releases to (1960), by authorizing transfer of venue to the Social Security Act that is used by Medi- satisfy a participation threshold. Instead, she a district where the action could not have care to asser t its payer of last resor t focused on the plain language of the MSP been brought initially, as long as all parties status. The Defendants in the case had been statute to bar the claim pursuant to the statue consent. involved in a settlement resolving a large of limitations defense. toxic tort lawsuit. The government alleged in The unpublished decision in Stricker went • narrows the resident-alien proviso now the case before Judge Bowdre that the Defen- out on the government’s failure to file in suit located at the end of 1332 (a), which dants had failed to reimburse Medicare for in a timely manner. While the statute of limi- appears to be the only provision affecting conditional payments which had been made tations defense protected the Defendants in original jurisdiction. for injuries to Medicare beneficiaries. the case, the result could well have been very The government could have brought suit different had the suit been filed in a timely The Act’s provisions will apply to newly- against the individual Medicare beneficiaries, manner. The message learned is that lawyers filed actions starting 30 days after enactment. but instead, elected to go after the corporate must use great caution when settling claims I haven’t attempted to cover all of the ramifi- and insurance company payors. While the where there is the potential that Medicare cations of the law and would welcome any case was dismissed because the government beneficiaries are to receive payments under comments from lawyers around the country had failed to file the lawsuit in a timely the settlement. Stricker can be considered as on the new law. Hopefully, we will be able to manner, the court’s opinion is still important. a guide and a warning to all lawyers who give our readers a little better read on the Act It provides valuable insight into how the gov- handle personal injury claims, either for the next month. er n ment wi l l proceed agai nst entities Plaintiff or on the Defense, where Medicare accused of violating the MSP statute. The beneficiaries are Plaintiffs. basis of the government’s claim was that the Lawyers handling claims, whether a mass A look AT mediCAre liens And settlement included 907 Medicare beneficia- tort, or a single case, must determine if a set- seTTlemenTs ries and that the Defendants failed to reim- tlement will involve any Medicare beneficia- burse Medicare for conditional payments ries. There is still uncertainly regarding A case, decided in an Alabama federal made by the Medicare program for medical CMS’s policy and procedures in pursuing court in 2010, involving Medicare liens, was treatment related to the beneficiaries’ inju- these claims. A number of issues will have to brought to my attention last month. That ries as required under the MSP statute. be answered by the courts. Because of the case should be of interest to all lawyers who The government alleged that the Defen- new enforcement rules, if Medicare has paid represent parties—both Plaintiffs and Defen- dants “knew or should have known that one any portion of a Plaintiff’s medical expenses, dants—in personal injury lawsuits. As you or more of the Claimants were Medicare-eli- all parties must take steps to protect them- may already know, the existence of Medicare gible individuals on whose behalf Medicare selves due to the statutory Medicare lien. Of liens can create a real problem when settle- was entitled to recover any conditional pay- course, defense lawyers, as well as insurers, ments are reached involving personal injury ments.” It was alleged further that the Defen- must be extremely careful to protect them- claims. Medicare is a payer of last resort, dants failed to reimburse Medicare for selves when lawsuits are settled that involve which simply means any entity with a duty to conditional payments made under the MSP Medicare liens. pay, such as an insurance company, must pay statute. The total settlement involved in the Source: Insurance Journal before Medicare does. Generally, a payment original case that was settled was $300 may not be made by Medicare if payment has million. For the claimed violations, by the been made, or could be made, by another Defendants, the government sought: responsible party. If Medicare has already $322 million AsbesTos lAWsuiT verdiCT made a payment, it has a statutory right, • Reimbursement of the alleged Medicare vACATed in mississippi either by subrogation or private cause of conditional payments, plus interest; action, to recover the payment it made. A Mississippi judge has vacated a $322 In 2007, Congress addressed growing • Double damages against the Defendants; million lawsuit verdict that had been hailed financial problems with Medicare by enact- and as the largest asbestos award for a single ing statutory reforms that restated Medicare’s Plaintiff in U.S. history. Defense lawyers had • Declaratory relief against the Defendants asked the Mississippi Supreme Court to status as a payer of last resort. But these stat- requiring them to give notice to CMS of all utes, Medicare, Medicaid and SCHIP Exten- remove the presiding judge in the case future payments to Medicare beneficiaries, because he allegedly neglected to disclose sion Act of 2007 (MMSEA), brought about the and to ensure that they make appropriate largest and most intensive reporting require- that his parents had been involved in similar payments to Medicare before any future asbestos litigation against one of the very ments in Medicare history. For example, settlement payments. MMSEA requires that all entities that pay, same companies. A specially appointed either by settlement or judgment, to any per- Judge Bowdre wrote the opinion in the judge, William Coleman, issued the order sonal injury Plaintiff, must report that infor- case [U.S. v. Stricker (CV-09-2423)] on Sep- vacating the verdict and award. 8 www.BeasleyAllen.com The case from Smith Count y, Miss., The interest of society in the enforce- suit alleging discrimination in employment. involved a lawsuit filed by Thomas Brown, ment of employment discrimination But the Court pointed out that the courts of who claimed he had inhaled asbestos dust statutes is undoubtedly important. But appeal have had experience with this issue while mixing drilling mud sold and manufac- so too is the interest of religious groups and they have uniformly recognized the exis- tured by Chevron Phillips Chemical Co. And in choosing who will preach their tence of a ministerial exception, grounded in Union Carbide Corp. The Plaintiff, who was beliefs, teach their faith, and carry out the First Amendment. The High Court said it 48 at the time of the award in May, said he their mission. When a minister who agrees that there is such a ministerial excep- was diagnosed with asbestosis and required has been fired sues her church alleging tion. Chief Justice Roberts wrote: to take oxygen 24-hours a day. The jury that her termination was discrimina- awarded Brown $22 million in compensatory tory, the First Amendment has struck Requiring a church to accept or retain damages and $300 million in punitive the balance for us. The church must be an unwanted minister, or punishing a damages. It was the biggest asbestos award free to choose those who will guide it church for failing to do so, intrudes ever to a single Plaintiff. on its way. upon more than a mere employment Union Carbide first asked Circuit Judge decision. Such action interferes with Eddie Bowen to vacate the verdict not long The decision clears churches and religious the internal governance of the church, a f te r t he r ecor d aw a r d w a s h a nd e d institutions to follow their teachings in depriving the church of control over down. The company also asked Judge Bowen employment decisions regarding its leaders. the selection of those who will person- to step down from the case. When the judge Unfortunately, the Court does not set forth a i f y i t s b e l i e fs . By i m p o s i ng a n didn’t respond, Union Carbide asked the Mis- clear definition of what a leader is, beyond unwanted minister, the state infringes sissippi Supreme Court to remove him. Union referring to them as “ministers.” Neverthe- the Free Exercise Clause, which pro- Carbide claimed Judge Bowen was a practic- less, the decision would appear to cover the tects a religious group’s right to shape ing attorney when his father and mother hiring and dismissal of priests, rabbis and its own faith and mission through its sued Union Carbide, seeking $1 million for other religious leaders. The decision stops appointments. emotional distress. The company said that short of declaring that the exemption applies to other types of lawsuits by employees The Chief Justice also said that the purpose after the trial, it “learned that Judge Bowen’s against religious employers. of the exception is not to safeguard a church’s father had filed two asbestos lawsuits, one of The case before the High Court involved a decision to fire a minister only when it is which remains pending; and that both Judge teacher at a church and school in Michi- made for a religious reason. On that point, he Bowen’s father and mother had settled asbes- gan. The teacher developed a disease and wrote: “The exception instead ensures that tos claims with UCC and other Defendants went on disability leave. While out, she was the authority to select and control who will based on a diagnosis of asbestosis—which is told that her employment would be termi- minister to the faithful—a matter ‘strictly the same disease claimed in this case.” nated. After the teacher returned to work, ecclesiastical.’” The EEOC warned that a min- Union Carbide claimed in its motion that she was in fact fired. The teacher filed a isterial exception could protect religious Judge Bowen’s bias and prejudice against claim with the Equal Employment Opportu- organizations from liability for retaliating Union Carbide and Chevron Phillips were nity Commission, claiming that her employ- against employees for reporting criminal mis- clear from his rulings, comments in front of ment had been terminated in violation of the conduct or for testifying before a grand jury the jury, and his coaching of the Plaintiff’s Americans with Disabilities Act. The EEOC or in a criminal trial. Also, the EEOC argued lawyers in questioning witnesses. The Mis- brought suit, alleging that the teacher had that the logic of the exception would confer sissippi Supreme Court granted Union Car- been fired in retaliation for threatening to on religious employers “unfettered discre- bide’s request to remove Judge Bowen in file an ADA lawsuit. tion” to violate employment laws by, for October. Judge Coleman, who was appointed The Defendant church argued that the suit example, hiring children or aliens not autho- to take over, said in his order that he was was barred by the First Amendment because rized to work in the U.S. But the High Court vacating “the judgment, the underlying jury the claims concerned the employment rela- appears to have limited its decision, when the verdict, and all rulings and orders of the tionship between a religious institution and Chief Justice wrote: former trial judge.” A retrial has been set for April, but the venue for the trial has not been one of its ministers. The district court agreed We express no view on whether the determined. and granted summary judgment in the Defen- exception bars other types of suits, dant’s favor. The Sixth Circuit vacated that Source: Insurance Journal including actions by employees alleg- lower court ruling and recognized the exis- ing breach of contract or tortious tence of a ministerial exception rooted in the conduct by their religious employ- First Amendment, but concluded that the ers. There will be time enough to supreme CourT rules ThAT minisTers teacher did not qualify as a “minister” under address the applicability of the excep- noT Covered by disCriminATion lAWs the exception. But the Supreme Court said tion to other circumstances if and that the Sixth Circuit court erred and ruled The U.S. Supreme Court released an when they arise. that the suit must be dismissed. The Supreme opinion last month that has already created a Court opinion said the ministerial exception The unanimous decision was hailed by great deal of discussion. The Court ruled in is not limited to the head of a religious con- religious organizations and criticized by the opinion that religious groups and gregation. But the court did say it would “not many others. Needless to say, this ruling will churches may hire and fire their leaders adopt a rigid formula” for deciding when an definitely have an effect and likely will be without being subject to laws against dis- employee qualifies as a minister. hotly debated in the coming months. crimination in employment. For the first The First Amendment provides, in part, Source: Insurance Journal time, the Court, in a unanimous landmark that “Congress shall make no law respecting ruling, recognized a “ministerial exemption” an establishment of religion, or prohibiting to the nation’s employment discrimination the free exercise thereof.” The Supreme laws. Chief Justice John G. Roberts Jr., Court noted that it has never ruled previously writing for the Court, said: whether the freedom of a religious organiza- tion to select its ministers is implicated by a www.JereBeasleyReport.com 9 FederAl JurisdiCTion over Consumer over politics in this country. Public Citizen The seC CAn mAndATe disClosure oF TelemArkeTinG ClAims upheld has led the fight to correct the problems CorporATe poliTiCAl spendinG caused by the Court’s ruling and fortunately The U.S. Supreme Court unanimously the consumer advocacy group is continuing After the 2010 election cycle brought an ruled last month that consumers injured by the fight. onslaught of corporate campaign contribu- violations of the Telephone Consumer Pro- The Supreme Court’s ruling, issued on Jan. tions, the Corporate Reform Coalition— tection Act (TCPA), which outlaws abusive 21, 2010, said that corporations can spend made up of institutional investors managing telemarketing practices, may bring lawsuits unlimited sums to influence elections. The a combined total of $800 billion in assets, as in federal courts as well as state courts. effect on that year’s midterm Congressional well as public officials, legal scholars, good Public Citizen represented Marcus Mims, the elections was immediate. We are now seeing government groups and CEOs—called on the successful Plaintiff, in the case. The Court’s massive amounts of corporate money being Securities and Exchange Commission to opinion, written by Justice Ruth Bader Gins- funneled into the presidential primaries. issue rules on corporate political spend- burg, accepted without reservation, all of the Rober t Weissman, president of Public ing. Ten prominent corporate and securities arguments made by Public Citizen in support Citizen, had this to say: law professors filed a petition with the SEC of Mims’ right to choose a federal court to in August of 2011, urging the Commission to assert his claims. Citizens United subverts the essence of require publicly traded companies to dis- The TCPA forbids such practices as calls to democracy, which means rule by the close their political spending. The petition cell phones that use automatic dialers, calls people. Overturning the Supreme has since garnered a number of supportive to residences that use prerecorded messages, Court’s Citizens United decision with a comments filed with the SEC from investors, and unsolicited junk faxes. The Act says that constitutional amendment is the first including mutual fund managers, good cor- consumers who are victims of such practices step in fixing our broken political porate actors, good government groups and can sue for up to $1,500 per violation. The system and opening the door to other stakeholders. Act specifies that those lawsuits may be address the great challenges facing the The petition calls on the SEC to ensure brought in state courts. But, as the High country, from putting people back to that shareholders be told how corporations Court ruled, the act does not prevent con- work to averting catastrophic climate they “own” are spending their money. It took sumers from going to federal court, where change. a while for the public to realize that corpo- they can invoke the federal courts’ general In the wake of the Citizens United ruling, rate executives were using millions of dollars jurisdiction over all cases that are based on campaign spending by outside groups has of other people’s money to influence the federal law. skyrocketed. In the 2010 election cycle, the outcome of elections. In addition this money The decision will make it possible for first since the Supreme Court ruling, outside was being used to develop a wide range of Plaintiffs with large claims that are suited to groups spent well over $300 million. A huge public policy issues, including such things as litigation in federal court to choose a federal number of Super PACs have been created, environmental protection, public health and forum for those claims. It also may facilitate amassing huge amounts of money used for safety and financial regulatory reform, to class actions that could not be brought if attack ads. A prime example is Restore Our name just a few. The request to the SEC is TCPA claims were limited to state courts. Future, the Mitt Romney-supported Super simply to require companies to disclose these Source: Public Citizen PAC, that has used ads against Newt Gin- political payments so that investors can eval- grich. Meanwhile, Republican strategist Karl uate and mitigate the risks. Rove and his Crossroads groups are going to Source: Public Citizen raise and spend $240 million in the 2012 VIII. elections. The infamous Koch brothers say THE NATIONAL they plan to spend at least $200 million. All loreley FinAnCinG sues CiTiGroup over this corporate money promises to help make $1 billion invesTmenTs SCENE this election record-setting. Public Citizen is working with more than We wrote on collateralized debt obliga- 60 organizations committed to overturning tions (CDOs) in another section of this issue The AmeriCAn people musT be the Supreme Court’s decision by way of a and attempted to explain how these instru- proTeCTed constitutional amendment. According to all ments played a major role in almost destroy- recent polling, the vast majority of the Ameri- ing our economy. In a lawsuit arising out of Two years have now passed since the U.S. can people believe there is too much money this complicated debacle, Loreley Financing Supreme Court handed down its unbeliev- being spent in politics. But to get the needed has sued Citigroup Inc. for fraud involving ably bad Citizens United v. Federal Election change, it will take a grassroots move- nearly $1 billion worth of CDOs purchased in Commission ruling. The bad effects of that ment. There are a number of organizations 2006 and 2007. Citigroup is accused of opinion must be changed and I’m fairly that are working with Public Citizen to bring defrauding Loreley into purchasing “fraudu- certain the Court won’t do it. Instead, it will about the change. Information about Public lent investments that are now worthless.” It’s take a constitutional amendment to get the Citizen’s amendment campaign is available at alleged in the suit, filed in New York State job done. There is an urgent need to over- www.DemocracyIsForPeople.org. Supreme Court in Manhattan, that Citi used turn the decision and ensure that democracy If you agree that spending in politics the CDOs to offload the risks of toxic mort- is for people—not corporations—and I should be controlled, get involved with gage-backed securities on its books and to believe the time is ripe for Congress to act. Public Citizen and the other groups and work help preferred clients “short” the housing There is a growing disgust across the land for the needed change. It would help for you market. with the obscene amounts of money being to contact your U.S. Senators and Representa- Loreley Financing is a group of special-pur- spent in politics, a direct result of the high tives and ask for their help. pose entities formed to invest in CDOs. The court’s ruling. There also is an increasing Source: Public Citizen entities are organized under the laws of awareness among ordinary citizens of the Jersey in the Channel Islands. The entities, corrupting inf luence corporations have whose claims include fraud and unjust 10 www.BeasleyAllen.com enrichment, are seeking to recover at least service providers like hospitals and health- • J.C. Penney’s Ron Johnson—$51.5 million, $965 million paid for the notes and buy- care facilities that make claims to Medicare including $50 million in restricted shares backs. This lawsuit may be the first of many or Medicaid. But Mason also had firsthand after signing on in November. more to come arising out of the sale of CDOs knowledge that Medline was routinely violat- and related matters. ing this law, involving millions of dollars of All of this comes at a time when executive illegal kickbacks. Mason blew the whistle on pay has become a real sore point among rank- Source: Insurance Journal his employer, resulting in an $85 million and-file workers. It has given rise to move- dollar settlement with $23.4 million paid to ments such as Occupy Wall Street. Corporate Mason and $6 million paid to his lawyers. governance experts say most of these salaries IX. Our lawyers predict that settlements like aren’t warranted. It’s rather difficult to imagine any person making these sorts of sal- THE CORPORATE these will create a powerful incentive for more whistleblowers to come forward in aries, especially in bad economic times. WORLD 2012. For more information on qui tam suits, It was reported that exit packages for the executives are even more lucrative. For please contact Archie Grubb or Andrew Brashier at 800-898-2034 or Archie.Grubb@ example, Nabors Industries will pay Chair- beasleyallen.com or A ndrew.Brashier@ man Gene Isenberg $126 million when he our Firm ConTinues To invesTiGATe Qui steps down, while Motorola Mobility CEO beasleyallen.com. TAm suiTs Sanjay Jha and Temple-Inlad CEO Doyle Source: lawyersandsettlements.com Simons are due more than $60 million once Lawyers in our firm continue to investigate merger deals are finalized. qui tam suits brought under the False Claims I believe that publicly-held companies will Act, 31 U.S.C. § 3729 et seq. Qui tam suits, The pAy sCAle For some CorporATe have to deal with their shareholders on com- commonly called “whistleblower suits,” are Ceos isn’T Too shAbby pensation packages for top-level executives suits brought by private citizens on behalf of more carefully in the future. In years past, the United States to recover monies owed to Based on recent reports, it appears that the annual meetings were generally of the dull the government. The law provides citizen- current pay scales for some CEOs in Corpo- sort, but I predict those days are over. Share- Plaintiffs, called “relators,” with powerful rate America are way out of line. An excel- holders will start asking tough questions of incentives—sometimes up to 30% of the lent article on this subject appeared recently those who decide how to pay corporate amount recovered—to report instances of in USA Today. From all accounts, 2011 was bosses and how much. They had best have fraud against the federal government. It the year of the $50-million-plus salary for some good answers. should be noted that the relator must have CEOs. Huge employment contracts, retention Source: USA Today first-hand knowledge of the alleged fraudu- deals, stock-option gains, bonuses and golden lent activity. parachutes created huge windfalls for a Common qui tam cases involve instances number of CEOs. Even those on their way out of Medicare and Medicaid fraud, pharmaceu- b e c au s e of i mpr op e r co n du c t f a r e d monTAnA FArmers File ClAss ACTion tical fraud, government contract fraud, and extremely well, which is difficult to under- lAWsuiT AGAinsT mF GlobAl other public benefit fraud. For example, stand. All of this comes at a time when a tre- studies have revealed that up to 10 % of mendous number of Americans are hurting A group of Montana farmers have filed a Medicare charges are fraudulent. Typical with many of them being in very bad finan- class action lawsuit against MF Global to fraudulent schemes involve billing Medicare cial shape. Thousands have lost their jobs recover money they claim was stolen from more than once for the same service, charg- and their homes and others are simply having their personal accounts with the New Jersey ing for services not performed, billing for a hard time making ends meet. firm. Defendants in the case include MF expensive equipment and only providing A very good analysis of company filings Global principals Jon Corzine, Christine A. cheaper equipment, or routinely waiving co- with the Securities and Exchange Commis- Serwinski and David Simons; JP Morgan payments. sion appeared in the USA Today article. The Chase and Co.; and PricewaterhouseCoo- The False Claims Act protects whistle- following is a list of CEOs who did very well pers LLP. As you may recall, Corzine was a blowers who are “demoted, suspended, last year: former governor of New Jersey and served threatened, harassed or in any other manner as a U.S. senator. discriminated against in the terms and con- • Walt Disney’s Robert Iger, whose 2011 The Montana farmers claim they had their ditions of employment” for acts done in fur- compensation is valued at over $52 farms’ segregated accounts raided of thou- therance of filing a qui tam claim. Penalties million. That includes $31.4 million in pay sands of dollars when the brokerage firm MF for such conduct include reinstatement with and perks and $21.4 million from stock Global reported $1.2 billion of customer seniority, double back pay with interest, options and vested shares. money was missing after it declared bank- other special damages incurred due to dis- ruptcy last year. The farmers’ money was • Apple’s Tim Cook—$378 million, includ- used to guarantee futures contracts for their criminatory treatment, and attorney’s fees ing $376 million in restricted stock after grains and cattle sales, as well as to lock in and costs. This is true even if the case is replacing the late Steve Jobs. prices for fuel, fertilizer and seeds for coming never filed, as long as the employee’s claims could legitimately support a False Claims • Qualcomm’s Paul Jacobs—$50.6 million, years’ production. Act case. i ncludi ng $28.9 m i l l ion f rom stock The farmers’ accounts were supposed to A good example of a successful qui tam options. be kept separate from funds deposited by suit was the Milberg firm’s handling last year people using MF Global to invest in commod- of a False Claims Act case against medical • Tyco International’s Ed Breen— $ 68.9 ities and international finance markets. The supply giant Medline. Sean Mason, a Medline million, including stock and option gains class action lawsuit claims MF Global lost sales executive, knew that federal regulations worth $52.4 million. huge sums in bad investments on European prohibit medical supply companies from government bonds, and tried to cover the offering perks or incentives to medical www.JereBeasleyReport.com 11 losses by stealing from the segregated cus- insurer, Syncora Holdings Ltd’s Syncora Guar- that’s very dangerous for persons buying pre- tomer accounts. antee unit. scription drugs. Once they control the PricewaterhouseCoopers audited MF Glob- Bank of America has had lots of mortgage– market, the cost of those prescription drugs al’s records and internal controls, while JP related problems since it bought Country- will go up sharply and consumers will again Morgan Chase was the firm’s primary banker. wide in 2008. In a November regulatory be the loser. Interestingly, JP Morgan had been fined 30 filing, Bank of America said unresolved litiga- There is another area of abuse concerning million (British) pounds in 2010 “for failing tion could “significantly” boost costs and the PBMs. They increase their profits by to protect segregated funds.” The case was materially impact future results. It also said retaining payments from drug companies to filed in Missoula because both the farmers that, through Sept. 30, it had resolved about promote their drugs. The PBMs are allowed and the Defendants have connections to Mis- half of the $6 billion of fraud and warranties under the existing law to accept rebates from soula County. There are 38,000 potential claims tied to monoline-insured transactions, the drug companies and that has been a tre- members of the Plaintiff’s class who allegedly including $2 billion in an April settlement mendous money-maker for them. The goal of lost money in MF Global accounts. Since the with Assured Guaranty Ltd. MBIA meanwhile the drug companies is to increase sales of Plaintiffs were unlikely to get their money was restructured by New York’s insurance their most profitable products, which plays through the bankruptcy court, they elected department in 2009 after the company, into the heads of the PBMs. This allows the to file suit. which traditionally insured municipal bonds, PBMs to rake in tremendous profits through Source: missoulian.com incurred big losses from insuring mortgage this rebate system. It’s most significant that debt. Bank of America and some other banks the PBMs don’t pass these huge profits on to are challenging that restructuring. the insurance plans or to consumers. The Source: Insurance Journal bottom line is that the rebate system has A mosT siGniFiCAnT rulinG in A FrAud developed into a great thing for the drug suiT AGAinsT CounTryWide companies as well as for the PBMs. It also has a huge potential for abuse. Congress must As a result of a ruling by a New York state WhAT do you knoW AbouT phArmACy take a serious look at how the PBMs operate court judge, it will be much easier for the beneFiT mAnAGers? and then take the actions necessar y to bond insurer MBIA Inc. To pursue its $1.4 protect the American people. billion lawsuit accusing Bank of America We hear the term Pharmacy Benefit Man- Corp.’s Countrywide Financial unit of fraudu- agers (PBM) from time to time and read on lently inducing it to insure risky mortgage- occasions about some of their activities. But I backed securities. New York State Supreme Court Justice Eileen Bransten ruled last wonder how many folks really know what PBMs are and what they actively do. My guess X. month that in order to show fraud, MBIA is that most folks don’t have a clue. For the PRODUCT need only show Countrywide misled it about the $20 billion of securities it insured, not uninformed, PBMs administer almost every prescription drug insurance plan in the LIABILITY UPDATE that the misrepresentations caused its losses. U.S. The first PBMs were created in the MBIA accused Countrywide of misrepre- 1980s, and in recent years, they have taken senting the quality of underwriting for about on great importance. ToxiC GAses Are dAnGerous And silenT 368,000 loans backing 15 financings it The three largest PBMs managed drug ben- killers insured between 2005 and 2007, while the efits for over 200 million Americans, repre- housing market was booming. MBIA said it senting 95% of folks in this country with Toxic gases can kill and injure people as would not have provided insurance on the prescription drug coverage. Up until recently, easily and as quick ly as an armed agreed terms had it known how the loans the PBM industry was dominated by there intruder. These gases can harm or injure were made. While not ruling on the merits, three large companies, Medco, Caremark and over a period of time, or instantaneously, Judge Bransten lowered the burden of proof Express Scripts. Together they administered d e p e nd i ng on t he a mou nt of e x p o - on MBIA to show Countrywide committed 80% of insured prescriptions and 90% of sure. These silent, harmful gases are pro- fraud and breached its insurance policies. insured mail order prescriptions. Each of duced naturally and intentionally and subject Judge Bransten wrote that: these companies had annual revenues of over unsuspecting people to harm or death in the $15 billion. But now because of a recent workplace and even in their homes. With No basis in law exists to mandate that transaction, there are two main players. respect to the workforce, if a person works MBIA establish a direct causal link Express Scripts bought Medco Health Solu- in the oil and gas industry, farming or pro- between the misrepresentations alleg- tions in December of last year for $29.1 cessing of livestock they should be aware of edly made by Countrywide and claims billion, further increasing the power and the potential presence of toxic gases. If made under the policy. influence of PBMs. potential for toxic gases exists, there should The PBMs are now working hard to be safety procedures and safety devices in Judge Bransten also said MBIA may try to place to limit or prevent exposure. prove financial damages, while agreeing with i n c r e a s e t h e i r s i z e a n d n e go t i a t i n g power. The PBMs process prescriptions for With respect to our homes, it is important Countrywide that it “will not be an easy to determine the likelihood of exposure. We task.” The judge rejected Countrywide’s the groups that pay for drugs, usually insur- ance companies or corporations, and use must know the detection methods, and what argument, however, that MBIA’s only remedy can be done to limit or prevent expo- was to void its insurance policies. MBIA had their size to negotiate with drug makers and pharmacies. This latest deal continues the sure. The most common toxic gases are said that would be unfair to investors. Bank hydrogen sulfide, carbon monoxide and of America has lost one of its key defenses in consolidation trend. It also illustrates how the industry is becoming more than just an methane. the ongoing litigation over mortgage put- Hydrogen sulfide is commonly called backs by the monoline insurers. Judge Brans- administrator and negotiator. For example, it should be noted that the PBMs operate exten- sewer gas or stink damp because of its rotten ten issued a similar ruling last month against egg smell. It’s a colorless, flammable and Countrywide in a case brought by another sive mail-order pharmacies. That has the potential to drive out local competition and extremely hazardous gas. Hydrogen sulfide 12 www.BeasleyAllen.com occurs naturally in crude petroleum, natural cific procedures, training and safety equip- ously injured or killed. Also, a child safety gas, volcanic gases and hot springs. It can ment for these industries. seat can be the cause of paralysis in children also result from bacterial breakdown of In our homes, it’s important to ensure that in certain scenarios, especially when chil- organic matter. At high concentrations, the heaters, fireplaces, generators or any equip- dren are sitting in booster seats. The prob- ability to smell the gas can be completely lost ment that create toxic gases are properly lems with car seats are extensive. A car seat in an instant. Just a few breaths of air con- maintained and used properly. Damaged may not be designed to be compatible with taining high levels of hydrogen sulfide can home heating devices, as well as devices the vehicle in which it is used. In such a cause death. improperly used, can injure or kill an entire case the seat can’t be properly tightened in Our firm has handled cases in the past family while they sleep. When dealing with the vehicle. Fortunately, car installed latches involving hydrogen sulfide exposures. One toxic gases, knowledge is power. The inabil- and top tethers have lessened incompatibil- such case was at an oil and gas facility. Cur- ity to see and sometimes smell the presence ity issues. rently, we have a case going to trial in March of toxic gases can be fatal. The families we Older car seats with overhead shields involving an exposure to hydrogen sulfide have represented have first-hand knowledge present can cause serious injuries from head from a poultry delivery truck. The exposures of the consequences of failing to deal with contact to the shield. Fortunately, these seats in one of the cases resulted in the death of these threats properly whether in the work- haven’t been manufactured since the early the first exposed individual and respiratory place or at home. 2000s and that’s a good thing. Many safety problems to others attempting to save their If you need additional information or have experts believe that car safety seats should fallen co-employee. questions concerning this subject, contact employ a five-point harness. Five-point har- Carbon monoxide is an odorless, colorless Kendall Dunson at 800-898-2034 or by email nesses are by far the safest restraint and can and toxic gas. Like hydrogen sulfide, carbon at Kend a l l.Du n son @ bea sleya l len.com. easily be placed in a child safety seat. Until monoxide is impossible to see and taste. Kendall has successfully handled a number of that happens, there will continue to be safety Unlike hydrogen sulfide, however, carbon cases involving toxic gases. problems with safety seats for children. monoxide does not have a smell at any level Finally, it should be noted that structural of concentration. In low concentrations, failures are not uncommon. Components Carbon Monoxide causes flu-like symptoms Child sAFeTy seATs musT be mAde sAFe needed to properly restrain the occupants such as headaches, dizziness, nausea and can break, or the seat itself can become For Children fatigue. The gas is fatal at very high concen- detached, and such incidents can cause trations. Carbon monoxide originates from Few safety-related decisions a parent can serious injuries and even the death of a child. unvented kerosene and gas space heaters, make are more important than the decision If you have any questions about child safety leaking chimneys and furnaces, gas stoves, to place their child in a child safety seat seats, contact Chris Glover, a lawyer in our generators and other gasoline powered when that child is a passenger in a motor firm, by calling 800-898-2034 or by email at equipment. It can also derive from tobacco vehicle. But the seat must be properly chosen Chris.Glover@beasleyallen.com. Chris has smoke. Our firm has handled several cases and then must be used correctly. The statis- successfully handled a number of cases in the past involving carbon monoxide tics can’t be ignored, and they show that an involving defective child safety seats. exposure. infant in a proper child safety seat has 71% Methane, l i ke hydrogen su l f ide and less likelihood of receiving a fatal injury in a carbon monoxide, is colorless. Similar to vehicle crash. A toddler’s chances of survival FAmily seTTles pesTiCide-relATed carbon monoxide, methane is odorless. In increase by more than half (54%). There is WronGFul deATh lAWsuiT commercial natural gas production, trace really no reason why a child shouldn’t be amounts of smelly organic sulfur is added to placed in a child safety seat. When riding in a The family of two girls who died just days give the gas a detectable smell. Methane is vehicle I strongly recommend all that parents after a fumigant was placed around their the principal component of natural gas and use them for their children. These seats are home has settled its wrongful death lawsuit can be produced by the anaerobic bacterial provided to protect the children and must be filed against Bugman Pest and Lawn Inc., a decomposition of plant and animal matter. designed properly. They must also be used pesticide company, located in Bountiful, Methane is not toxic when inhaled, but it properly. Utah. The lawsuit was filed by the family of can cause suffocation by reducing the con- Most child seats are never called upon to Rebecca Kay Toone, age four, and her sister, centration of oxygen inhaled. The principal provide safety to the children they were Rachel Ana Toone, 15 months, who died in use of methane is fuel and an undetected gas designed to protect and serve only as seats February of 2010. leak could result in an explosion or asphyxia- for a child to sit in while riding in a vehicle. According to authorities who investigated tion. Our firm is currently handling a case But the real purpose of a child safety seat is the deaths, the girls might have inhaled phos- involving a methane exposure which caused to protect children. Unfortunately, some phine fumes emitted from tablets of Fumi- or contributed to the death of the exposed child seats fail in the one task they were toxin, a rat poison. The Utah Medical individual. designed to perform and that is to protect Examiner’s Office reported that the girls had In the workplace, strict compliance with children. elevated levels of phosphor us in their the employer’s safety protocol dealing with What are some signs that a safety seat may bodies. The girls’ deaths came after an exter- toxic gases is highly recommended. Safety have failed in a collision? If a child in a child minator for Bugman applied Fumitoxin can be improved by focusing on detection safety seat is seriously injured or killed in a pellets around the family’s home in a manner procedures in place and appropriate use of wreck and not others in the vehicle, that is a allegedly “inconsistent with the labeling.” equipment designed to limit or prevent inha- sure sign of a problem. Many times the child The complaint named the pest control lation of toxic gases. Industries that engage in safety seat fails, breaks or detaches from its company and its owners as Defendants. The the creation of toxic gases, as well as indus- base. In such cases, the seats should be complaint sought compensatory damages for tries where these toxic gases are the byprod- inspected by an expert to determine how it the deaths. uct of a process, shou ld in for m their performed. The pest control company pled guilty in employees of the risks and prepare them to A child safety seat can be to blame in a federal court to the unlawful use of a regis- deal with an exposure. OSHA mandates spe- side impact if the child is unexplainably seri- tered pesticide, a misdemeanor, in October. It www.JereBeasleyReport.com 13 was stated that the use of the pesticide called transvaginal mesh. According to A 2009 study, published in The Lancet, resulted in the deaths of the two children. the FDA, reported complications from suggested that statins such as Crestor Less than two months after the Toone girls the transvaginal placement of the mesh cause serious heart muscle problems, died, the U.S. Environmental Protection include erosion of the mesh into the including cardiomyopathy. Cardiomyop- Agency prohibited the residential use of Fumi- vaginal tissue, organ perforation, pain, athy, wh ich means “hear t muscle toxin. The Utah Department of Agriculture in fection, pain f ul intercourse and disease,” is a deterioration of the heart and Food—which regulates the use of pesti- urinary and fecal incontinence. Often muscle. Patients may experience diffi- cides—also tightened its rules and increased women require surgery to remove the culty breathing, swelling of the feet or accountability after the deaths, mandating mesh. In some cases, this can require ankles, rapid heartbeat and other symp- that consumers be notified in advance and multiple procedures without success- toms. The Lancet article explained that given specific written information when fully removing all of the mesh. Cur- the study’s results “might be a reduction products labeled “danger” are used. Peter rently, we are i nvestigati ng cases in the concentration of coenzyme Q10 Summerill, a lawyer with Hasenyager, Sum- involving mesh manufactured by Ameri- or ubiquinone, which is known to be merill, & Wahlquist, a firm located in Ogden, can Medical Systems, Bard, Boston Sci- caused by statins.” Utah, represented the family in the civil suit entific, Caldera, and Johnson & Johnson. and did a very good job. Our firm is currently investigating Lawyer: Leigh O’Dell claims involving Crestor use and cardio- Source: Desert News.com Primary Staff Contact: Melisa Bruner myopathy. Lawyer: Chad Cook • Antidepressants Primary Staff Contact: Tabitha Dean XI. SSRI-antidepressants such as Celexa, MASS TORTS Lexapro, Luvox, Paxil, Prozac and Zoloft are prescribed to treat depression. • DePuy Hip Replacements UPDATE Studies over the last several years have Johnson & Johnson, in conjunction with its DePuy Orthopaedics subsidiar y, shown an increased risk of heart birth defects in children born to mothers who announced at the end of August 2010 Our Mass Torts Section has been very busy took SSRI-antidepressants in the first tri- that it is recalling parts used for hip over the past year with that activity has mester. Most of the cardiac defects replacements. At issue is the high rate of carried over into the New Year. Andy Birch- observed in these studies were atrial or repeat surgeries needed by people who field heads up the section and Melissa Prick- ventricular septal defects, conditions in have received the parts. An estimated ett serves as the Section Administrator. which the wall between the right and 93,000 people will be affected by Currently, we have 16 lawyers and 66 staff left sides of the heart does not com- Johnson & Johnson’s latest product personnel in the section. I will give a pletely develop. We are currently inves- recall. Affected hip replacement parts summary of the Section’s current activity. tigating claims of birth defects involving involved in the recall include the DePuy Lawyers and staff in the Section are currently children whose mother was taking an ASR XL Acetabular System and the investigating and/or litigating the following: SSRI during pregnancy. DePuy ASR Hip Resurfacing System. Patients who reported problems in the • Actos® Lawyer: Roger Smith first five years and had revision surgery The FDA has approved updated warning Primary Staff Contact: April Worley reported a variety of symptoms, includ- labels for Actos, a prescription medica- i ng pa i n, s wel l i ng a nd problem s tion used to treat Type 2 diabetes. The walking. These symptoms are normal updated label states that Actos usage for • Chantix® We are investigating claims of suicide or for patients following a hip replacement, more than one year may cause bladder but can be a sign that something is cancer. Actos, manufactured by Takeda, attempted suicide resulting in perma- nent injury involving Chantix. Chantix wrong if they continue or come back has been under FDA review since Sep- frequently. Additionally, metal debris tember 2010. In June 2011, the FDA (USA) or Champix (European and other countries), known generically as vareni- spreading in the hip area has been issued a warning for Actos, while at the reported due to the metal on metal fric- same time, drug regulators in France cline, is marketed by Pfizer as a pre- scription medication used to treat tion involved from the metal compo- and Germany suspended use of the nents moving together. drug. We are currently investigating smoking addiction. claims involving usage of Actos, Acto- Lawyer: Frank Woodson We would like to review any cases plus Met, Actoplus Met XR, Duetact and Primary Staff Contact: Cathy Perry involving individuals who have had a bladder cancer. DePuy hip device implanted and all indi- viduals unsure of the type of hip device Lawyer: Roger Smith • Crestor® implanted if the person has had revision Primary Staff Contact: April Worley Crestor (Rosuvastatin) is a popular pre- surgery, or the person is experiencing scription medication used to reduce the hip pain, hip swelling or difficulty • Transvaginal Mesh amount of cholesterol in the blood. walking. The FDA has issued an updated safety Crestor, which is manufactured by AstraZeneca, was approved for use by Lawyers: Navan Ward and Melissa communication warning doctors, health the U.S. Food and Drug Administration Prickett care professionals and patients that the (“FDA”), in August of 2003. Since that Primary Staff Contacts: Janet Pair and placement of surgical mesh through the time, there have been several warnings Donna Puckett vagina to treat pelvic organ prolapse and stress urinary incontinence may issued by the FDA relating cholesterol lower i ng dr ugs (i.e.—stati ns) and • EBIce® Cold Therapy Cases present greater risk for the patient than These cases involve injuries caused by other non-mesh procedures. This is also serious adverse events. cr yo-therapy devices typically pre- 14 www.BeasleyAllen.com scribed by orthopedic surgeons and resonance imaging (MRI) and can place Lampkin, Danielle Mason and Matt podiatrists after a surgical procedure. patients at risk for developing a poten- Teague “Cold Therapy” is used by a physician or tially fatal disease known as Nephro- Primary Staff Contacts: Katie Tucker and podiatrist in order to minimize pain and gen ic System ic Fibrosis ( NSF ) or Gwyn Harris swelling related to the surgery. With no Nephrogenic Fibrosing Dermopathy or very little instruction and essentially (NFD). People who develop NSF or NFD • Keppra Generic no warnings, a patient uses the device may experience a thickening of the skin Keppra (generic name levetiracetam) is by placing the pad on the affected area, and other organs, which can limit their an anti-epileptic drug. It is used to treat fills the ice chest with ice and water and ability to move or extend joints, and can seizures in adults and children. There is the circulating pump inside the ice lead to significant pain and even death. growing evidence that switching from chest circulates cold water through the Other problems may include dark the brand-name Keppra to the generic tubes and cooling pads. Without instruc- patches on the skin that appear rough form of Keppra (levetiracetam) can tion the patient, thinking that more and hard with raised plaques or papules, cause an increased rate of seizure. Many cooling is better, will subject the skin which are elevations of the skin. Joint individuals report going seizure-free for and underlying ner ves around the and bone pain, as well as swelling of the years and then having a seizure shortly affected area to very cold temperatures. fe e t a n d h a n d s h a ve a l s o b e e n after switching to the generic drug. For Injuries resulting from these devices can reported. The FDA first warned about anticonvulsant drugs, small variations in be dramatic and typically fall into two NSF and NFD associated with Gadolin- concentrations between the brand-name categories, nerve-only damages and skin ium in June of 2006 and again in Decem- formulation and the generic formulation injury with nerve damage. The skin ber of 2006. As of April of 2007, the can cause toxic effects and seizures injury with nerve damage cases will F DA had received a consider able when taken by patents with epilepsy. A have visible injuries like frost bite. number of additional cases involving single breakthrough seizure due to a these conditions. change in the amount of medication that Lawyer: Russ Abney Primary Staff Contact: Amy Brown There are five Gadolinium-based con- is delivered can have devastating conse- trast agents which are FDA-approved. quences, including loss of driver’s One is the Omniscan Contrast Dye, license, injury, and even death. We are • Fosamax® currently investigating cases where indi- Fosamax® (alendronate sodium), manu- manufactured by GE Healthcare. It is designed for intravenous use in MRI for viduals have suffered breakthrough sei- factured by Merck, is in a class of drugs zures, injury or death after switching called bisphosphonates. Fosamax® is the brain and the spine. In a recent study, five of the nine patients diag- from the brand-name Keppra to the com mon ly used i n tablet for m to generic (levetiracetam) form of Keppra. prevent and treat osteoporosis in post- nosed with NSF received an MRI involv- menopausal women. Recently the ing Omniscan Contrast Dye. Other Lawyer: Roger Smith Journal of Oral and Maxillofacial Sur- studies have shown similar results. The Primary Staff Contact: Linda Reynolds geons reported a link between bisphos- other Gadolinium-based agents include phonates and a serious bone disease OptiMARK, Magnevist, MultiHance and Prohance. Manufacturers of these prod- • Paxil® called Osteonecrosis of the Jaw (ONJ). Paxil® (paroxetine) is an anti-depressant Osteonecrosis is a disfiguring and dis- ucts include Bayer Schering Pharma, GE Healthcare, Tyco Healthcare and manufactured by GlaxoSmithKline. abling condition of the jaw bone that Recently Public Health Advisories have causes infection and rotting of the jaw Bracco Diagnostic, Inc. We are cur- rently evaluating these Gadolinium- been issued for Paxil ® regarding an bone. Typical presentation of Osteone- increased risk of heart birth defects, crosis is pain, soft-tissue swelling and b a s e d co nt r a s t a ge nt s i nvo l v i n g patients who have developed nephro- persistent pulmonar y hypertension infection, loosening of teeth, drainage, (PPHN), omphalocele (an abnormality and exposed bone. Symptoms may genic systemic fibrosis or Nephrogenic Fibrosing Dermopathy. in newborns in which the infant’s intes- occur spontaneously, or at the site of tine or other abdominal organs protrude previous tooth extraction. Recently, Lawyer: Roger Smith from the navel) or craniosynostosis Fosamax has been linked to low-energy Primary Staff Contact: Linda Reynolds (connections between sutures-skull femu r f r act u res i n people ta k i ng bones, prematurely close during the Fosamax for three or more years. first year of life, which causes an abnor- • Hormone Therapy Femur Fracture Criteria : Docu- or years, women have taken Hormone F mally shaped skull) in children born to mented use of Fosamax® for three years Therapy (HT) to reduce the symptoms of mothers exposed to Paxil®. or longer with diagnosed low energy menopause. Studies now show that HT Criteria : Children born with birth femur fractures. medications such as Prempro and Prema- defects to a mother who has docu- rin can increase the risk of breast cancer, mented use of Paxil® during pregnancy. Lawyers: Chad Cook, Leigh O’Dell and ovarian cancer, stroke and heart disease. Russ Abney We are currently investigating potential Lawyer: Roger Smith Primary Staff Contact: Tabitha Dean claims against the manufacturers of HT Primary Staff Contact: April Worley • Gadolinium medications. There are a number of The U.S. Food and Drug Administration cases set for trial in several states over • Pain Pumps (FDA) recently asked manufacturers of the next few months and others will Pain pumps are portable and often dis- all Gadolinium-based contrast agents to soon be set. We currently have 660 cases posable pain management devices include a new boxed warning on the either filed or soon to be filed. which continuously administer local product label. These contrast agents are Lawyers: Ted Meadows, Melissa Prick- anesthetic through a catheter to a surgi- used to enhance the quality of magnetic ett, Russ Abney, Navan Ward James cal wound site for several days following www.JereBeasleyReport.com 15 surgery to decrease post-operative pain especially older women, and people Lawyer: Roger Smith and assist in earlier rehabilitation. A who have taken the drug for a long Primary Staff Contacts: Linda Reynolds “Y-connector” accessory is sometimes period of time. The FDA has advised and April Worley available so that the pain pump can be physicians to avoid long term use of used on multiple wound sites. Examples Reglan and recommends treatment not of pain pump manufacturers include exceed three months. Reglan is available puniTive dAmAGe AWArds upheld in Stryker, I-Flow, CME McKinley, Breg, in formulations including tablets, syrups hormone replACemenT TherApy CAses Medical Flow Systems, Baxter and Sgar- and injections. lato Labs. On January 3, 2012, the Superior Court of Criteria: Documented use of Reglan Pennsylvania released two extremely impor- Recently, the use of pain pumps to with a diagnosis or symptoms of Tardive tant opinions in the Hormone Therapy administer medication directly into the Dyskinesia. Replacement drug cases. The first case is glenohumeral joint space following Lawyers: Chad Cook and Kendall v. Wyeth Pharmaceuticals, Inc., and shoulder surgery has been linked to a Danielle Mason the second is Barton v. Wyeth Pharmaceuti- severe condition called Postarthro- Primary Staff Contact: Tabitha Dean cals, Inc. In each case, the Court affirmed scopic Glenohumeral Chondrolysis punitive damage awards involving Wyeth, (“Chondrolysis”), in which the cartilage Pharmacia & Upjohn, Inc. Wyeth was a of the humeral head and the glenoid • Stevens- Johnson Syndrome Defendant in both cases with Upjohn only space of the shoulder process has been Ste ve n s - Joh n s on s y nd r ome i s a n being a Defendant in the Kendall case. The destroyed and lost. The destruction of immune complex hypersensitivity reac- claims against both Wyeth and Upjohn were the shoulder cartilage can be attributed tion that can be caused from an infec- based on the conduct of each Defendant in to the application of anesthetic medica- tion or immune response to drugs. It is a the sale of their drugs promoted for the treat- tion directly into the joint space via the severe expression of a simple rash ment of menopausal symptoms. The Plaintiff pain pump catheter. In 2003, it appears known as erythema multiforme. SJS is in each case contended that the drugs caused that some pain pump manufacturers also known as erythema multiforme breast cancer and that the Defendants failed may have increased the anesthetic major. It affects all ages and genders to provide adequate warnings concerning dosing capacity of their pain pumps, including pediatric populations. The the breast cancer risks of the drugs. which may have hastened the onset of most severe form of SJS is toxic epider- Examining the evidence supporting a Chondrolysis in some patients. mal necrolysis (TENS). SJS occurs twice punitive damage award against Wyeth, the as often in men as in women. Most cases Chondrolysis symptoms usually present Court concluded that the evidence demon- of SJS appear in children and young between six weeks and six months fol- strated that Wyeth, as early as the 1970s, adults under age 30. Females with SJS lowing surgery and include increased knew of a link between its drug, Premarin, are twice as likely as males to develop shoulder pain and stiffness, loss of carti- and breast cancer, but failed to warn physi- TENS, and have an even higher chance lage, decreased range of motion, loss of cians or pursue definitive studies about the if taking a category of drugs known as shoulder joint space, crepitus in the risk. Additionally, the Court concluded that NSAIDs, non-steroidal anti-inflamma- shoulder and loss of strength. Patients the evidence demonstrated that Wyeth: tory drugs. suffering from Chondrolysis are usually • actively sought to suppress information unable to complete their post-surgical Lawyer: Frank Woodson about the risk of breast cancer associated physical therapy due to pain. Whatever Primary Staff Contact: Cathy Perry with Premarin/Prempro; the patient’s condition was prior to his or her shoulder surgery, the post-opera- • promoted the drugs for unapproved off- • Yaz, Yasmin, Ocella or Beyaz tive diagnosis of Chondrolysis is typi- label uses; and Yaz is a combination birth control pill con- cally much worse. Ultimately, complete taining drospirenone and ethinyl estradiol. It shoulder replacement surgery (acromio- • that the drug company’s primary motiva- is marketed not only as a contraceptive pill, arthroplasty) could become necessary in tion was profit. but as a proven treatment for premenstrual order to eliminate the painful and debil- dysphoric disorder (PMDD), a condition with The Court held that Wyeth’s conduct was itating symptoms of Chondrolysis. severe emotional and physical premenstrual sufficient to support a claim that Wyeth Lawyer: Frank Woodson symptoms. Yaz is also marketed as an effec- acted with a wanton disregard for the rights Primary Staff Contact: Cathy Perry tive treatment for moderate acne. However, of others under Illinois law. The Court studies indicate that Yaz poses a particular rejected Wyeth’s arguments that compliance heath hazard because one of its two primary with FDA regulations prohibited the imposi- • Reglan® ingredients, drospirenone, is a diuretic, Reglan is used to treat gastrointestinal tion of punitive damages and evidence of which can cause an increase in potassium Wyeth’s marketing conduct should not have disorders such as heartburn caused by levels in the blood and lead to hyperkalemia, reflux. The FDA recently required a been admitted at trial. which causes heart rhythm disturbances that Examining the evidence supporting a black box warning linking Reglan and can cause blood clots leading to sudden Tardive Dyskinesia. Symptoms of tardive punitive damage award against Upjohn, the cardiac death or pulmonary embolism or Court concluded that Upjohn was on notice dyskinesia include involuntar y and strokes. Diuretics can also cause significant repetitive movements l i ke tongue that its drug, Provera, caused mammary problems with the gallbladder, leading to cancer in rats as early as 1961 and exacer- thrusting, eye blinking and head jerking gallbladder removal. Criteria: Documented as well as involuntary movements of the bated breast cancer in humans as early as use of Yaz with a diagnosis of heart attack, 1963. The Court noted that Upjohn did not fingers. These symptoms are rarely stroke, pulmonary embolism, DVT, or gall- re ve r sible w it h no k now n t r e at- study the risk of breast cancer despite bladder removal. actively promoting Provera to be used with ment. Those at increased risk for devel- oping Tardive Dyskinesia are the elderly, exogenous estrogens for the treatment of menopausal symptoms, a use that was not 16 www.BeasleyAllen.com approved by the FDA. In fact, the FDA repeat- Associates, are representing the plaintiffs in unknown at this time whether the generics’ edly denied Upjohn’s requests for such a use this case. petition for appeal will disrupt the upcoming due to the lack of sufficient studies. Source: Insurance Journal trial settings. If you need more information The Court rejected Upjohn’s argument that on this subject, contact Danielle Mason at punitive damages were not warranted for an 800 - 898 -2034 or by email at Danielle. “unknown” risk of breast cancer associated Mason@beasleyallen.com. Danielle has been with Provera because Upjohn stuck its head reGlAn liTiGATion updATe actively involved in this litigation. in the sand and failed to conduct studies to The following is a requested update on the explore a possible risk between Provera and Reglan litigation in Philadelphia. Even though breast cancer. That failure was despite lAWsuiT Filed AGAinsT Tylenol mAker a state trial judge there has overruled generic Upjohn conducting studies on potential ben- drug manufacturers’ preliminary objections over boy’s deATh efits of Provera, including osteoporosis. seeking dismissal of the claims asserted Additionally, Upjohn did not include any A lawsuit has been filed in Philadelphia against them, the viability of the Plaintiffs’ warning about the possible risk of breast against Johnson & Johnson Inc. Alleging claims are still in question and could be cancer in humans in the Provera label. The Very Berry Strawberry Children’s Tylenol was subject to further delay. Recently, generic Court held that the evidence was sufficient linked to the death of a two-year-old boy. In drug manufacturers involved in the Philadel- to support a claim that Upjohn acted with the lawsuit filed in Philadelphia Common phia litigation jointly filed a petition for per- wanton disregard for the users of Pleas Court, the parents, Daniel and Katy mission to appeal Judge Moss’ order to the Provera. The Court also rejected Upjohn’s Moore, allege their son received a larger dose Superior Court of Pennsylvania. arguments concerning compliance with FDA than normal of acetaminophen causing liver Under Pennsylvania law, the Defendants regulations and admission of Upjohn’s mar- damage and his ultimate death. The suit are permitted to appeal under sections keting materials. names Tylenol’s manufacturer, Johnson & 702(b) and 742 of the Pennsylvania Judicial In Kendall, the Court affirmed a compen- Johnson, and its McNeil Consumer Health- Code when there is an order involving a con- satory award of $6.3 million and reinstated a care subsidiary as Defendants. trolling question of law to which there is a $28 million dollar punitive damage award When McNeil Consumer Healthcare initi- substantial ground for difference of opinion against Wyeth ($16 million) and Upjohn ($12 ated several recalls for children’s products in that an immediate appeal from the order may million). The Court reversed the trial court’s 2010, it communicated that information to materially advance the ultimate determina- remittitur of the punitive damages award. the Food and Drug Administration, consum- tion of the matter. Here, the controlling ques- In Barton, the Court affirmed a compensa- ers, retailers and healthcare profession- tion of law is whether, under Mensing, tory award of $3,746,344.97 and modified the als. There were various reasons for those Plaintiffs’ claims against generic Defendants trial court’s remittitur of the punitive damage recalls, but they were not related to serious are preempted by federal law. award by increasing the punitive damage adverse events, as alleged in this suit. McNeil Many courts, including the 5th, 6th, and 8th award to $7,492,689.94. That was a 2:1 ratio announced a recall April 30, 2010, of more Circuit Courts of Appeal, as well as district of pu n itive damages to compensator y than 136 million bottles of liquid infants’ and cour ts in Louisiana, A rkansas, Florida, damages. These two appellate court deci- children’s products, due to metal particles, Indiana, Georgia and New Jersey, have all dis- sions are very important and told the story of incorrect doses and musty-smelling pills missed state law claims raised against generic how truly bad these companies have been. I among other issues. A Congressional hearing drug manufacturers. To add further support believe the well-written opinions have to be on the subject was held in May 2010. Joseph to their argument that appeal is proper under considered good news for Plaintiffs in other Messa, a Philadelphia lawyer, represents the the circumstances, the generic Defendants cases and very bad news for the Defendant parents in the lawsuit. also argue that Judge Moss’ decision was a companies. collateral order separable from and collateral Source: UPI.com to the main cause of action, making the issue immediately appealable. bosTon JudGe orders druG CompAnies Plaintiffs who have filed suit around the dAnGerous mediCAl deviCe should be To seTTle breAsT CAnCer CAse country contend that Mensing may preempt removed From The mArkeT failure to warn claims, but that does not A federal judge in Boston, last month, imply that Mensing granted generics immu- JAnuAry 12, 2012—CiTizen.orG ordered 14 drug companies to negotiate set- nity from all tort liability. Specifically, Public Citizen believes that the Food and tlements for 53 women whose breast cancer generics are not preempted from failing to Drug Administration’s failure to remove from was allegedly caused by an anti-miscarriage adequately communicate warnings that the market a medical device that is supposed drug their mothers took decades ago. The are consistent with information found in the to prevent strokes in patients who are at high ruling by U.S. Magistrate Judge Marianne labeling of its brand-name counterpart. In risk of such events because of severely nar- Bowler came after closing arguments on fact, it was alleged before the trial court in rowed brain blood vessels represents a reck- motions by the drug companies to exclude Philadelphia that no Reglan manufacturer, less disregard for patient safety. Public testimony from experts for the women who generic or brand, communicated the 2004 Citizen filed a petition with the FDA in believe there is a link between DES, or dieth- label changes, which specifically warned December, seeking to protect the public. ylstilbestrol, and breast cancer in daughters that drug therapy with Reglan/metoclo- Since the December petition, the manufac- over 40. Judge Bowler rejected those pramide should not exceed twelve weeks, turer of the Wingspan Stent System-Stryker— motions and ordered the drug companies to to physicians. It was this failure to commu- and an FDA official have made public enter mediation. The women are suing drug nicate that led to the chronic over-prescrib- statements implying that the continued companies who made and promoted DES, a ing of the drug and the multitude of injuries failure of the FDA to remove this dangerous synthetic estrogen, from about 1938 to the that resulted. medical device from the market is justified. early 1970s. Aaron Levine and Julie Oliver- After Judge Moss’ ruling, the bellwether The two said the failure to act is related to Zhang, lawyers with Aaron M. Levine and trial process reconvened in Philadelphia with some alleged lack of comparability between the first trial set to begin in May 2012. It is the subjects in the Stenting and Aggressive www.JereBeasleyReport.com 17 Medical Management for Preventing Recur- device should be withdrawn by the FDA and circle of employees was also involved. It was rent Stroke in Intracranial Stenosis (SAMM- the device pulled from the market. reported that six board members implicated P R I S ) s t u d y— t h e o n l y r a n d o m i z e d , Source: Public Citizen in the report, including Takayama, will resign controlled study ever done to evaluate the at the next shareholder meeting, scheduled safety and effectiveness of the device—and for March or April. Kikukawa is being sued the patients for whom the Wingspan Stent for 3.6 billion yen ($47 million). The System was intended to treat under the FDA’s CourT Gives preliminAry ApprovAl To company is seeking smaller amounts from 2005 approval of the humanitarian device Chinese dryWAll seTTlemenT other Defendants, including 1 billion yen exemption (HDE) for this device. If that ($13 million) from Kishimoto. U.S. District Judge Eldon Fallon has given sounds complicated, it is, but I take the state- Under Japanese law, auditors represent the his preliminary approval to the settlement ment as simply a weak excuse for not acting company when executives on the board are that calls for a Chinese drywall manufacturer in the public interest. targeted in damage lawsuits. In the Olympus to pay hundreds of millions of dollars to The former study, funded by the National lawsuit, three auditors, two of them outsiders, resolve court claims by thousands of Gulf Institutes of Health and published in Septem- are representing the company. None of them Coast property owners who say the product ber 2011 in the New England Journal of Medi- were implicated in the scandal. Olympus wrecked their homes. In his order, Judge cine, found a 2.5-fold higher risk of suffering alleges in the lawsuit that it suffered direct Fallon said that he believes the proposed set- a stroke or dying within the first 30 days in losses to its finances, in terms of fees and tlement to be “fair, reasonable and adequate.” patients who had the device implanted than interest paid to run the scheme—as well as Knauf Plasterboard Tianjin Co. Agreed in those who received medical treatment alone. losses stemming from the improper handling December to create an uncapped fund to pay Enrollment in the study was stopped in April of the scandal after it surfaced. It’s alleged for repairing roughly 4,500 properties, 2011—earlier than anticipated—because of further that the “credibility of Olympus’ cor- mostly in Florida, Louisiana, Mississippi and these serious safety problems and a lack of porate governance and the public’s trust of Alabama. The settlement also would create a evidence that the device provided any Olympus were seriously damaged.” separate fund capped at $30 million to pay benefit. Dr. Michael Carome, deputy director Japanese prosecutors, which have begun a for other types of losses, including those of Public Citizen’s Health Research Group, separate investigation, raided company head- blaming drywall for health problems. Judge who was the author of the petition, had this quarters and Kikukawa’s home in December. Fallon will hold a “fairness hearing” on the to say: Olympus barely met its mid-December dead- settlement agreement before giving his final line to avoid being removed from the Tokyo T he Wingspan Stent Syste m wa s approval. Stock Exchange by filing corrected earnings thought to be too dangerous to implant Source: Montgomery Advertiser for the April-September first half and for the in any more subjects in the SAMMPRIS past five fiscal years. Olympus’ stock plunged trial, and it is likewise too dangerous amid the scandal and it’s now trading at to use in the hundreds of patients who have clinical characteristics similar to XII. about half of its pre- scandal value. Sources: Claims Journal and Associated Press those of the SAMMPRIS trial subjects and the population of patients eligible BUSINESS for treatment with this device under LITIGATION the FDA-approved HDE indication. Former red sox CATCher Wins Due to the FDA’s unconscionable deci- ArbiTrATion ClAim sion to delay withdrawal of the agen- olympus sues exeCuTives For dAmAGes cy’s approval of the Wingspan Stent Former Red Sox catcher Doug Mirabelli, a in Cover-up two-time World Series champion, and his System HDE, the continued use of this device exposes patients to an unaccept- wife Kristin, have won their securities claim Olympus Corp. has sued 19 former and able risk of serious harm, including against Merrill Lynch. An arbitration panel current executives for damages that the Jap- death. Given the evidence of signifi- ruled last month that Merrill Lynch must anese camera and medical equipment maker cant harm with no evidence of any repay Mr. & Mrs. Mirabelli more than $1.2 says it has suffered over a massive cover-up benefit, there is no justification for any million in damages and fees for providing of investment losses. The lawsuit, filed by additional patients to be treated with i n a p p r o p r i a t e i n ve s t m e n t a d v i c e t o auditors on behalf of the company in Tokyo this dangerous device. The only way them. The Financial Industry Regulatory District Court, targets former CEO Tsuyoshi that further use of the device can effec- Authority (FINRA) arbitration panel awarded K i k u k awa, cu r rent P resident Shu ich i tively and definitely be prevented is to the full amount of the Claimants’ out-of- Takayama and 17 other executives that the immediately remove the device from pocket losses. The Claimants received their company says participated in or knew about the market, as it clearly cannot be said entire initial investment, as well as all legal the fraudulent activity. The scheme—which to provide reasonable assurance of fees and associated arbitration costs. The first came to light after former President safety. Rather, it guarantees an unrea- panel basically put the Mirabelli’s back in a Michael Woodford blew the whistle—has sonable risk of harm. To allow any position that they would have been in had raised serious questions about corporate further implantation of this device they never met the Merrill Lynch adviser. governance in Japan, and whether major would be highly unethical as well as a The Mirabelli’s invested all of their liquid companies are complying adequately with violation of FDA laws and regulations. assets, about $1.8 million, with Merrill Lynch global standards. in early 2008. The advisor then put those Financially battered Olympus said the Hopefully, the FDA will recognize that the assets into his team’s income portfolio, lawsuit follows a report from an investigation further use of the device creates an unrea- which was made up of 33 dividend-paying by an independent panel that the Tokyo- sonable risk of harm to the public. I agree growth stocks. Because the account was col- based company had set up. Then-President with Public Citizen that the approval of this lateralized through loans, if the value of the Masatoshi Kishimoto, as well as subsequent account fell below $1 million in value, the executives—including Kikukawa—knew Mirabellis would need to sell out of the secu- about the scheme, the company says. A small 18 www.BeasleyAllen.com rities held in the accounts. That is what hap- to $31 million in 2011, well below the 2010 know that I am not a fan of the payday p e n e d i n Nove m b e r 2 0 0 8 , a m i d a n average of $108 million, but still the third- lenders. If there has ever been any doubt, let i ndu st r y-w ide meltdow n of f i n a nci a l highest on record. It was projected by NERA me resolve it by saying that I am not. I con- markets. The Mirabelli’s suffered a loss of Trends authors that there will be 232 share- sider this industry to be one that preys on about $800,000. holder class action filings in 2011. This is and takes advantage of folks on a regular It was contended that Merrill Lynch put pretty much in line with levels observed in basis. Few people know how politically the Mirabelli’s assets in “inappropriate” 2008, 2009, and 2010, with the highest active and powerful this industry is both at investments and recommended the purchase number being in 2008, 245. Suits objecting to the federal and state levels. Payday lending is of “unsuitable securities.” The arbitrators a merger or an acquisition have accounted for now a $7 billion a year industry in the United obviously agreed with the Claimants. Barry 29% of filings so far in 2011, and filings States. Millions of Americans with limited Lax, a lawyer with Lax & Neville, a firm against Chinese companies have accounted income see this as their only way to get quick located in New York City, represented the for approximately 18%. That pace is a bit cash to pay for an unexpected expense. The Mirabellis and did a very good job. slower than NERA projected in June when it market is so lucrative that some traditional Source: Insurance Journal forecast there would be 260 filings for all of banks now offer their version of the payday 2011. There were 130 filings of securities loan, called a deposit advance. class actions from January to June of this year. While some states limit the interest rate One interesting development involved set- payday lenders can charge, a few states actu- XIII. tlements in securities class action law- ally ban these loans. While payday lenders AN UPDATE ON suits. The number of settlements also declined in 2011. Average settlement values have to comply with federal law, there has been little federal oversight in the past. Hope- SECURITIES of securities class actions fell to $31 million fully, that’s about to change. The Consumer in 2011.The following are some additional Financial Protection Bureau held a hearing in LITIGATION trends mentioned in the report: Birmingham, Ala., last month on payday lenders. Richard Cordray, the CFPB’s newly- • Securities class actions against financial appointed executive director, said his agency A revieW oF seCuriTies ClAss ACTions sector companies accounted for roughly will examine both bank and nonbank institu- in 2011 16% of cases in 2011, as contrasted with tions offering these short-term, small-dollar nearly half in 2008 and 2009. Filings loans. Cordray had this to say: Our firm in recent years has become much against companies in the electronic tech- more involved in class action litigation, espe- nology and technology services sector We recognize that there is a need and a cially in lawsuits involving securities brought accounted for the largest percentage in the demand in the country for emergency by shareholders. We plan to be much more year, with 21% of filings. Health technol- credit. At the same time, it’s important active in that field in the future. We have ogy and services companies accounted for that these products actually help con- several lawyers who specialize in class action 15% of filings. sumers and not harm them. We know litigation. We learned early-on that it’s a field that some payday lenders are engaged • Filings of credit crisis-related class actions in practices that present immediate of law that requires expertise in a number of largely subsided in 2011, with 11 cases risks to consumers and are illegal. different areas. Bill Hopkins, who had a filed. Such litigation is approximately a Where we find these practices, we will strong background in class action litigation in third of its level last year, when it had take immediate steps to eliminate South Carolina, joined the firm in 2010 and already declined by about two-thirds from them. he has been a very good addition. its 2008 peak. A recent report took a look at what is Payday loans are supposed to be short going on in that field. It was reported by • Aggregate Plaintiffs’ attorney fees, at $594 term: 14 days. As the name implies, they are NERA Consulting that there was little change million, fell in 2011 to their lowest level supposed to get a person to the next pay day, in the number of securities’ class action law- since 2004. This decline is largely attrib- when they will be able to repay the loan. suits filed in the U.S. during 2011. The pace uted to the combination of the lower Here is how a payday loan works. Let’s say a of filings of class actions under federal secu- average and median settlement size, and person needs $100 and the interest rate for rities and commodity laws, according to the fewer settlements occurring in 2011. that two week period is 17% . He or she report, held relatively steady in 2011, as com- • Cases were f i led considerably more writes a postdated check made out to the pared to the previous three years. The quickly in 2011 — the average time to file lender for $117. If they can’t pay that amount report did point out, however, that there has in 2011 was 109 days, as compared to 175 when the two weeks is up, the borrower been a substantial change in the make-up of days last year. keeps $17, the loan is extended and another suits filed. The work done by the authors of the $17 fee is added on. It’s quite common for The report, “Recent Trends in Securities report is greatly appreciated. It helps lawyers the borrower to be unable to pay the loan Class Action Litigation: 2011 Year-End keep up with litigation trends in this area of when due. Review,” indicates there has been an increase law. You can get more information on the The borrowers often roll-over their debt in cases involving Chinese companies listed subject by going to www.NERA.com. when they can’t repay it. They wind up in the U.S. And in merger and acquisition living off that borrowed money at an annual objection lawsuits. A decline in credit-crisis Sources: Insurance Journal and NERA.com interest rate of 400% to 600% or more. Steven cases was also noted in the report. NERA Stetson, a policy analyst with Alabama Arise, Economic Consulting, a global firm of eco- an anti-poverty group based in Montgomery, nomic experts with its main office in New Consumer WATChdoG TArGeTs pAydAy said at the hearing that folks get “churned York City, issued its semi-annual report that loAns through the system” six, eight, ten times a contains this information and a great deal year. He said that “If we have laws against more. Anybody who has been reading this Report gouging for gas and water, we ought to have The report also found that the average set- over the past several years should already tlement values of securities class actions fell www.JereBeasleyReport.com 19 laws against gouging for loans.” He is abso- JudGe AlloWs suiT AlleGinG Ge misled period the Fairfield, Conn.-based company lutely correct. invesTors To proCeed cut its dividend and lost its “triple-A” credit Director Cordray said at the meeting that rating. It also received a $3 billion infusion the CFPB will look into the long-term use of A federal judge has refused to dismiss a from Warren Buffett’s Berkshire Hathaway payday loans. He talked about a consumer lawsuit accusing General Electric Co. And its Inc. GE’s many products include jet engines, who had contacted the agency and who had chief executive of misleading investors about turbines and light bulbs. Interestingly, GE taken out a $500 loan to pay for a car repair. the conglomerate’s financial health and expo- also owns part of NBC Universal, in which But at the end of two weeks, the man sure to risky debt during the 2008 financial Comcast Corp. holds a majority stake. couldn’t repay the loan. It’s been nine crisis. The decision by U.S. District Judge Source: Insurance Journal months and the borrower has paid $900 on Richard Holwell, who sits in Manhattan, that loan and still has $312 more to go. The keeps alive litigation seeking to hold the money is withdrawn directly from his pay- company responsible for investor losses check and now the man doesn’t have enough during a six-month period when its stock A ChAnGe in seTTlemenT lAnGuAGe by left to pay his bills. I suspect that’s a story price fell to about $10 from about $26, The seC that could be told in ever y state where causing its market value to tumble by more U.S. securities regulators have said that payday lenders operate. than $150 billion. Investors claimed that GE Defendants can no longer settle civil cases Folks who use payday loans tend to have withheld information regarding its health using “neither admit nor deny” language if less income, fewer assets and lower net and the health of its GE Capital finance arm, they have already admitted to wrongdoing in worth than the average American family. including exposures to subprime and other parallel criminal cases. The policy change, Reportedly, they are disproportionately low-quality loans. They also said GE mislead- announced by Securities and Exchange Com- people of color. The industry insists it is ingly touted itself as being safer than rivals, m ission En forcement Di rector Rober t serving people who are denied credit and despite the effects of the financial crisis. Khuzami on January 9 th , applies only to shu t ou t of t he t r a d it ion a l b a n k i ng Judge Holwell also let stand some claims instances where a Defendant has already system. They obviously like the current accusing bank underwriters of omitting admitted to violating criminal laws. It comes system. There have been tremendous abuses statements from offering documents for a after a federal judge in New York rejected a in that system and there are some badly $12.2 billion GE stock offering in October proposed $285 million settlement between needed changes. Hopefully, Director Cordray 2008. He dismissed several other claims, and the SEC and Citigroup, in part because the and the new agency will bring them about. did not rule on the case’s merits. Judge bank had not admitted to wrongdoing. Source: Associated Press Holwell said investors led by the State Uni- However, in that case, no parallel criminal versities Retirement System of Illinois ade- charges have been filed. quately alleged that GE made material Apparently, the SEC felt it wasn’t necessary misrepresentations during the crisis about its u.s. shAreholders sue lloyds access to commercial paper and ability to to include its traditional “neither admit nor deny” approach if a Defendant had already American shareholders have filed suit maintain its dividend. He also let the inves- been criminally convicted of the same against the Lloyds Banking Group of Britain tors pursue claims alleging that company conduct. For years companies have admitted and former bank executives, alleging they officers, including Chief Executive Jeffrey to a narrow set of facts in resolving a crimi- were misled by the Defendants over the gov- Immelt and Chief Financial Officer Keith nal case with the Justice Department, while ernment’s rescue of HBOS in the depths of Sherin, misled them and had sufficient neither admitting nor denying more colorful the financial crisis in 2008. The bank, along intent, known as “scienter,” to mislead. Judge language in an SEC complaint. In one of the with Victor Blank, who stepped down as Holwell wrote in the opinion: most egregious examples, Bernard Madoff chairman of Lloyds, and Eric Daniels, the Immelt’s categorical statements that pleaded guilty for his role in a multi-billion former chief executive, were named as investors could ‘count on’ a dividend dollar Ponzi scheme in 2009, but neither Defendants in the class-action lawsuit filed in and that GE was having ‘no difficul- admitted nor denied the allegations in a set- New York. It’s alleged that the Defendants ties’ issuing commercial paper are not tlement with the SEC. had a “reckless disregard for the truth.” the sort of cautious statements one More recently, insurance brokerage firm The bank’s board is accused of making would expect of a CEO attempting to Aon admitted to accounting errors to resolve misleading statements about the government- come to grips with the effects of the criminal bribery charges with the Justice engineered takeover of HBOS, which at the economic crisis on his company. A Department, but neither admitted nor denied time was called by Mr. Daniels a “fantastic CEO is allowed to convince the public related allegations from the SEC. The practi- opportunity to create the U.K.’s leading to invest in his company, but not at the cal impact of the change could be limited. financial services group and create great expense of providing it with accurate Since Defendants will not be required to value for both sets of shareholders.” But information about the company’s admit to allegations beyond those in a crimi- weeks later, Lloyds had to turn to the govern- financial health. Taking the factual nal case, it could do little to help private liti- ment for a bailout, surrendering a 43% stake allegations in the (complaint) as true, gants sue on similar grounds, a concern in return for a £17 billion ($26.4 billion) the inference that Immelt acted with companies have long raised. The SEC policy injection of taxpayers’ money. Shareholders scienter is at least as compelling as the change comes after a review by senior claim they were not told about a deteriora- inference that he did not. enforcement staff that began last spring, tion in HBOS’s finances, and the extent of the according to Khuzami, who says it’s “unre- problem became known only when the bank Among the banks that were sued were lated” to the Citigroup ruling. posted a worse-than-expected £10 billion Bank of America Corp., Citigroup Inc., Source: Insurance Journal. loss in February 2009. Deutsche Bank AG Goldman Sachs Group Source: New York Times Inc., JPMorgan Chase & Co., and Morgan Stanley, court records show. The lawsuit covered investors who owned GE stock from Sept. 25, 2008 to March 19, 2009. During that 20 www.BeasleyAllen.com XIV. insurance company. This was the ninth insurance fraud lawsuit filed by Allstate in XV. INSURANCE AND 2011. The Complaint, filed in Federal District PREDATORY FINANCE UPDATE Court, as a Declaratory Judgment/Recovery action, says that a chiropractor, along with LENDING one layperson and two lay entities, illegally owned and controlled three professional CourT upholds AWArd For TrAvelers in medical corporations allegedly owned on reCord FAir-lendinG seTTlemenT by lAWsuiT paper by a medical doctor and used them to bAnk oF AmeriCA submit fraudulent billing to Allstate. In addi- A New York appellate court has affirmed a tion, four other individuals and four other Bank of America Corporation has agreed $420.4 million ruling in favor of The Travel- companies were also named as being part of to pay a record $335 million to compensate ers Companies, which is, of course, a large the overall scheme to submit fraudulent bills Countrywide Financial Corporation borrow- insurer. This ends one of the longest-running to Allstate. ers who were charged more for home loans and most complex asbestos-related litigations Allstate contends in the lawsuit that pro- based on their race and national in history. The dispute has to do with the fessional service corporations were actually origin. According to the United States obligations of certain reinsurers to Travelers, owned and controlled by laypersons, rather Department of Justice, Countrywide, which which joined in payments of nearly $1 billion than by licensed medical professionals. The was acquired by Bank of America in 2008, to cover asbestos claims against Western lawsuit also alleges that the Defendants sub- assessed higher fees and higher interest rates MacArthur. Travelers subsequently sought to mitted claims for services that were per- to more than 200,000 black and Hispanic recover some of its payments from its rein- formed by independent contractors in borrowers. The DOJ also stated that Coun- surance companies. violation of the No-Fault Law. Allegedly, trywide had steered minorities into higher- Among those reinsurers is the U.S. unit of there were also incidents of illegal referrals cost subprime mortgages from 2004 to 2007, industry leader Munich Re and units of the to a person who had a financial interest. The even when they would qualify for prime insurer and reinsurer ACE Ltd. In October suit contends that B.J.Y. Freeport Medical, loans. The penalty being paid by Bank of 2010, a lower New York court ruled that the P.C., B.Y.,M.D., P.C. And Innovative Medical, America, whose lender status is the second- reinsurers were obliged to help cover Travel- P.C. were fraudulently incorporated through largest in the U.S. by deposits, far exceeds ers. That ruling was affirmed on appeal by a scheme using the name of Benjamin Yentel, the $30 million total for all previous fair-lend- the appellate division of New York Supreme M.D., a licensed medical doctor. But, in ing settlements reached by the Justice Court. The court ruled that the reinsurance reality, those medical entities were actually Department, which includes the $6.1 million companies were bound by a concept known run by Stanley Anderson, D.C. And his wife paid last year by American International as the “follow the fortunes doctrine,” which Jill Anderson. Not one of these individuals is Group, Inc. holds that reinsurers share the burdens taken a medical doctor. Two management compa- The review that was conducted covered on by the insurance companies with which nies also were utilized to effectuate this 2.5 million loans, which included data on they do business. scheme, according to Allstate. They were terms and creditworthiness of borrow- The appellate court found that the lower HISLI, Inc. And Steady Management Corp. ers. According to the Justice Department, court “correctly determined that the follow- Included in this lawsuit are claims for Countrywide allowed its loan officers and the-fortunes doctrine required Defendants to improper self-referral against Oasis Physical brokers to vary interest rates and fees and it accept the reinsurance presentation made by Therapy, P.C. And also an unjust enrichment was aware that it was discriminating against (Travelers unit) USF&G.” The events giving claim against Ranj Corporation, Top Rehab minorities, while whites with similar credit rise to this case started in 1948, when Inc., and Soft Touch Acupuncture, P.C. The profiles received prime loans. Bank of USF&G first wrote a liability insurance policy lawsuit was filed following an investigation America has been cleaning up the liabilities it for Western Asbestos Co. By the late 1970s, by Allstate’s special investigative unit and inherited with the takeover of Countrywide victims harmed by asbestos began to sue seeks reimbursement for personal injury pro- for several years now as the North Carolina- Western Asbestos’ successor company, tection benefits Allstate paid on behalf of its based bank has committed around $40 Western MacArthur. In turn, in 1993 Western customers during timeframes specified in billion for mortgage refunds, lawsuits and Asbestos sued USF&G and two other insurers the lawsuit. foreclosures since 2007. seeking indemnification. It should be noted that since 2007, All- This settlement resolves a lawsuit brought In 2002, the parties reached a settlement, state has filed 36 separate fraud lawsuits in by Illinois Attorney General Lisa Madigan which resulted in Western MacArthur going New York alone. In these suits, Allstate who also alleged discriminatory lending into bankruptcy. USF&G then sought indem- sought almost $200 million in damages. It’s practices by Countrywide. According to nification from its reinsurers. Travelers was good to know that Allstate not only agrees Attorney General Madigan, the settlement represented on the appeal by Simpson that the civil justice system should be alive provides for an independent administrator Thacher & Bartlett, a New York law firm, and well, but also that the insurance giant to distribute payments to borrowers identi- and they did a very good job in this compli- believes in punishing wrongdoers in the fied by the Justice Department. Compensa- cated matter. courts it plans to do. tion to borrowers could reach more than Source: Insurance Journal Source: Insurance Journal $1,000 per loan, and the exact size will depend on who originated the loan and whether the borrower was steered into a subprime product. The settlement checks AllsTATe Files AnoTher FrAud CAse should start going out to qualified borrowers lAWsuiT in neW york in about 24 months. Bank of America is still in negotiations, Allstate Insurance is trying to recover along with four other mortgage servicers, to more than $1.1 million from 16 New York- settle unrelated probes from U.S. regulators area Defendants in a civil lawsuit filed by the and several state Attorneys General involving www.JereBeasleyReport.com 21 the use of so-called robo-signers by the com- 1,500 barrels, Montana environmental offi- warnings were issued in the middle of the panies to improperly submit foreclosure doc- cials said. night and never reached those at the camp- uments without first properly verifying The settlement represents only part of ground. The camp had no ranger on-site, no them. Before its acquisition, Countrywide Exxon’s liability stemming from the pipeline cellphone service and no sirens, and deputies was the biggest provider of subprime mort- rupture, according to Montana Department at the nearest sheriff’s departments were at gages in the U.S. Regulators have said these of Environmental Quality Director Richard least an hour’s drive away. After the flood, loans were offered disproportionately to Opper. Exxon in November estimated its workers installed a new transmitter so minorities and were more likely to end in overall response to the spill, including weather-alert radio signals could reach the default. Countrywide was also one of the cleanup, would cost $135 million and said it campground. worst when it comes to how it treated folks. had reached settlement agreements with Roy Payne, a law yer with Gregor io, Bank of America saved Countrywide from more than 95% of riverside property owners Gregory & Payne, located in Shreveport, La., possible bankruptcy in July 2008 when it affected by the accident. In addition, Exxon represents the family in this case. Another purchased the company for $2.5 billion. It must still settle with the state for any Louisiana family, which lost three of its had to know, or at least be highly suspicious damages assessed by the Montana Attorney members in the flood, filed a lawsuit last year. of how truly bad Countrywide was at the General under the state’s natural resource It will be interesting to see how these cases time and ran the risk of massive litigation. laws. The cause of the accident, which develop as they progress through the system. Borrowers with questions about the settle- occurred amid historically high water levels Source: Claims Journal ment referred to above can send an e-mail to on the pristine river, remains under investiga- countr y email@example.com and tion by the federal Pipeline and Hazardous request information. But, if you have any Materials Safety Administration. Exxon said questions about predatory lending, or mort- in a statement that it regretted the incident invesTmenT bAnker Files suiT over gage servicing fraud generally, contact Bill and took full responsibility for the cleanup. sexuAl AssAulT in hoTel room Robertson, a lawyer in our firm’s Consumer Source: Yahoo News An investment banker on a business trip Fraud Section at 800-898-2034 or by email at to Finland has sued the Starwood Hotels Bill.Robertson@beasleyallen.com. Bill is cur- chain, saying a front desk clerk gave her rently handling cases against Countrywide, Bank of America and several other compa- lAWsuiTs Filed ArisinG ouT oF deAdly room key to a drunken man who then nies involving predatory lending practices. ArkAnsAs Flood assaulted her in bed. Alison Fournier, a New York investment banker who now lives in He is also handling cases involving mortgage Three Texas residents whose children Florida, was assaulted in her hotel room in servicing fraud against several companies. were injured when floodwaters swept 20 Helsinki a year ago, according to the lawsuit Source: Bloomberg News people to their deaths at an Arkansas camp- filed in U.S. District Court in Manhattan ground have a filed a lawsuit in federal court against Starwood Hotels & Resorts World- against the U.S. Forest Ser vice and the wide Inc. Ms. Fournier says she was in bed XVI. National Oceanic and Atmospheric Adminis- tration. The claim, filed by three residents of in her room at the Hotel Kamp on her first work trip abroad on January 15, 2011, when PREMISES Smith County, Texas—Natisha Rachal and she awoke to “someone climbing into her Benjamin and Judy Pate—seeks damages for bed groping at her.” LIABILITY UPDATE personal injury and wrongful death in con- Fearing imminent rape, Ms. Fournier, then nection with a June 11, 2010, flash flood at age 30, fled to the front desk clad in a bath- the Albert Pike Recreation Area near Glen- robe and screamed for help, only to be told exxon To pAy monTAnA $2.4 million wood. The federal agencies are accused of by front desk staff “that the man was her failing to “properly maintain the severe husband.” The T-shirt-wearing attacker, Exxon Mobil Corp. will pay more than $2 weather and flooding warning system” at the clearly intoxicated and claiming at 4 a.m. to million in penalties and cleanup costs to campground and not correcting “known be the Plaintiffs’ husband and that he had Montana for a pipeline rupture in July that communications problems that prevented locked himself out of the room, was given a spilled an estimated 1,500 barrels of oil into campers from learning of the imminent key to the room without any attempt to the Yellowstone River. Under the agreement danger of flooding.” verify his claim. Ms. Fournier’s lawyer, Gloria between Exxon and the Montana Depart- Seven children and 13 adults from Arkan- Allred, said the assailant was an American ment of Environmental Quality, the Texas- sas, Louisiana and Texas died after heavy staying at the hotel who had made overtures based oil company will pay a fine of $1.6 rains inundated the remote valley in the to the woman earlier and been rebuffed. million. This is the largest penalty ever Ouachita Mountains and pushed the Little Starwood said in a statement its policy is to levied in Montana for violations of its water Missouri River out of its banks. The Plain- ensure proper identification and verification quality regulations. Exxon also would reim- tiffs’ sons were camping with nine others, before issuing a room key. That should be a burse Montana $760,000 for state cleanup including one of the boys’ fathers, Anthony policy and practice for all hotels and one that expenses and cover any future costs should Smith, who died along with five others. The must be strictly adhered to. The suit seeks the state incur them. campground has a documented history of unspecified damages for gross negligence, The proposal is open for public comment flooding events dating back to 1940, accord- economic loss, physical and emotional dis- through February 21. Exxon’s Silvertip pipe- ing to allegations in the Complaint, and it’s tress and pain and suffering. Ms. Fournier line burst on July 1 at a crossing beneath the claimed that the Forest Service “negligently went public with her lawsuit hoping to flood-swollen Yellowstone River near Bill- failed to post flood hazard warning signs and “warn other women who may be travelling ings, Montana, about 150 miles downstream notices or to otherwise warn campers of the alone of the danger that they may face.” Any from Yel lowstone National Park. T he dangers of flooding in the area.” person has the right to feel safe in a hotel company originally put the size of the spill at Weather Service forecasters sent warnings room. In that regard, hotels have a duty to act 1,000 barrels of crude but has since revised four times in a single hour to advise people of responsibly to protect their guests. If the alle- the volume of oil released into the river at the potential for flash flooding, but those gations in this lawsuit can be proved, this 22 www.BeasleyAllen.com hotel failed to perform its duty in a grossly and did a very good job. Jeff is a nationally rec- Massey Energy, settled with ten families soon negligent manner. ognized lawyer for victims of sexual abuse. after. A lpha Natural Resources, which Ms. Fournier was unable to return to work Source: Claims Journal acquired Massey last year, settled with the as a banker, saying she felt unsafe even in remaining 19 families and also one of the sur- the most ordinary circumstances. A gradu- vivors. In December, Alpha agreed to pay ate of Princeton University and Harvard Busi- $1.5 million to each of the families of the 29 n e s s S c h o o l , M s. Fou r n i e r q u it h e r XVII. men killed as part of a $209 million settle- high-six-figure-paying job as a vice president at an unnamed investment banking firm and EMPLOYMENT ment of civil and criminal charges stemming from the accident. left New York City to be nearer her family in LITIGATION Source: Insurance Journal Florida. “Business travel is often a critical part of a successful career, and women should not have to fear travelling or wonder novArTis seTTles overTime CAse Tennessee plAnT FAiled To proTeCT if they will be targets of violence when they are staying alone in a hotel,” Ms. Fournier AGAinsT explosions A Novartis AG U.S. subsidiary has agreed to said in a statement. The Hotel Kamp oper- pay $99 million to settle long-running over- A company knew of the explosive danger ates under Starwood’s international Luxury time litigation involving its sale representa- of dust throughout its Tennessee plant, but Collection chain. tives. A group of current and former sales didn’t do enough to prevent three separate Gloria Allred, a founding partner at Allred, representatives sued Novartis Pharmaceuti- blasts that killed five people last year. That Maroko & Goldberg, located in Los Angeles, cals Corp. in 2006, seeking overtime pay for was the finding of the U.S. Chemical Safety Cali f., represents Ms. Fournier in this hours worked in excess of 40 hours a Board, which released a final report last case. This is a most important case that will week. A federal district judge in New York month on the three accidents at the Hoegan- be watched very closely by the hotel industry agreed with Novartis that the sales represen- aes Corp. plant in Gallatin, near Nash- and by working women who must travel in tatives were exempt from federal overtime ville. The report found that the dust was first their jobs. rules. But the Second U.S. Circuit Court of noted by an insurance audit in 2008, which Source: Reuters Appeals disagreed and reversed the lower prompted sa fet y testing by the plant. court’s ruling in July 2010. The U.S. Supreme Company officials learned that the dust was Cou r t decl i ned to hea r the case last combustible, but the federal panel found it sAn bernArdino CounTy seTTles year. That led to negotiations which ulti- didn’t properly follow through on its plans to moTorCyCle ClAim For $3 million mately resulted in this settlement. prevent an accident. Investigator-in-charge The settlement is subject to final court Johnnie Banks says his own visits to the plant San Bernardino County has agreed to pay approval. U.S. District Judge Paul A. Crotty, have shown improvements, but he wouldn’t $3 million to settle a lawsuit that blamed dan- sitting in Manhattan, said at a pretrial confer- speculate on whether the plant is now safe gerous road conditions for a motorcycle ence that he would grant preliminar y for workers. Hopefully, those in charge of crash that left a passenger with head and approval to the settlement when he received safety at the plant will take all necessary neck injuries. Lisa Hermann sued the county it. A fairness hearing was scheduled by the steps to prevent a disaster. after a 2007 crash on a road where recent court for May 31. If approved, Novartis will Source: Insurance Journal heav y rains had washed out part of the have to compensate its sales representatives road. A trench was left and the crash for years of overtime pay. David Sanford, a occurred before crews made repairs. lawyer with Sanford Wittels & Heisler, repre- sented the sales representatives in this case, oshA CiTes rAilCAr CompAny For Source: Insurance Journal and he did a very good job. Worker’s deATh Source: Wall Street Journal American Railcar Industries Inc., head- FloridA Jury AWArds $3 million in dAy quartered in Saint Charles, Mo., was cited by CAre Abuse CAse OSHA for ten serious safety violations after A Florida jury awarded $3 million last XVIII. an employee was electrocuted while per- forming repair work on a tanker-style railcar month to the family of a young girl who was WORKPLACE on July 25th at the company’s work site near sexually abused at a day care center. The Miami-Dade Circuit Court jury found Discov- HAZARDS Marmaduke. Upon receiving a fatality report from the employer, OSHA initiated an investi- er y Day Care at fau lt a f ter a lengthy gation at the company’s facility and found trial. Trial testimony showed that the day that workers were being exposed to electri- care center director’s son admitted abusing seTTlemenTs reporTed in WesT virGiniA cal shocks from welding equipment. The vio- the girl on multiple occasions when he was mine blAsT ThAT killed 29 lations include: left alone with the children in 2008. Testimony also showed that a center Coal company Alpha Natural Resources has • failing to provide personal protection for employee falsified documents related to the reached settlements with all the families of employees conducting cutting and welding abuse. The abuse happened when, the girl the miners killed in the worst U.S. mining operations; now eight, was a preschooler. The boy was 13 disaster in four decades. The company settled a total of 20 wrongful death cases. The settle- • failing to properly mark the power supply at the time and later pleaded guilty to sexual and control boxes for voltage, current and battery in juvenile court. The daycare cen- ments must be approved by a West Virginia court before payments are made. wattage; ter’s law yer said the verdict would be appealed. Jeff Herman, a law yer with Twenty-nine miners died in the April 2010 • failing to use fixed wiring instead of flexi- Herman, Mermolstein, & Horonitz, located in explosion at the Upper Big Branch mine in ble cords and protect the wiring from pos- Miami, Fla., represented the family in the case West Virginia. The mine’s then-owner, sible damage; www.JereBeasleyReport.com 23 • failing to remove defective electrical oshA Fines souTh dAkoTA GrAin CB Radios, GPS, and f leet management equipment from service; and CompAny For violATions systems. Drivers may also use hand-held cell phones for emergency purposes. Federal • failing to inspect and mark web slings. A South Dakota grain company is facing Motor Carrier Safety Administration Adminis- A mer ican R ai lcar I ndustr ies, wh ich $95,000 in fines after federal investigators trator Anne S. Ferro said of the new regula- employs about 260 workers at the Marmad- found more than a dozen safety violations. tion: uke facility and about 1,500 workers nation- OSHA has proposed penalties amounting to $95,0 0 0 agai nst LaBolt Far mers Grai n The final rule represents a giant leap wide, designs and manufactures railcars. The for safety. It’s just too dangerous for proposed penalties total $ 61,400. The C o mp a n y I n c., w h i c h i s l o c a t e d i n LaBolt. Three of the 13 citations were con- drivers to use a hand-held cell phone company has 15 business days from receipt of while operating a commercial vehicle. the citations to comply, or request an infor- sidered serious, including failing to effec- tively train workers entering confined spaces Drivers must keep their eyes on the mal conference with OSHA. Obviously, these road, hands on the wheel and head in are extremely serious violations if OSHA’s and grain bins. A serious violation is when there is substantial probability that death or the game when operating on our findings are correct. roads. Lives are at stake. serious physical harm could result from a hazard that the employer knew or should It remains to be seen how this new regula- have known about. tion will be enforced. This ban comes oshA CiTes mississippi shipyArd For 50 Source: Claims Journal almost two years after a fatal trucking acci- sAFeTy violATions dent in Kentucky involving an Alabama The Occupational Safet y and Health truck driver. The trucker had just made a call that lasted one second before he crossed Administration has cited a Pascagoula, Miss., shipyard for 50 safety violations and has pro- XIX. over the median, striking a van carrying a posed penalties of $176,444. According to TRANSPORTATION family of 12. The trucker and ten of the OSHA, the penalties against Huntington family members died in the crash. During Ingalls Industries and five subcontractors the National Transportation Safety Board’s come from a June inspection after receiving a investigation, it was learned that the trucker depArTmenT oF TrAnsporTATion bAns had used his cell phone 69 times while complaint about safety hazards. Huntington hAnd-held Cell phone use by drivers Ingalls was cited for violations carrying pen- driving in the previous 24 hours before the alties of $166,300. The violations found by accident, including four calls in the minutes The U.S. Department of Transportation’s OSHA included: blocked exits; tripping and before the crash. latest attempt to eliminate distracted driving fall hazards; allowing lead, arsenic and Distracted driving accounted for 5,474 became effective the first week of January cadmium dust to accumulate in a lunch area; deaths and half a million injuries in 2009. 2012. In November 2011, U.S. Transportation and the dispensing of flammable liquids in Many large trucking companies had already Secretary Ray LaHood announced a final rule improper containers. banned cell phone use before this regulation prohibiting interstate truck drivers from Five subcontractors were cited for viola- became effective. If you would like more using hand-held cell phones while operating tions that included improper handling of information on this issue, please contact Cole their vehicles. The final rule provides the compressed gas cylinders and other safety Portis at Cole.Portis@beasleyallen.com or following: and electrical hazards. One subcontractor Stephanie Stephens at Stephanie.Stephens@ received no monetary penalty. Ingalls says it • It prohibits commercial drivers from using beasleyallen.com. took this as an opportunity to make its opera- a hand-held cell phone while operating a Source: U.S. Department of Transportation, The New tions safer. The company said in a statement: truck or a bus York Times The OSHA inspection was an opportu- • The rule imposes a $2,750 penalty for each nity for us to identify opportunities to offense and disqualification from operat- $17.8 million AWArded in mArine JeT further enhance our safety program. ing a commercial motor vehicle after mul- tiple offenses CrAsh lAWsuiT We monitor the safety of our shipyard and shipbuilders daily and we are A federal judge has ordered the U.S. focused on continually improving. In • It suspends the driver’s CDL after two or more serious traffic violations Marine Corps to pay $17.8 million for the fact, injuries and lost time cases in 2008 crash of a fighter jet into a San Diego Pascagoula are down in 2011 from • The rule holds commercial truck and bus home that killed four people. U.S. District 2010 by 15 and 8% respectively. Wher- companies liable for their employees’ Judge Jeffrey Miller made the award at the ever possible, inspection citations were offenses by imposing a maximum penalty conclusion of a non-jury trial. The Marine corrected immediately or corrective of $11,000 for allowing their drivers to use Corps accepted responsibility for the crash in action plans were immediately imple- hand-held cell phones. 2008 of the F/A-18D into San Diego’s Univer- mented. We share OSHA’s commitment sity City neighborhood. The crash claimed to the safety of our shipbuilders and Specifically, the final rule prohibits com- the lives of Don Yoon’s wife, mother-in-law appreciate this opportunity to further mercial drivers from holding, dialing, or and two daughters. Mr. Yoon was at work improve our safety program. reaching for a hand-held cell phone. The when the crash occurred. driver may initiate, answer, or terminate a The Marine Corps said the aircraft went It’s good to see a company taking an OSHA call by touching a single button and only if citation and using it to improve safety prac- down because of mechanical failure, as well the cell phone is accessible from where the as pilot and ground personnel error. The tices. Hopefully, the intent is to actually do driver is sitting in his seat. A driver is prohib- what the company says in the statement. pilot ejected safely. The Corps has said that a ited from reaching into the passenger seat, series of mistakes ultimately led the pilot of Source: Claims Journal under the driver’s seat, or into the sleeper the malfunctioning jet to bypass a coastal berth for the cell phone. Drivers may still use base and fly over neighborhoods toward an 24 www.BeasleyAllen.com inland base. The victims were 36 year old guilty to vehicular homicide and in April was first crash. The bus driver, Bonner, 61, was Youngmi Lee Yoon, her daughters Grace, 15 sentenced to two years, seven months in killed instantly. months, and Rachel, two months; and prison. As part of his plea deal, McNeil Bonner’s widow, Debra, filed the lawsuit Seokim Kim Lee, 59, who was visiting from admitted being under the inf luence of in a Wyoming federal court. Several passen- South Korea. The judge ruled the children’s alcohol at the time of the crash. gers have also filed lawsuits. Some of the pas- deaths robbed their father of “the comfort, It was alleged in the civil lawsuit that sengers expressed concern that Bonner was companionship, society and love a young McNeil consumed far too much alcohol at driving too fast for the road conditions and child is capable of providing to a new parent Captain Jack’s. It was further alleged that the appeared distracted during the and, then, in later life.” The judge allocated employees of the bar sold numerous alco- drive. Although the morning was clear, the nearly $10 million to Don Yoon, nearly $4 holic beverages over a considerable number highway was icy in spots. One passenger told million to his father-in-law and the remainder of hours to McNeil, its customer. McNeil investigators he had approached Bonner with to the father-in-law’s three adult children. departed in the early-morning hours on the his concerns and was warned to go back to Source: Los Angeles Times day of the incident, in an obviously intoxi- his seat or be kicked off the bus. In Novem- cated condition. The Plaintiffs contend ber, four passengers settled claims in their Captain Jack’s employees served McNeil too lawsuit filed against both Arrow and Darren much to drink and let him drive away even Nelson Trucking. The cases of three other FATAl ATv CrAsh lAWsuiT seTTled For though he was obviously drunk. The lawsuit passengers are still pending. A trial in that $2.7 million contends the Defendants failed to “properly case is set for March. Darren Nelson Truck- instruct, educate and supervise their employ- ing is no longer in business. A $2.7 million settlement has been reached ees to avoid selling alcoholic beverages to Source: Trib.com in a wrongful death lawsuit involving an all- obviously intoxicated patrons.” Patrick Duffy, terrain vehicle crash. The crash killed a lawyer from Sumner, Wash., represents the 19-year-old Jonathon Byram, a college student estate in the lawsuit. from Maryland. The decedent was a passen- nTsb FAulTs piloTs in FATAl heliCopTer ger on the ATV driven by Mark Renehan, CrAshes another college student, when the vehicle flipped over. The fatal crash occurred in the WidoW seTTles lAWsuiT From 2009 bus Federal safety investigators have blamed early morning hours of July 5th after a 2009 CrAsh pilots who tried to outrun approaching Independence Day party. storms in two fatal medical helicopter Renehan was charged with homicide The widow of a bus driver who died in a crashes in South Carolina and Tennessee, for while driving under the influence and with collision with a tractor-trailer near Casper, the crashes. The National Transportation involuntary manslaughter. A jury later acquit- Wyo., has settled her lawsuit against the Safety Board issued very similar findings in ted him on the criminal charges. The vic- trucking company. The settlement came each crash, saying the pilots could have made tim’s father, Daniel Byram, filed the civil about a month before the case was scheduled safer decisions, but risked flying into bad lawsuit in federal cour t, alleging that to go to trial. The suit was filed against weather in order to return home. Two pilots Renehan was intoxicated and driving exces- Darren Nelson Trucking and its driver, and four flight nurses were killed in the 2009 sively fast, causing the death of his son. The Steven Burson, for the wrongful death of the and 2010 crashes. The board studied an suit charged that Renehan’s family served bus driver, Donald Bonner. He died when his increase in crashes involving medical heli- alcohol to the students in their home on a Arrow Stage Lines bus struck a tractor-trailer copters between 2002 and 2005 and found “continuous basis” over several hours prior to that had overturned on Interstate 25. Twenty- there to be recurring safety issues, including the wreck. It was reported that Renehan nine passengers on the bus were injured in a lack of flight risk evaluations and less strin- admitted to state police he had consumed the crash. gent requ i rements for f l ights without alcohol. Kevin Foley, a lawyer based in Scran- The lawsuit accused Burson of failing to patients on board. ton, Pa., represented the Bryam family and he use flares or emergency triangles to warn In the September 2009 crash in South Car- did a very good job in the case. drivers that his truck was partially blocking olina, the NTSB said the Texas company that the highway. It also claimed Darren Nelson operated the medical helicopter, OmniFlight, Source: The Times Tribune Trucking hired Burson with knowledge that contributed to the crash because it did not he had a bad driving record, with multiple have a formalized dispatch system that traffic citations in his past. Lawyers for the required its pilots to check in with dispatch- driver And bAr sued over AlCohol- Defendants claimed Burson wasn’t able to set ers before taking off. The system could have relATed deATh flares or emergency triangles because he was helped the pilot realize there were storms still trapped in the tractor trailer. They also between the Charleston hospital where he A wrongful death lawsuit has been filed by denied the trucking company was negligent dropped off the patient and the helicopter’s the estate of Samuel Stephens, a 24 year old, in training and supervising its driver. home base in Conway, the safety board said in the Superior Court of Pierce County. The The crash occurred early on Dec. 5, in a report on the accident. The pilot in the wrongful death suit was filed against Captain 2009. According to allegations in the lawsuit, South Carolina crash likely became confused Jack’s Bar and Grill, its owners, and Joseph P. Burson had been driving for 11 hours straight by low clouds and stormy conditions and lost McNeil, the drunk driver whose car crashed when he lost cont rol of h i s t r ac tor - control of his helicopter, the NTSB said. He into the victim’s car. Stephens was killed in a trailer. The unit came to rest on its side, par- elected “to enter the area of bad weather, car wreck involving the drunk driver. The tially blocking the northbound lanes of the despite the availability of safer options,” the crash occurred on September 6, 2010. Ste- highway. Burson told Wyoming Highway safety board said. phens was driving on a public highway about Patrol troopers that he had veered to the left In the March 2010 crash in Tennessee, the 2 a.m. when McNeil’s car crossed the center to avoid deer on the highway. But two troop- NTSB said the pilot was finishing a 12-hour line of the highway and crashed into his car. ers walked the area, and failed to find any night shift and told another pilot he thought The victim, who was engaged to be tracks in the snow. The Arrow bus collided he had about 18 minutes to beat a storm married at the time of his death, was working with the tractor-trailer a short time after the moving into the area and return to his home at a church as a youth pastor. McNeil pleaded www.JereBeasleyReport.com 25 base in Brownsville, which is about 55 miles that was missed, according to his testimony. Cline said that if the FAA worked with the northeast of Memphis. The pilot reportedly But, he pointed out that the FAA’s goal is to industr y to develop certification for air told another pilot that he “wanted to get the make it clearer what standards and require- bosses, it “would make air shows safer.” But helicopter out” and was going to leave the ments are already in place. McGraw had this from all accounts there won’t be any major flight nurses behind. But the nurses returned to say: changes coming from the FAA. to the helicopter before the pilot was able to Source: USA Today leave the hospital. At this point, I’m not aware of any On its return trip, the helicopter likely ran changes—at least any significant or into the leading edge of the storm, which substantive changes — to the policy included heavy rain, lightning and wind and guidance we have in place. If we become aware of a risk that exceeds XX. gusts up to 20 knots. The report said there was no evidence that the helicopter was the boundary of what we think is HEALTHCARE struck by lightning before it crashed. “Based a c c ept a bl e, we w il l m a ke thos e changes. But not currently. ISSUES on these conditions, the helicopter likely encountered severe turbulence from which The FAA, he said, stepped in after the there was no possibility of recovery, particu- Reno crash and separated the regulation of The FdA ApprovAl proCess For neW larly at a low level,” the report said. The report noted that while the helicopter ran air shows, where planes simply perform aero- mediCAl deviCes should be sTronGer batics, and races, where pilots race up to 700 into bad weather, the crash wouldn’t have mph in a closed course. The NTSB, which The public should be up in arms over the happened if the pilot had chosen to remain at investigates crashes and watches over trans- ongoing activities by the global, multi-billion the hospital. The report stated: portation safety, held the January hearing medical device manufacturing industry in The pilot made a risky decision to because of the Sept. 16 Reno crash and the our Nation’s Capitol. The industry has its lob- attempt to outrun the storm in night deaths of five performers at other air shows byists working overtime to get the Food and conditions, which would enable him to last year. Drug Administration to take shortcuts in the return the helicopter to its home base Eleven people died and about 70 others approval process of the medical devices that and end his shift there, rather than were badly injured at the Reno race after a would put millions of lives at risk. The choosing a safer alternative of parking souped-up World War II-era fighter crashed medical device approval process should be the helicopter in a secure area and in front of VIP boxes and sent debris into the made stronger and certainly not made any exploring alternate transportation crowd. The events are popular, but feature weaker. The only reason that folks are not arrangements or waiting for the storm risky f lying. The $300 million industr y greatly concerned over the lobbying activi- to pass and returning to base after attracts 12 million spectators a year at about ties is that they don’t know what goes on sunrise when conditions 300 shows. Nobody died at air shows in 2009 either in Congress or at the FDA. That is why improved. This decision-making error or 2010. it’s so easy for lobbyists to control what played an important causal role in NTSB members are looking in particular at happens in Washington. this accident. whether planes should fly farther away from Weak regulation of medical devices causes spectators and whether flight directors at air serious health and safety problems for the The report also noted that the pilot was shows and races should be regulated. public. For example, consider the defective nearing the end of his shift, during which he Deborah Hersman, chairman of the NTSB, artificial hips manufactured by the DePuy had flown previous missions and may have observed: division of multinational pharmaceutical had limited opportunities to rest. “The pilot’s company Johnson & Johnson. Two years ago, length of time awake, his night shift and the Performers are assuming a certain the company’s metal-on-metal hip implants accident occurred at an early hour that can level of risk. But when spectators come were recalled because they carried the risk of be associated with degraded alertness,” the to an event, they are coming to be releasing metal toxins into the hip tissue, report said. The board was not able to deter- entertained and they don’t expect to be which caused inf lammation and serious mine whether or to what degree fatigue in a situation where their lives are at internal damage. Just a few years after receiv- played a role in the crash because it did not risk. ing the hips, which were implanted in 40,000 have complete evidence on how rested the The FAA doesn’t have certification stan- patients in the United States (and tens of pilot was before the crash. dards for air bosses, who direct the aircraft thousands more worldwide), many patients Source: Claims Journal during air races and shows much like air-traf- required costly, painful and risky operations fic controllers. That appears to have come as to replace the devices. a surprise to NTSB board members. Michael This is just one of many examples of medical devices that fell through the cracks no biG ChAnGes in Air shoW sAFeTy Umstead, FAA’s national aviation events spe- of our nation’s system for regulating these rules likely cialist, said waivers for customary flight stan- devices, injuring or killing thousands of dards are provided to air shows, which then hire people to direct planes in flight. patients. Catastrophic failures, such as the Air shows and air races are sufficiently reg- George Cline, president of Air Boss Inc., all-metal hip implants, show that the FDA ulated despite tragedies like the September said these f light directors are typically approval process should be strengthened and crash at a Reno race that killed 11 people, the former air-traffic controllers with a great deal not weakened. Shockingly, lobbyists repre- National Transportation Safety Board was of aviation experience. Cline said there are senting the powerful medical device industry told last month. John McGraw, deputy direc- briefings for pilots before each show to are trying to persuade lawmakers to make tor of the Federal Aviation Administration for review flying patterns, weather and direc- the already-insufficient approval process flight standards, told the board that current tions. But he also said there is no training in even weaker than it is. Their aim is to push regulations are enough for overseeing shows place right now for an air boss. That dis- their products through a weakened process and races. FAA officials review standards turbed NTSB board member Robert Sumwalt. and get them to market as quickly as possi- after every crash to see if there is some risk ble, even without undergoing adequate 26 www.BeasleyAllen.com testing to assure that they are reasonably safe company or one of its subsidiaries. It was In June 2007, Johnson & Johnson applied for patients. In other words, they are putting stated in the letter: for U.S. Approval of Doribax for the treat- profits first and neglecting safety. ment of pneumonia acquired in the hospital, Unfortunately, the regulatory problems are In the future, if a reasonable person known as nosocomial pneumonia, which not confined to medical devices. New pre- would have questions about the includes ventilator-associated pneumonia. In scription drugs are often rushed to market— impartiality of any member of an August 2008, the FDA asked the company for many being put on what is referred to as the advisor y commit tee regarding a more information. The company says it Fast-Track by the FDA—and approved by the matter before the committee, the FDA resubmitted its application and is still in dis- agency without being adequately should not allow that member to par- cussions with the FDA. tested. There are hundreds of examples of ticipate in the matter and should Source: Claims Journal drugs that were approved, rushed to market make public the relevant information and later had to be recalled because of about that committee member. serious health and safety issues. We are badly in need of an overall of the FDA, and the In light of the evidence concerning Bayer’s J&J delAyed reporTinG insulin pump public should insist that Congress properly financial ties to committee members, the problems watchdog’s letter stated that a “new advisory fund the agency. Only when that is done, can committee—without questionable impartial- The widening quality problems at Johnson the FDA do its job. ity or any conflicts of interest—should re- & Johnson are causing concerns as yet Source: Public Citizen evaluate the safety of Yaz and Yasmin. another J&J business — at least the seventh Source: Lawyers USA Online — has come under scrutiny. The lapses are hard to reconcile with what once was J&J’s WATChdoG CiTes ConFliCTs in CAllinG stellar image. Executives at J&J cite the cor- For neW yAz pAnel J & J hAlTed doribAx TriAl due To porate credo, prominently displayed at head- q u a r t e r s , s t r e s s i n g t h e c o m p a n y ’s sAFeTy issues An independent watchdog group has responsibility to the doctors, patients and asked the Food and Drug Administration to The FDA has reported that Johnson & parents who use its products. disregard a safety panel’s recommendation to Johnson shut down a clinical trial of its anti- Animas Corp., the J&J unit that makes keep the popular birth control drugs Yaz and biotic Doribax for a type of pneumonia after insulin pumps for diabetics, is currently Yasmin on the market. Evidence was cited patients taking the drug had higher rates of being investigated. The Food and Drug that several panel members operated under death and a lower cure rate than those who Administration has warned Animas that conflicts of interest. Danielle Brian, Execu- got an alternative medicine. Doribax is cur- unless it corrects violations soon, it could tive Director of the Project of Government rently approved in the United States to treat face fines and other sanctions for selling Oversight, stated in a letter to the FDA: adults with complicated urinary tract or faulty insulin pumps and delaying disclo- abdominal infections. It’s not approved by sures of serious injuries to patients using its Because of the [ phar maceutical ] OneTouch Ping and 2020 pumps. The FDA industry ties of these members, the the FDA for any type of pneumonia. In a clin- ical trial, testing Doribax on patients with ordered Animas to explain by Jan. 20 why it joint committee’s conclusion—which kept selling pumps known to fail and also to amounted to an endorsement of the ventilator-associated pneumonia, those who received the drug had a 6.7% higher rate of submit a plan to recti f y its fai lure to safety of these oral contraceptives— promptly report cases where its device should be disregarded. death from any cause than patients getting an alternative. might have caused or contributed to death or The Jan. 11 open letter was e-mailed to Patients taking Doribax also had an 11.2% serious injury. FDA Commissioner Margaret Hamburg and lower rate of being cured than patients In a Dec. 27 warning letter posted online addressed concerns over the outcome of the getting imipenem-cilastatin, the generic by the FDA, the agency wrote to Animas and December joint meeting of two federal advi- version of Merck & Co Inc’s Primaxin. J&J CEO Bill Weldon that inspectors found sory panels to address the safety of drospire- Doribax, known generically as doripenem, is Animas, based in West Chester, Pa., never none-containing oral contraceptives like approved for hospital-acquired pneumonia in reported on one complaint about serious Bayer’s Yaz and Yasmin. The FDA sponsored Europe. The trial was conducted as part of a patient injury and delayed reporting on two the meeting of the agency’s Reproductive post-marketing requirement from the Euro- others. Those patients were hospitalized Health Drugs Advisory Committee and Drug pean Medicines Agency, according to a with dangerously high blood sugar, respira- Safety and Risk Management Advisory Com- spokesman at Janssen, the J&J unit that tory failure and coma, and a life-threatening mittee. The joint panel voted 15 to 11 against markets the drug. Japanese drugmaker Shion- complication called diabetic ketoacidosis a Yaz and Yasmin recall, but also voted 21-5 ogi & Co. manufactures Doribax. caused by lack of insulin to break down in favor of increased information on the The trial, which had study sites in several blood sugar. potential risk of blood clots on the labeling of countries, including the United States, was The problems follow a string of nearly 30 Bayer’s popular birth control pills. halted in May 2011. This was said to have product recalls announced by New Bruns- Recent studies have found that drospire- been based on the recommendation of an wick, N.J.-based Johnson & Johnson since none causes a greater risk of blood clots than i ndependent data mon itor i ng com m it- September 2009, with the latest just three similar ingredients used in previous types of tee. The company says it has now finished weeks ago. The recalls have included mil- birth control pills. Thousands of lawsuits are analyzing the results. In the halted trial, the lions of bottles of Tylenol, Motrin and other pending across the country alleging that Yaz, 28-day all-cause mortality rate was 21.5% for nonprescription medicines for children and its predecessor, Yasmin, and the generic those who received Doribax, compared adults, prescription drugs for seizures and Ocella cause heart attacks, strokes and gall- with 14.8 % in the control group. The HIV, faulty hip implants and contact lenses bladder failure. According to the watchdog’s Janssen spokesman claims that Doribax was that stung the eyes. Reasons ranged from letter, at least four members of the commit- safe and effective for its approved uses in contamination with metal shards and glass tee either were paid as consultants by Bayer the United States. particles to nauseating odors and inaccurate or received research funding from the drug levels of active drug ingredients. www.JereBeasleyReport.com 27 Insulin pumps, which are about the size of FdA Fines red Cross neArly $9.6 appears to still have problems. The latest a cell phone, automatically inject small million For AlleGed blood sAFeTy sanctions at least demonstrate the existence amounts of insulin through a tiny needle lApses of problems. Due to the subject matter and under the skin throughout the day to keep the potential for harm, this is a matter that diabetics’ blood sugar at a safe level. Patients It was reported last month that federal needs to be resolved. program the device to inject additional health officials fined the American Red Cross Source: MSNBC insulin right before a meal or snack, accord- nearly $9.6 million for blood management ing to the amount of carbohydrates about to practices described as “sloppy and unsafe.” be eaten. This is the second multi-million-dollar An Animas spokeswoman, Caroline Pavis, penalty levied against the Red Cross in the XXI. says that the company did not report the three patient incidents to FDA as required last two years. This most recent fine by the Food and Drug Administration came after ENVIRONMENTAL within 30 days because each involved patient inspections at 16 Red Cross blood centers CONCERNS was not using the pumps according to direc- between April and October 2010, which tions. In one case, she said, the patient we r e s a i d t o r e v e a l o n g o i n g p r o b - ignored an alarm signaling the cap had come lems. According to the FDA, those problems WesT virGiniA CourT To heAr ChemiCAl off the insulin cartridge inside the device, appeared to endanger donors and to allow preventing insulin from being pumped into plAnT TesTinG CAse potentially contaminated blood into the the body. She did say that Animas will now nation’s blood supply. But, an FDA spokes- A West Virginia jury will have to decide report all patient complaints promptly. In a woman said the agency found no evidence of whether the owners of a former chemical separate issue, some pump keypads for con- actual harm to blood recipients. Red Cross plant will have to pay to test thousands of trolling how much insulin is injected were officials say they remain confident about current and former residents of Nitro, W. Va., deteriorating prematurely, leading to failures. sources of blood in the U.S. The Red Cross for disease. A class-action suit, filed in 2004, Animas decided to go with a new keypad supplies 40% of the nation’s blood. alleges that Monsanto unsafely dispersed “because it’s more durable,” according to Ms. The FDA said in a letter to the Red Cross dioxin, exposing residents to unsafe levels of Pavis. But while Animas was lining up the that the blood collection system was plagued the toxic chemical. The lawsuit seeks peri- new keypad supplier, it was still selling the with “poorly trained staff and inadequate odic medical monitoring for at least 5,000 older ones. The FDA has demanded docu- record-keeping,” and that donated blood was current and former Nitro residents. It was ments about the company’s decision to do “mishandled or misplaced and, in some reported that the total number could reach as that. Companies are required to continuously cases, potentially infected blood was trans- many as 80,000. evaluate a product’s safety over its life fused into patients.” The letter stated further The monitoring would determine whether span. They should have infrastructure in that the Red Cross “has known of these con- exposure to the harmful chemicals caused place to process, review and classify com- tinuing problems and has failed to take ade- a ny one or more of 12 di f ferent dis - plaints, because they could be indicative of a quate steps to correct them.” eases. According to Monsanto, it will claim larger issue with the product. A Red Cross spokeswoman said in a state- that the residents can’t prove their allegations The recalls have cost J&J $900 million in ment that the problems primarily centered on and, as a result, it says the company shouldn’t 2010 alone in lost revenue from products not an inspection at a Philadelphia site conducted have to pay. Jury selection started on January being in stores, plus millions more for 15 months ago and that the agency has since 10th in Putnam County, W. Va., and the trial is factory upgrades and legal expenses. The addressed many of the issues. The spokesper- expected to last for several weeks. FDA and Congress have been investigating son said the Red Cross was “not aware of any Source: Charleston Gazette and Claims Journal the handling of the manufacturing problems adverse donor reactions or patient issues due as well as the recalls. J&J has said there have to the problems in the FDA report.” The latest been no reports of serious patient harm fine, however, follows a $16 million fine in from the recalled products, although as we have reported, the company is now being June 2010 for similar failures. For almost two decades, trouble at the XXII. sued by a couple alleging their toddler died Red Cross has been reported. About 17 THE CONSUMER from taking a “super dose” of defective Chil- dren’s Tylenol. million units of blood are donated each year and about 15 million units are transfused, CORNER The FDA’s warning letter states that the according to a 2009 survey conducted by initial Animas response to the problems cited AABB, an international association of blood in the August inspection report was not ade- products groups. The Red Cross has been Gm AnnounCes Fix To sTop ChevroleT quate. Animas was to respond before the operating under terms of a consent decree volT Fires January 20th deadline. The letter states that if first issued in 1993 and then amended in the company doesn’t promptly correct the 2003 to allow the FDA to impose stiff fines General Motors will modify its Chevrolet violations, it could face seizure, injunction, for ongoing failures to meet regulations and Volt plug-in car in order to eliminate the pos- and fines, and could be denied future con- laws governing quality and safety of the sibility that its batteries can catch on fire tracts from federal agencies. nation’s blood supply. hours or days after a serious side-impact Source: Yahoo News While I believe the public generally trusts crash. GM calls it a “customer satisfaction” the Red Cross, and considers what it does to action, which it says doesn’t make this action be very important, a number of problems a recall. According to the automaker, battery have been reported. The problems detected coolant could leak on an electronic board, in previous years included: overworked staff, causing a fire. The leaks were discovered by sloppy clinical practices and inadequate GM in tests in which a Volt was rotated until record-keeping. Despite repeated heavy fines it was inverted. According to GM, only a and even the informal threat of criminal pen- small amount of coolant, a few cupfuls, were alties from some FDA officials, the Red Cross involved. 28 www.BeasleyAllen.com To fix the problem, GM says it will modify heWleTT-pACkArd AGrees To $425,000 u.s. supreme CourT AlloWs CrediT the cars to strengthen the protection around Civil penAlTy For FAilure To immediATely CArd ArbiTrATion the battery. This will only add a few pounds reporT liThium-ion bATTery pACks of weight to the car, according to GM, which The U.S. Supreme Court has ruled that says “it is a structural reinforcement that dis- Hewlett-Packard Company (HP), of Palo consumers who sign credit card agreements tributes the load.” According to GM’s North Alto, Calif., has agreed to pay a civil penalty that contain an arbitration clause cannot American chief Mark Reuss, the battery itself of $425,000. The settlement agreement has dispute fees or charges in court. The 8-to-1 is safe and won’t need modification. He says been provisionally accepted by the U.S. Con- decision justifiably drew immediate fire from only about 250 owners asked GM for loaners sumer Product Safety Commission. The set- a number of consumer advocates. To get a or to have their car bought back. GM has sold tlement resolves CPSC staff allegations that credit card, a consumer generally must sign a more than 8,000 Volts, which can travel 25 HP knowingly failed to report immediately to detailed agreement. In the fine print, which miles or more on electric power alone before CPSC, as required by federal law, that certain sometimes is not only too small to read, but a backup gas engine kicks in. lithium-ion battery packs contained a defect often in a long, wordy document, there will Hopefully, this is a problem that can be or created an unreasonable risk of serious almost always be an arbitration clause. It will fixed. It appears NHTSA believes it can since injury or death. The lithium-ion battery say that if consumers want to dispute fees, the agency has closed its preliminary investi- packs can overheat, posing a fire and burn they must do so through arbitration, not in gation. NHTSA has issued some guidelines for hazard to consumers. The packs were court. A 1996 federal law allowed consumers firefighters on how to deal with fires involv- shipped with new HP Notebook computers, to take those disputes to court. But in this ing electrical cars. sold as accessories or provided as spare parts most recent ruling, the Supreme Court said Source: USA Today for various HP models. arbitration clauses in those agreements CPSC staff alleges that by September 2007, trump that law. HP knew of about 22 incidents associated Michael Calhoun, president of the Center with the lithium-ion battery packs. At least for Responsible Lending, says the ruling gives u.s. reGulATors upGrAde Jeep liberTy companies that provide credit cards, student two of these incidents resulted in injuries to AirbAG probe consumers. HP also was aware that at least loans and car loans the ability to exact any one consumer apparently went to the hospi- fee, because consumers will have no legal The National Highway Traffic Safety tal, but says it didn’t receive any information recourse. He points out that almost every Administration has upgraded an investigation on t he con su mer’s i nju r ies or t re at- loan agreement now includes an arbitration into almost 387,000 Jeep Liberty sport utility ment. According to CPSC staff, between clause. “These arbitration clauses have vehicles for potential inadvertent airbag March 2007 and April 2007, HP conducted a become a ‘get out of jail free’ card,” accord- deployment. This increases the possibility of study, from which it obtained additional ing to Mr. Calhoun. The main exception is a recall. NHTSA is upgrading its investigation information about the lithium-ion battery for mortgage loans, where such clauses are of the 386,873 Chrysler SUVs to an engineer- packs. HP did not notify the Commission currently prohibited, and hopefully that ing analysis, which is a step in a process that about the incidents or the study until July 25, won’t change. could lead to a recall if regulators determine 2008. By that time, CPSC staff says that the Lauren Saunders, the managing attorney at a safety issue needs to be addressed by a man- firm was aware of at least 31 incidents involv- the National Consumer Law Center, correctly ufacturer. According to NHTSA, there have ing the lithium-ion battery packs. In October states that the arbitration process itself is been 87 reports of inadvertent driver or pas- 2008, HP and CPSC announced a recall of unfair largely because the arbitrators usually senger front airbag deployment, resulting in about 32,000 lithium-ion battery packs. have a financial incentive to rule against con- 50 injuries, including burns, cuts and bruises Source: CPSC sumers. She says the desire to stay on good to the upper body. terms with the industry and stay on the list of NHTSA says 42 of the 87 incidents involved arbitrators has to be a motivation for the arbi- the driver front airbag deploying without a trators who hear these claims. Ms. Saunders crash, occurring at vehicle startup and while ClAims oF Whirlpool dishWAshers asks an interesting question: “Who are you driving on the road. It says the remaining 45 CATChinG Fire prompTs invesTiGATion (the arbitrator) going to favor, the company involved both the driver and passenger front that might send you more business, or the airbags. Some drivers noted that the airbag The Consumer Products Safety Commis- consumer who you’ll never see again?” How warning light had illuminated just prior to sion has started an investigation into Whirl- did you think an arbitrator would answer airbag deployment, while others did not pool after a lawsuit claims dishwashers made that question? observe one, according to NHTSA. An inspec- by the company caught fire. The complaint I don’t believe this ruling will be the last tion conducted by Chrysler indicates an inter- says a design defect in the control panel can word on this issue. Hopefully, the new Con- nal electronic chip that controls airbag cause fires in the machines. The brands sumer Financial Protection Bureau will study deployment failed, possibly due to a voltage involved in the complaint are KichenAid, arbitration clauses and then ban them from spike. NHTSA says the automaker, which is Kenmore, and Whirlpool. Whirlpool also has credit card agreements. If anybody believes a controlled by Fiat, is in the process of identi- begun an internal investigation into the consumer has a real chance of winning in fying root causes. NHTSA initially opened a reports. The CPSC wants anyone who has arbitration in a dispute with a large corpora- probe into the Jeep SUVs in September after had a problem or concern with a Whirlpool tion, including a big bank, they have never receiving seven consumer complaints. dishwasher to call them. The Consumer been involved in such a dispute. Source: Claims Journal Products Safety Commission can be reached The reality is a person who needs a credit toll free at (800) 638-2772 Monday—Friday card really has no real choice on the arbitra- from 8 a.m.—5:30 p.m. tion issue because all credit card companies Source: CPSC are including arbitration clauses in their agreements. Where would that person go to get a credit card if he or she refused to sign an agreement containing an arbitration clause? Unfortunately, few folks even read www.JereBeasleyReport.com 29 the fine print when asking for a card. This Anthony and Barbara Grazia, could be made a sented, citing California’s “compelling inter- decision by the High Court was very bad for class action. Defendants in the case include a est” in regulating the conduct of American consumers. plastering company, the community’s devel- Honda, which has headquarters in Torrance, Source: NPR.org oper, a home builder and an architect. The Calif. The 9th Circuit returned the case to the class action ruling is preliminary because, Los Angeles district court for further pro- under South Carolina law, the builders have a ceedings. Judge Gould and U.S. District Judge chance to first offer repairs, money or some James Gwin, who normally works in Cleve- mAndATory ArbiTrATion ClAuses violATe other solution. land, made up the majority. FederAl lAbor lAW Source: Claims Journal Source: Insurance Journal On a more positive note, the National Labor Relations Board ruled last month that employers will be blocked from requiring hondA GeTs viCTory in ClAss ACTion neWs Corp. AdmiTs GuilT in hACkinG workers to sign arbitration agreements that suiT sCAndAl prevent them from later pursuing a class action claim in court. The Board ruled that it American Honda Motor Co. won a victory The British newspaper arm of Rupert Mur- is a violation of federal labor law — the when a divided U.S. Appeals court ruled last doch’s News Corp. has agreed to settle at National Labor Relations Act— to require month that a nationwide lawsuit over a brake great expense a series of legal claims. The employees to sign arbitration agreements that system used in some Acura RL vehicles was compa ny ad m it ted w ide - s ca le phone prevent them from joining together to pursue improperly certified as a class-action. The 2-1 hacking, something that was both known employment-related legal claims in any decision by the 9 th U.S. Circuit Court of about and concealed by senior management. for u m, whet he r i n a r bit r at ion or i n Appeals is a setback for consumers, who For years, Murdoch’s News International had court. The ruling does not require employ- have seen their ability to sue collectively cur- claimed that the hacking of voicemails to ees to seek relief through class arbitration as tailed after a U.S. Supreme Court ruling last generate stories was the work of a single long as the employment agreement allows June in favor of Wal-Mart Stores Inc. That “rogue” reporter who went to jail for the employees to pursue their claims in court. narrowed class-action litigation. The 9 th crime in 2007. But, as a result of a wave of The decision examined one such agree- Circuit said a Los Angeles district court judge damning evidence revealed last year, the ment used by nationwide homebuilder D.R. was wrong to find that California’s tough company has finally admitted that the Horton, under which employees waived their consumer protection laws should apply to a problem was widespread. This scandal has right to a judicial forum and agreed to bring nationwide class of consumers who bought rocked the company, the British press, all claims to an arbitrator on an individual or leased Acura RLs equipped with the police and the political establishment in basis. The agreement prohibited the arbitra- optional Collision Mitigation Braking System Great Britain. tor from consolidating claims, fashioning a from Aug. 17, 2005 to Dec. 16, 2008. In a statement that could further damage class or collective action, or awarding relief The Appeals Court also said the lower the firm’s reputation, lawyers for victims to a group or class of employees. The board court wrongly found that consumers could who have reached settlements said on found that the Horton agreement unlawfully have relied on advertising by American January 19 th that their agreements were barred employees from engaging in “con- Honda about the system, part of a $4,000 based on News Group Newspapers, pub- certed activity” protected by the National technology package. Lawyers for the roughly lisher of some of News International’s news- Labor Relations Act. 2,000 Plaintiffs did not immediately respond papers, ack nowledging that its senior The board emphasized that the ruling does to requests for comment. American Honda is management were at fault. A statement by not require class arbitration as long as the part of Japan’s Honda Motor Co. Ltd. The the lawyers reads: agreement leaves open a judicial forum for brake system was designed to warn Acura RL group claims. Horton will now have to drivers with an alarm and flashing indicator News Group has agreed to compensa- rescind the agreement or revise it to make that a crash may be imminent, and tighten tion being assessed on the basis that clear to employees that they are not waiving seat belts and apply brakes automatically if a senior employees and directors of NGN their right to pursue a class or collective frontal crash appeared unavoidable. But knew about the wrongdoing and action in all forums. This is a very good drivers claimed that the system might deploy sought to conceal it by deliberately ruling and one that protects workers’ rights. or fail to warn too slowly, and would shut off deceiving investigators and destroying in bad weather. evidence. Source: Insurance Journal The lower court found enough in common Judge Geoffrey Vos heard the basis for the among the claims to certify a class. It also settlement in each case in a London Court- said American Honda failed to show why the JudGe Approves iniTiAl ClAss ACTion in laws in other states should prevail, even room. At the end of each statement, a lawyer souTh CArolinA deFeCTive sTuCCo though the purchases and leases took place for News Corp confirmed the details out- lAWsuiT lined to the court. Settlements announced in in 44 separate states. But writing for the 9 th court generally ranged from around 30,000 Circuit majority, Judge Ronald Gould said it pounds ($46,000) to 60,000 pounds, while A state judge in South Carolina has granted was unfair to apply California law every- some of them were not revealed. These preliminary class-action status to lawsuits where. Judge Gould said other states had admissions could lead to increased scrutiny alleging defective stucco work on homes in strong interests in regulating similar transac- of James Murdoch, who has been heavily crit- Sun City Hilton Head. The order issued by tions, often under materially different con- icized for his handling of the situation. Judge J. Michael Baxley could affect as many sumer protection laws. While he was not in charge of News Inter- as 4,000 homes. Judge Baxley ruled a class T he judge a lso sa id there were no national at the time of the hacking, James action would prevent similar cases from clog- “common issues of fact” because drivers Murdoch has been accused of leading a ging the courts. Currently, there are about nationwide could not have relied on Honda’s cover-up by the company. James Murdoch 140 cases now pending. In 2010, the state “small scale” advertising for the brake has denied all knowledge of the scale of the Supreme Court overturned a lower court system. Circuit Judge Dorothy Nelson dis- problem and blamed many of those around ruling and said the initial suit filed by 30 www.BeasleyAllen.com him for the failings. It will be interesting to economy. In a statement explaining his deci- increasing the risk of a crash. Ford says see how his attempts to shift blame will sion, President Obama said: it’s aware of two minor accidents attrib- stand up. Law yers for the victims who uted to the minivan recall, with minor settled had obtained documents from News The American people deserve to have injuries reported in one and no injury in International that revealed its attempts to qualified public servants fighting for the other. The company says it’s not destroy evidence. them every day—whether it is to aware of any accident or injury involved enforce new consumer protections or in the Escape recall, only reports of Source: Insurance Journal uphold the rights of working Ameri- property damage. cans. We can’t wait to act to strengthen the economy and restore security for zAppos sAys CusTomer dATAbAse hACked our middle class and those trying to Gm reCAllinG ChevroleT soniCs To get in it. CheCk brAke pAds Online shoe seller Zappos.com says a hacker may have accessed the personal infor- I join with those commending the Presi- General Motors Co. has recalled more mation of up to 24 million customers. The dent for these appointments. Congress has an than 4,000 of its 2012 Chevrolet Sonic company says that customers’ credit card and obligation to the American people to allow subcompact cars to check for missing payment information weren’t stolen. But it appointments to be either approved or brake pads. Some Sonics could be said in an email sent by CEO Tony Hsieh that rejected within a reasonable time. Holding missing an inner or outer brake pad, names, phone numbers, email addresses, up appointments—solely for partisan politi- which could increase stopping distance. billing and shipping addresses, the last four cal reasons—to important boards and agen- GM said there are no known crashes or digits from credit cards and more may have cies is not the way to do business. injuries related to the issue. The recall been accessed in the attack. Source: Huffington Post involves 4,296 of GM’s 2012 Sonics sold Zappos is contacting customers by email in the U.S. Affected models are from the and urging them to change their passwords. Orion Township, Mich., assembly plant, Zappos said the hacker gained access to its which makes Sonics for the U.S. And internal network and systems through one of XXIII. Canadian markets. Dealers will inspect the company’s servers in Kentucky. Zappos, based in Las Vegas, is owned by Seattle-based RECALLS UPDATE front brakes on Sonics for missing inner or outer pads and install new pads, if Amazon.com Inc. Hsieh said in his email: necessary. Customers affected by the Again, we have a number of safety-related recall should have received dealer We’ve spent over 12 years building our letters which were scheduled to go out recalls to write about. There have been a reputation, brand, and trust with our beginning January 14th. very large number of product recalls over the customers. It’s painful to see us take so past weeks. Serious safety-related recalls have many steps back due to a single inci- become commonplace. The following are dent. I suppose the one saving grace is some of the more significant recalls since $100,000 eleCTriC CArs reCAlled that the database that stores our cus- those reported in the January issue. There over Fire risk tomers’ critical credit card and other continue to be a number of recalls by auto- Fisker Automotive has recalled its 2012 payment data was not affected or makers. If more information is needed on any Karma because of a potential coolant accessed. of the recalls mentioned below, readers are leak. The plug-in hybrid cars cost about This is an another example of what encouraged to contact Shanna Malone, the $100,000. Fisker has sold about 50 of the appears to be a huge problem for customers Executive Editor of the Report. We would cars and says 1,200 more are in produc- of big and small companies which are unable also like to know if we have missed any tion or waiting to be sold. Improperly to keep hackers out of their networks and safety recalls that should have been included installed hose clamps in the car’s battery systems. in this issue. pack could cause coolant to leak, which Source: Claims Journal could start a fire. Fisker says no inci- dents have been reported by customers Ford reCAllinG 450,000 minivAns or retailers. The company says it will And suvs presidenT obAmA AnnounCes Three replace the battery pack. Fisker was reCess AppoinTmenTs To nlrb Ford has recalled 450,000 older model founded in 2007 and is privately held. minivans and SUVs for risks from fire It’s based in Irvine, Calif. President Barack Obama used his recess and loss of power. The affected vehicles powers on January 4th to fill three vacancies are the 2001 and 2002 Ford Escape on the National Labor Relations Board compact SUV, and the 2004 and 2005 Fire risk spArks reCAll oF 89,000 (NLRB). Labor groups, including the AFL- Ford Freestar and Mercury Monterey TurboChArGed minis CIO, applauded the President for “exercising minivans. The Escape has a reservoir BMW of North America has recalled his constitutional authority to ensure that cap on its brake master cylinder that can nearly 89,000 Mini vehicles because of a crucially important agencies protecting leak brake fluid, which could lead to water pump malfunction that could workers and consumers are not shut down by smoking or even a fire, according to the cause a fire. The company says that the Republican obstructionism.” Similarly, Secre- recall notice from the National Highway water pump that cools the turbocharger tary of Labor Hilda Solis praised the President Traffic Safety Administration. There are in some of its cars has a circuit board for making the NLRB appointments and said about 245,000 Escapes on the road. that can malfunction and overheat. That that if he had not made the recess appoint- could cause smoldering and potentially ments, Republicans would have continued The minivans, of which there are 205,000 on the road, have a torque con- a fire. No accidents or injuries have blocking nominees to the detriment of the been reported. BMW will replace the verter output shaft that can fail, which can cause the vehicle to lose power, pump at no cost to owners. The recall www.JereBeasleyReport.com 31 applies to 2007-2011 models of the Mini 1, 2008 through June 30, 2011. Vehicles Toyo Tire reCAlls neArly 69,000 Cooper S, 2008-2011 Cooper S Clubman, can be identified by their Vehicle Identi- Tires 2009-2011 Cooper S Convertible and fication Numbers (VINs) located either JAnuAry 31, 2012—AssoCiATed 2011 Cooper S Countr yman. It also on the passenger’s side left kick panel, press—insurAnCeJournAl.Com includes the 2009-2011 models of the in the driver’s side storage compartment Mini JCW, JCW Clubman and JCW Con- or on the steering wheel beneath the Cypress-based Toyo Tire U.S.A. Corp. vertible. center cap. has recalled nearly 69,000 tires because of a possible kink near the rim area that The vehicles were sold by ParCar could cause a crack and lead to tire kiA reCAlls 146,000 vehiCles For dealers from July 1, 2008 to July 31, 2011 failure. The recall involves the Toyo AirbAG issue for between $5,000 and $12,000. If you Extensa A/S tires that were manufac- need a list of the vehicles recalled tured at the Toyo Tires plant in Georgia Kia Motors has recalled 145,755 Optima contact Shanna Malone at Shanna. and have a “Made in U.S.A.” mark on the sedans and Rondo crossover vehicles in Malone@beasleyallen.com. Consumers sidewall. The defective tires can be the United States because of potentially should contact local ParCar dealer for a identified by the last four digits of the faulty driver-side airbags. The model free inspection and repair as required. tire’s identification number, ranging years affected are 2006-2008 Optimas For additional information, contact from 3809 to 4410. If the tire has the and 2007-2008 Rondos. Kia Motors Columbia ParCar Corp. At (800) 222- “Made in Japan” or “Made in China” America, a unit of Kia Motors Corp, said 4653 between 8 a.m. And 4:30 p.m. CT mark on the sidewall, they are not being it is not aware of any injuries or airbags Monday through Friday or visit the recalled. The company will replace the not deploying because of the issue. firm’s website at www.parcar.com. recalled tires at no charge if returned on Affected are 95,569 Optimas and 50,186 or before May 31st. Rondos. Kia, an affiliate of Hyundai kymCo reCAlls uTiliTy vehiCles Motor Co, said the clock spring contact due To Fire hAzArd assembly for the driver’s side air bag Child biCyCle TrAilers And supplemental restraint system may KYMCO USA, of Spartanburg, S.C., has Conversion kiTs reCAlled become damaged over time, potentially recalled about 1,876 Utility Vehicles. An Thule Child Transport Systems Ltd., causing the driver’s air bag not to exposed portion of the exhaust system d/b/a Chariot Carriers, of Calgar y, deploy. The recall is to begin in March. can allow debris such as leaves, brush or Canada, have recalled their Chariot other flammable materials to enter the bicycle trailers and bicycle trailer con- opening and ignite, posing a fire hazard. version kits. The bicycle trailer’s hitch mAzdA reCAlls TribuTe suvs KYMCO USA has received three reports mechanisms can crack and break, of vehicles catching on fire and being causing the trailer to detach from the Mazda Motor Corp was recalling more damaged. No reports of injuries have bicycle. This poses an injury hazard to than 52,000 Tribute SUVs for potential been received. The recall involves 2009 children in the bicycle trailer. The firm brake fluid leaks that could lead to a fire. through 2012 KYMCO utility task vehi- has received 24 incident reports world- Mazda has notified owners of 52,390 cles (UTVs). The vehicles are gasoline- wide, three of which occurred in the Tributes from model years 2001 and powered, off-road vehicles with two United States, involving the bicycle trail- 2002 about the potential brake fluid side-by-side seats, a cargo bed and a ers and the conversion kits. No injuries leaks that could come into contact with steering wheel. The vehicles come in have been reported. Chariot Carriers the anti-lock brake system module red, blue, black, gray, orange, silver and convert to strollers, jogging strollers and wiring harness. In the case of a leak, cor- green and have the model and brand bike, hike or ski trailers. rosion cou ld develop and lead to name “KYMCO” on both sides of the melting, smoking or a fire, according to rear fender area and the front of the This recall involves Chariot bicycle trail- NHTSA. The affected vehicles were built hood. The VIN is located on the frame ers and bicycle trailer conversion kits. at Ford Motor Co’s Kansas City Assembly behind the right front wheel. The tenth Recalled trailers have serial numbers Plant in Missouri. Until the repairs are alphanumeric character of the VIN is from 1205-xxxx to 0710-xxxx (repre- made, NHTSA says owners are being told the model year of the vehicle. senting manufacture dates December to park their vehicles outside. 2005 through July 2010) located on the They were sold by KYMCO dealers left side on the frame. Recalled conver- nationwide from June 2008 to October sion kits have hitch arms that attach the ColumbiA pArCAr reCAlls GolF, 2011 for between $7,600 and $10,100. serviCe And uTiliTy vehiCles due To car r ier to the bicycle with model Consumers should stop using these number “20100503” printed on a label CrAsh hAzArd vehicles and return them to a KYMCO attached to the aluminum tube next to Columbia ParCar Corporation, of Reeds- dealer for the free installation of a repair the warning label. Older conversion kits burg, Wis., has recalled about 1,400 golf, kit. For more information, contact without a label, but with a release push service and utility vehicles. The lower KYMCO USA at (888) 235-3417 between button located where the hitch arm steering yoke can loosen where it 9 a.m. And 5 p.m. ET Monday through inserts into the carrier, are also being attaches to the steering rack and pinion, Friday, by email at firstname.lastname@example.org, recalled. causing the driver to lose control of the or visit the firm’s website at www.kym- vehicle and crash. The recalled items cousa.com. The carriers were sold at specialty are 2009, 2010 and 2011 Columbia bicycle stores nationwide and on various ParCar golf carts, low-speed service and websites from December 2005 through utility vehicles. They are 36- or 48-volt August 2010 for between $400 and $925 electric vehicles manufactured from July for Chariot bicycle trailers and from October 2002 through August 2011 for 32 www.BeasleyAllen.com between $40 and $70 for bicycle trailer stores from Februar y 2011 through The high chairs were sold exclusively at conversion kits. Consumers should October 2011 for about $100. Consum- IKEA stores nationwide from August immediately stop using the recalled ers should immediately stop using these 2006 through January 2010 for about bicycle trailers and bicycle trailer con- bicycles pedals and contact Perfor- $20. Consumers should immediately version kits and contact Chariot Carriers mance to obtain a full refund. For addi- stop using the high chairs and contact for a free repair kit which the consumer tional information, contact Performance IKEA to obtain a free replacement seat can install. at (800) 553-8324 between 9 a.m. And 8 restraint. For additional information, p.m. ET Monday through Friday, or visit contact IKEA toll-free at (866) 966-4532 the company’s website at www.perfor anytime, or visit its website at www. GiAnT biCyCle reCAlls TWo biCyCle mancebike.com. ikea-usa.com. models Giant Bicycle, Inc., of Newbury Park, WesT elm reCAlls dover dininG poTTery bArn kids reCAlls Calif., has recalled about 900 2012 TAble due To inJury hAzArd mAdeline CAnopy bed Model Year Giant Defy Advanced and Avail Advanced Bicycles. The fork can West El m, a division of Wi l liams - Pottery Barn Kids has issued a safety crack, posing a fall hazard to riders. This Sonoma, Inc., of San Francisco, has recall of the Madeline Canopy bed. A recall involves all 2012 model year men’s recalled their Dover Dining Table. The notice on the retailer’s website says, Giant Defy Advanced 0, 1 and 2 model wooden base of the table can collapse, “The connections of the posts to the top bicycles and the women’s Giant Avail causing the glass table top to fall. This rails of the canopy can come apart and Advanced 0, 1, and 2 model bicycles. poses an injur y hazard to consum- allow components of the canopy to fall, “Giant” and the model name are printed ers. The firm says it is aware of 14 posing an impact hazard to consumers.” on the bicycle. The bicycles are various reports of tables collapsing or breaking, The U.S. Consumer Product Safety Com- colors and sizes. The bikes were sold by including one report of a bruise to a mission said the connections of the authorized Giant Bicycle dealers nation- consumer’s leg. The Dover dining table posts to the top rails of the canopy can wide from August 2011 through Novem- is a tempered glass-top table with a come apart, allowing components of the ber 2011 for bet ween $3,000 and brown wooden base. The base has four canopy to fall and posing an impact $4,550. Consumers should immediately legs, four buttress support bars and hazard to consumers. stop riding the recalled bicycles and three glasstop support bars. “West Elm” contact any authorized Giant Bicycle and “SKU: 2188233” are printed on a There have been 33 reports of compo- dealer for a free inspection and replace- white label on the underside of the long, nents of the canopy falling, including ment of the fork. For additional informa- center beam. The tables were sold by one report of a cut that required stitches tion, contact Giant Bicycle toll-free at West Elm retail and online stores nation- and nine other reports of minor cuts, (866) 458-2555 between 9 a.m. And 4 wide from July 2011 through October bruises and/or bumps. About 7,700 of p.m. PT Monday through Friday or visit 2011 for about $500. Consumers should the beds were sold in the United States its website at www.giant-bicycles.com. contact West Elm for a full store credit. and 230 were sold in Canada from West Elm will schedule a free return December 2003 until August 2011. pickup of the table. For additional infor- People who purchased the bed should biCyCle pedAls reCAlled due To mation, contact West Elm toll-free at remove the canopy and contact Pottery FAll hAzArd (855) 369-4335 between 7 a.m. And Barn Kids to schedule a free repair. The midnight ET seven days a week or visit company can be reached toll-free at 855- Performance, Inc, of Chapel Hill, N.C., 662-4114 from 6 a.m. To 11 p.m. CST its website at www.westelm.com. has recalled about 2,900 2011 Forte Pro daily. Pottery Barn Kids is a division of Carbon Road Pedals. The pedal body Williams-Sonoma Inc., which is based in can break or crack during use, causing ikeA reCAlls To repAir hiGh San Francisco, Calif. the rider to lose control and posing a fall ChAirs due To FAll hAzArd hazard. Performance has received three reports of the pedals breaking. No inju- IKEA North America Services LLC, of Food CArriers reCAlled due To ries have been reported. Forte Pro Conshohocken, Pa., has recalled their possible Gel leAk Carbon Road Pedals are sold in sets of ANTILOP High Chairs. The high chair’s two bicycle pedals that attach to cycling restraint buckle can open unexpectedly, California Innovations Inc., has recalled shoes. The pedal body is black and is posing a fall hazard to the child. IKEA about 55,000 Travelin’ Chef Expandable made of lightweight carbon injected has received eight reports worldwide of Thermal Food carriers sold at Walmart. thermoplastic. The axle is black and restraint buckles that opened unexpect- Gel that contains diethylene glycol and made of chromium molybdenum steel edly, including three reports of children ethylene glycol, can leak out of damaged with a black steel axle. The front, top of who received minor injuries after falling freezer gel packs posing a poisoning the pedal has “Carbon” printed in red; from the high chair. This recall involves hazard if ingested. The recalled product the top middle has “EPS-R” embossed in ANTILOP high chairs sold in red, blue is a four-piece food carrier set, which the body with the “R” in red and on the or white. The plastic high chair has includes a light blue thermal carrier top rear of the pedal the word “Forte” detachable silver-colored metal legs. with black carrying handles, a medium printed in white. The outer edge of the High chairs included in the recall have a plastic food container, a large plastic pedal has the Forte logos, crossed F’s, in manufacture date between 0607 and food container and a freezer gel pack. white. The catalog number, 50-8128, is 0911 ( Y YMM format) from supplier The recalled thermal carrier has the used in all catalogs. number 17389. The production date and code “1-38018-69-07” printed on a white supplier number are molded into the label on the inside of the main compart- The pedals were sold on Performance’s underside of the seat. ment on the left hand side. The thermal website, catalogs and Performance retail carrier is 18 inches wide, 10.5 inches www.JereBeasleyReport.com 33 deep and 4.7 inches high and made of ca-innovations.com or visit its website at lawn and garden sales and service stores vinyl and polyester. The gel pack is an www.californiainnovations.com. nationwide from January 2010 through 8.5-inch by 8-inch, opaque blue plastic September 2011 for about $20. Consum- pouch filled with liquid gel. The words Consumers should immediately stop ers should immediately stop using lawn- “Cryofreeze” and “Ice Pack/Hot Pack” using the gel packs. You may also mowers with the recalled blades and are printed in white letters on the front return the gel pack to Walmart for a return the blades to the store where pur- of the pouch. refund of $6, or contact California Inno- chased or directly to Blount for a free vations customer service at (800) 722- replacement. For additional information, The company has also recalled about 2545 for the same refund. For additional contact (866) 685-5449 between 6 248,000 Expandable Insulated Lunch information, call California Innovations a.m. And 4 p.m. CT Monday through Box with Freezer Gel Pack. Gel that con- at (800) 722-2545 between 9 a.m. And 5 Friday, or visit its website at www. tains diethylene glycol and ethylene p.m. ET Monday through Friday or visit blount.com. glycol can leak out of damaged freezer its website at w w w.cali forniainno gel packs, posing a poisoning hazard if vations.com ingested by children or adults. The firm porTAble GAs Grills reCAlled due has received two separate reports of a To Fire And burn hAzArds dog chewing and ingesting gel from the leAd pAinTed mexiCAn WresTlinG gel pack. One dog reportedly died from ACTion FiGures reCAlled Uni-O (Xiamen) Industries Corporation ingestion of the gel. The other was of Xiamen, China, has recalled their Lee Carter Co., of San Francisco, Calif., O-Grill Portable Gas Grills. The regula- reported to have received treatment and has recalled about 7,000 packs of Super tor on the grill can leak gas which can has recovered. Luchamania Action Figures. The surface ignite, posing a fire and burn hazard to This recalled product is a Ci Sport three- paints on the action figures contain consumers. Uni- O has received ten piece, expandable, insulated lunch box excessive levels of lead which is prohib- reports of grills catching fire. No inju- set, which includes the lunch box, alu- ited under federal law. The recalled ries or property damage have been m inum bottle and the freezer gel Mexican wrestling Super Luchamania reported. This recall involves Iroda pack. The lunch box of the recalled set action figures were sold in packs of O-Grill models 1000 and 3000 produced has the code “1-61731-99-57” printed on 12. The multi-colored action figures are before 2010. Some were also sold under one of the two white labels that are plastic, have plastic capes and measure the Tailgating Gear brand. Both models sewn under the white fastener inside about four inches tall. “Super Luchama- are lightweight, portable, clamshell-type the main compartment. The lunch box nia” is printed on the action figures’ propane grills with steel bodies, cast is 8 inches wide, 5 inches deep and packaging. The figures were sold at iron cooking surfaces, retractable legs 10.25 inches high. It is made of vinyl, various Mexican specialty craft stores and a handle. They can be used with polyester nylon and crushed nylon and nationwide from June 2000 through either 1-pound propane cylinders or has a logo with the words “Ci Sport” October 2011 for between $12 and $14 20-pound propane tanks. The grills attached to the upper left corner. The per pack. Consumers should immedi- come in orange, red, green, blue, silver lunch box has a carrying handle on the ately take the recalled action figures and black and have the words “O-Grill” top and a mesh carrying pouch for the away from children and return them to stamped on the metal gr ill cover. aluminum bottle on the side. The alumi- Lee Carter Co. for a full refund or credit Recalled O-Grills do not have ventilation num bottle measures 2.75 inches in towards a replacement product. For slots in the regulator cover where the diameter and 7.5 inches tall. The gel additional in formation, consumers propane bottle screws in. Grills with pack is a 6-inch by 4-inch transparent should call Lee Carter Co. collect at ventilation slots in the regulator cover plastic pouch filled with blue liquid (415) 824-2004 anytime, or visit the are not subject to the recall. gel. The words “Cryofreeze” and “Ice f i r m’s web site at w w w.leec a r te r Pack/Hot Pack” are printed in white company.com. The grills were sold by LL Bean, Stone- letters on the front of the pouch. The man, BBQG, Walgreens, REI, Dillards lunch box was available in four colors: and Dick’s Sporting Goods nationwide navy blue, red, black and denim blue. lAWnmoWer replACemenT blAdes from November 2008 through Decem- reCAlled ber 2010. The O-Grill 1000 sold for $149 These lunch boxes were sold at Costco and the O-Grill 3000 sold for $189. Con- Wholesale Clubs, Leon Korol and Cost U Blount International Inc., of Kansas City, sumers should immediately stop using Less stores between May 2007 and Sep- Mo., has recalled about 950 Oregon® the grills and contact Uni-O to receive a tember 2008 for about $10. Consumers Replacement Lawnmower Blades. The free replacement grill. For additional should immediately stop using the gel replacement lawnmower blades can information, contact the firm toll-free at packs and dispose of them according to break during normal use, posing a lacer- (888) 847-8968 between 7 a.m. And 6 federal, state and/or local regulations. It ation hazard to the user and bystanders. p.m. CT Monday through Friday, or visit is recommended that consumers contact Blount has received seven reports of it s website at w w w.r egcen.com / their local waste disposal authority for replacement blades breaking during OGRILL. The U.S. Consumer Product instructions. Consumers may return the use. No injuries have been Safety Commission (CPSC) is still inter- lunch box set to Costco for a full refund reported. This recall involves Blount ested in receiving incident or injury or may receive a $5 cash refund for the lawnmower replacement blades for reports that are either directly related to gel pack only by contacting California A r iens 48 -i nch lawn mowers. T he this product recall or involve a different Innovations. For additional information, replacement blades are sold under the hazard with the same product. You can call California Innovations at (800) 722- Oregon® brand name. “Oregon®,” part tell the CPSC about your experience 2545 between 9 a.m. And 5 p.m. ET number “91-003” and “PA” or “PJ” are with the product on SaferProducts.gov. Monday through Friday, e-mail ci-recall@ printed on the surface of the recalled Fi r m’s Reca l l Hotl i ne: (8 8 8) 847- blades. They were sold at Independent 34 www.BeasleyAllen.com 8968CPSC Recall Hotline: (800) 638- 2010 through December 2011 for about burn with an excessive flame height, 27 72C P S C M e d i a C o nt a c t : (3 01) $10 per set. Consumers should immedi- posing a fire hazard to consumers. The 504-7908. ately stop using the f lashlights and firm is aware of one fire that resulted in return them to any Target store for a full minor property damage. There are no refund. For additional information, reports of injuries. The recalled tea honeyWell porTAble eleCTriC contact Target at (80 0) 440 - 0680 lights, which come from China, were heATers reCAlled due To burn between 7 a.m. And 6 p.m. CT Monday sold as part of the Carruth Candleholder hAzArd through Friday, or visit the firm’s Collection sets. The Carruth candle- website at www.target.com. holder sets are resin votive candle Nearly 20,000 portable electric heaters holders with a glass insert that holds a have been recalled because the internal tea light. The stock number is printed housing can detach, causing a burn Five-liGhT Floor lAmps reCAlled on a label on the bottom of the candle- hazard to consumers. Honeywell Sur- holders. The tea lights are white. round Select Portable Electric Heaters, Big Lots, of Colu mbus, Oh io, has distributed by Kaz USA, were sold at recalled Five-Light Floor Lamps. The The following eight models and stock Best Buy, Meijer and Walmart stores wiring for the lamp’s light sockets can numbers are included in this recall: But- nationwide from July 2011 through become exposed, posing a risk of elec- terfly, 17708; Smile, 17709; Sun, 17710; December 2011 for between $50 and tric shock to consumers. In addition, use Roots of Love, 17711; Sunflower, 17712; $70. The recall includes Honeywell Sur- of the recommended standard 40 watt Hummingbird, 17713; Bunny, 17714; round Select Series portable electric light bulbs can generate excessive heat, Friendship, 17715. The light sets were heaters with model numbers HZ-420, which can melt the double plastic sold by Home decorating and gift stores HZ-430, and HZ-440 and five-digit date shades over the bulbs. The firm has nationwide from Ja nuar y 2010 to codes that have 11 as the last two received four reports of melting lamp November 2011 for about $14. Consum- digits. The heaters are black or white shades. No i nju r ies have been ers should immediately stop using the cylinders with a handle on top. The reported. This recall involves Classic tea light candle and contact Demdaco model number is stamped into the Quarters Five Light Floor Lamps. The for a free replacement tea light. For addi- plastic on the bottom of the heater. The lamps stand about five feet tall and have tional information, consumers should date code is located on the metal prongs a gunmetal or chrome colored metal contact Demdaco toll-free at (888) 336- of the heater’s electrical plug. “Honey- pole and five adjustable lights mounted 3226 between 8 a.m. And 5 p.m. CT well” and “Surround Heat” are printed on flexible metal tubes at the top. Dark Monday through Friday or visit its on the front of the heaters. plastic or multi-colored double plastic website at www.demdaco.com. shades cover each of the five lights. Consumers should immediately unplug Recalled lamps use standard incandes- and stop using the heaters and contact cent or CFL bulbs and have labels sTeelCAse reCAlls desk ChAirs Kaz for a full refund. For additional m a r ke d w it h t he mo del nu m b e r information, contact Kaz at (800) 370- “G-1843-5” affixed to the underside of About 11,000 Amia desk chairs have 8137 from 8:30 a.m. To 5 p.m. ET the lamp base. These lamps can be been recalled by Steelcase Inc., of Grand Monday through Friday, or visit its further identified by SKU numbers Rapids, Mich. The pivot pins installed in website at www.kaz.com/recall 612007239, 612007829 or 612008982 at the control mechanism under the chair the beginning of the instr uctions. seat can fall out, posing a fall hazard to Lamps that use candelabra bulbs are not the user. This recall includes the model TArGeT reCAlls led FlAshliGhT subject to this recall and can be identi- 482 Series Steelcase Amia desk chairs seTs due To Fire And burn fied by labels marked with the model manufactured between March 1, 2011 hAzArds number “G-1844-5B” and SKU numbers and June 6, 2011. The model number 612009036 or 612009037 in the instruc- and manufacture date are printed on a Target Corporation, of Minneapolis, label on the underside of the chair Minn., has recalled about 55,000 6-pc. tions. seat. The seats are available in various LED Flashlight Sets. When turned on, The lights were sold exclusively at Big colored fabr ic options as wel l as the flashlights can heat up, smoke or Lots stores nationwide from April 2010 leather. The chairs were sold at autho- melt, posing fire and burn through November 2011 for between rized Steelcase dealers and retail outlets hazards. Target has received reports of $30 and $50. Consumers should imme- including Healthy Back Store, CSN, four incidents with the f lashlights, diately stop using the lamps and return Home Of f ice Solution s, Of f ice & including two minor burn injuries to them to a Big Lots store for a full refund. Company and Sam Flax stores nation- consumer’s hands. This recall involves For additional information, contact Big wide and online at www.store.steelcase. 6 -pc. LED Flashlight Sets. They are Lots toll-free at (866) 244-5687 between com link from March 2011 through June made of silver plastic with black rubber 9 a.m. And 5 p.m. ET Monday through 2011 for between $350 and $700. Con- around the handle and light base. The Friday, or visit its website at www. sumers should immediately stop using f lash l ig ht sets have U PC code biglots.com. the chairs and contact Steelcase to 490021010049 printed on the back of receive adhesive covers to apply over the package. They were sold in sets of the pivot pins on their chairs. These pin six, including two small flashlights mea- CArruTh CAndleholder ColleCTion adhesive covers can be applied without suring about 3 inches long, two medium TeA liGhT CAndles reCAlled the use of a tool in less than five flashlights about 6 inches long and two minutes. Steelcase is contacting all large flashlights about 7 1/2 inches long. DD Traders Inc., doing business as known purchasers. For additional infor- Demd aco, of L eawood, K a n., has The lights were sold exclusively at mation, contact Steelcase toll-free at recalled their Lights in Carruth Candle- Target stores nationwide from October (800) 391-7194 between 8 a.m. And 5 holder Collection Sets. The tea light can www.JereBeasleyReport.com 35 p.m. ET Monday through Friday. Con- sumers can also e-mail Steelcase at retro- lowing stock numbers are printed inside the shoes below the size number: XXIV. email@example.com. A3279S1020 Dare (gray), A3279S1250 FIRM ACTIVITIES Dare (nude), A3279S1600 Dare (scarlet) and A3279S2001 Dare (black). Children’s ChAirs And sTools employee spoTliGhTs reCAlled by eleGAnT GiFTs mArT The shoes were sold exclusively by Nat- uralizer stores nationwide from July Elegant Gifts Mart Inc., of Los Angeles, 2011 th roug h November 2011 for LEIGH O’DELL Calif., has recalled their Children’s between $25 and $50. Consumers Leigh O’Dell practices in our Mass Torts Chairs and Stools. The yellow surface should immediately stop wearing the section. Leigh’s current focus is on product paint on the metal frame of the chil- shoes and return them to any Natural- liability actions involving Gardasil and trans- dren’s chairs and stools contains exces- izer store for a full refund. For additional vaginal mesh. Gardasil is a vaccine manufac- sive levels of lead which is prohibited information, contact Naturalizer toll- tured and marketed by Merck & Co. Inc. for under federal law. The children’s free at (888) 443-2019 anytime, visit its the prevention of cer vical cancer. The folding chairs and the stools have yellow website at www.naturalizer.com, or vaccine targets four types of human papillo- metal tube frames. The plastic seat, seat email them at NaturalizerDare@Brown- mavirus (HPV), a sexually transmitted virus backs and stool have a cartoon-like Shoe.com. linked to the development of cervical cancer. scene with monkeys, teddy bears, mush- However, since Gardasil’s introduction in rooms and hear t-shaped bal loons. 2006, the Vaccine Adverse Event Reporting “PENGKO” is printed on the chair’s inFAnT rATTles reCAlled System (VAERS) has received more than heart-shaped seatback. Item number Lee Carter Co., of San Francisco, Calif. 20,000 reports of adverse side effects report- “JCA8036” is printed on a white sticker ha s reca l led about 25,0 0 0 I n fa nt edly related to Gardasil. These reports u nder neath the chai r’s seat. Item Rattles. The rattle’s handle is small include serious adverse side effects including number “JCA8037” is printed on a white enough to fit into a child’s throat, posing Guillain Barŕe, lupus, seizures, rheumatoid sticker underneath the stool. a choking hazard and violating federal arthritis, and multiple sclerosis, among The chairs and stools were sold exclu- rattle standards. The recalled rattles are others. There also have been 92 reported sively at 1 to Seven stores in Puerto Rico made out of multi- colored, woven deaths among girls who received the vaccine. from September 2010 through June 2011 plastic and have a bell inside. They Transvaginal mesh is used to repair condi- for between $5 and $6. Consumers measure about 4 1/2 inches long. “Made tions such as pelvic organ prolapse (POP) should immediately take the recalled in Mexico” and “Lee Carter Company” and stress urinary incontinence (SUI). The tables and folding chairs away from chil- are printed on a tag on a purple plastic mesh is implanted through the vagina and is dren and return them to any 1 to Seven l o o p a t t h e e n d o f t h e r a t t l e’s used to shore up pelvic organs that have store in Puerto Rico or contact Elegant handle. The rattles were sold at various become displaced due to age, childbirth, hys- Gifts Mart for a full refund. For addi- Mexican specialty craft stores nation- terectomy or obesity. According to the FDA, tional information, in Puerto Rico call 1 wide from Febr uar y 2001 through reported complications from of the transvagi- to Seven at (787) 290-5625 between 10 October 2011 for about $4. Consumers nal placement of the mesh include erosion of a.m. And 4 p.m. ET, or call Elegant Gifts should immediately take the recalled the mesh into the vaginal tissue, organ perfo- Mart collect at (323) 698-6805 between rattles away from infants and return ration, pain, infection, painful intercourse 8 a.m. And 5 p.m. PT Monday through them to Lee Carter Co. for a full refund and urinary and fecal incontinence. Often Friday. or cred it towa rd s a repl acement women require surgery to remove the mesh. product. For additional information, In some cases, this can require multiple pro- consumers should call Lee Carter Co. cedures without successfully removing all of nATurAlizer reCAlls Women’s collect at (415) 824-2004 anytime, or the mesh. Currently, Leigh is investigating dress shoes due To FAll hAzArd visit its website at www.leecartercom- cases involving mesh manufactured by Amer- pany.com. ican Medical Systems, Bard, Boston Scientific, Brown Shoe Company, Inc., of St. Louis, Caldera, and Johnson & Johnson. Mo., has recalled their Naturalizer Once again, there have been a good Prior to her involvement with Gardasil and “Dare” Women’s Dress Shoes. This number of recalls since the January issue and transvaginal mesh litigation, Leigh devoted includes about 6,100 pairs in the United we were unable to get them all in this issue. more than six years to the Vioxx litigation. States and 700 pairs in Canada. The If you need more information on any of the She was a member of the trial team for five of heels of the shoes can lean to either recalls listed above, or would like informa- the 17 bellwether trials that took place side, posing a fall hazard when worn by tion on a recall that you are aware of that we throughout the country. Leigh also served on consumers. They have received one haven’t listed, please visit our firm’s web site various MDL committees, including the law report of a consumer in Canada who at www.BeasleyAllen.com/recalls. We would and briefing, trial package and settlement received a minor leg injury when she also like to know if we have missed any sig- liaison committees. fell while wearing the shoes. This recall nificant recall that involves a safety issue this Leigh came to our firm in 1994. In 1998, involves women’s faux patent leather month. If so, please let us know. As indicated she left the firm for full-time ministry, first dress shoes with the style name “Dare.” at the outset, you may also contact Shanna with Focus on the Family as Director of They have a three-inch heel, open toes Malone at Shanna.Malone@beasleyallen.com Women’s Ministries, and then six years with and a decorative faux patent leather for more recall information. Anne Graham Lotz as Director of Reviv- bow across the front. The shoes were als. These years of working with God’s sold in sizes 5M to 10M, 11M, 7W to 9W people around the world gave Leigh not only and in gray, nude, scarlet and black the opportunity to witness thousands of lives colors. “Naturalizer” is printed inside being changed for God’s glory, but to grow in and on the bottom of the shoe. The fol- her love for Jesus as she walked by faith 36 www.BeasleyAllen.com through many challenging and stressful situa- dard Act Cases, Employment Class Action District Court for the Northern District of tions. Her years of “adventuring” with the lawsuits and various fraud cases. She is Texas. Pinnacle litigation involves allegations Lord in vocational ministry have been trans- responsible for collecting, organizing and of serious adverse events associated with the formational as she continues to serve Him in reviewing documents, maintaining client Pinnacle Acetabular Cup System, a metal-on- law practice. Leigh returned to the firm in contact, helping to get cases ready for media- metal hip implant. DePuy Orthopaedics is a 2005 to join the Vioxx litigation team. tion, arbitration and trial. Tabitha also does subsidiary of Johnson & Johnson. Leigh earned a degree in Accounting from any other tasks that come her way as a Litiga- Patients who received the Pi n nacle Auburn University in 1990. She graduated tion Assistant. implants report problems including loosen- from the University of Alabama School of Tabitha is married to Brennon L. McGuire, ing of the implant, fracture at the implant Law in 1993. While in law school, Leigh who is on active duty in the United States Air site, dislocation of the implant, as well as served as Managing Editor of the Alabama Force, currently being stationed at Maxwell- pain, swelling and trouble walking. Addition- Law Review and received the Dallas Sands Gunter Air Force Base in Montgomery. They ally, some of these cases allege illnesses pos- Outstanding Senior Award. Following law have two daughters Ceara, 14, who attends sibly related to the release of tiny metal school, Leigh had the honor of serving as a Wetumpka High School and Kaylee, nine, particles resulting from friction where the law clerk for the late Honorable Ira DeMent, who attends Wetumpka Elementary School. metal parts rub together. Consolidating the United States District Judge for the Middle Tabitha graduated from Paint Valley High cases into a MDL allows the committee over- District of Alabama. School in Bainbridge, Ohio, and Pickaway seeing the process to put more pressure and Leigh is a member of the Alabama Trial Ross Vocational Center in Chillicothe, focus on moving the case forward, moving Lawyers Association, Montgomery County Ohio. Tabitha enjoys bowling, competing in cases more quickly to resolution. Lawyers Trial Lawyers Association, American Bar bowling tournaments, r iding with her will coordinate the litigation and work Association and Christian Legal Society. husband on their Harley, and spending together on issues of science and discovery. Leigh also was selected for inclusion on the quality time with her daughters, family and Navan is also serving on the Plaintiffs Steer- 2011 and 2012 Best Lawyers in America list, friends. Tabitha is a very good employee who ing Committee for the DePuy ASR Hip published by U.S. News & World Report. works hard and is dedicated to helping Implant Recall multidistrict litigation, consol- Leigh is originally from Prattville, Ala. The clients with their cases. We are fortunate to idated under District Court Judge David A. daughter of the late Billy O’Dell and Beverly have Tabitha with us. Katz in the Northern District of Ohio, which O’Dell Malone, Leigh enjoys spending time is a separate MDL regarding claims against with her large family, reading, playing tennis, the same Defendants for a similar defective as well as participating in other sporting The beAsley Allen reporT hip device. Navan also serves as Co-Chair to activities. We are truly blessed to have Leigh the DePuy Metal-on-Metal Hip Implant Litiga- in our firm. Our readers in Central Alabama can join us tion Group for the American Association for each week on WSFA-TV 12 for The Beasley Justice. SAnDY JACOBS Allen Report. Hosted by Gibson Vance, a Sandy Jacobs, who has been with the firm Beasley Allen Shareholder and Past President for over seven years, currently serves as a Staff Assistant to Roger Smith in our Mass of the American Association for Justice, this JudGe virGil piTTmAn WAs A GreAT Torts Section. At present Sandy is involved in 30-minute show shares information about JurisT important cases, talks with lawyers with the Actos litigation, which is a medication expertise in various fields and public offi- Judge Virgil Pittman will be remembered prescribed to treat Type II Diabetes. Sandy is cials, and provides valuable insight about as a talented jurist and as a man who not only responsible for working up case files for the topics affecting the public’s rights and access loved the law, but followed it to the letter lawyer and ordering and reviewing medical to the Civil Justice solution. The show also throughout a long and distinguished career. records in a timely fashion. She also main- will feature other Beasley Allen lawyers as Judge Pittman served both as a Circuit Judge tains communication with their clients and wel l as gover n mental and com mu n it y in the Alabama state court system and also as updates the database on a daily basis. leaders. Look for the show in the old Law Call a U. S. District Court Judge in the federal Sandy graduated with honors from Zion time slot, each Sunday evening on WSFA-TV, system. He was appointed to the federal Chapel High School, which is located in Jack, following the 10 o’clock news. bench by President Lyndon Johnson in 1966. Ala. She attended Enterprise State Commu- While his actions on the federal bench nity College in pursuit of a Paralegal Degree weren’t always well received by the public, and is enrolling at Troy University to con- there are two things for certain: Judge tinue her education. Her favorite pastimes XXV. Pittman was always “right” and he never include those spent with her boyfriend, Anthony. They love the outdoors and enjoy SPECIAL backed down. The Coffee County native held the title of “Judge” for almost six decades. hunting, working with their horses and RECOGNITIONS Judge Pittman died on Jan. 6, 2012. His was a spending time with Anthony’s two sons, lifetime of service to his fellow man and that Justin and Jonathan. In addition, Sandy nobody can deny. enjoys staying fit, fishing, 4-wheeling, spend- ing time with her family and spending time nAvAn WArd To help leAd pinnACle hip with Noodles, her dog. Sandy is a very good, implAnT liTiGATion dedicated, and hard-working employee. We Jones sChool oF lAW GAins nATionAl are fortunate to have her with us. Navan Ward, Jr., a shareholder in our Mass rATinG Torts Section has been selected to serve on TABITHA MCGuIRE the Plaintiffs Steering Committee (PSC) for Thomas Goode Jones School of Law, Tabitha McGuire has been with the firm multidistrict litigation (MDL) involving the located on the campus of Faulkner University for five years. She currently serves as Litiga- DePuy Pinnacle hip implant. The litigation in Montgomery, has been named one of the tion Assistant to Lance Gould in the Fraud involves more than 500 cases consolidated 15 best law schools in the United States when Section. Tabitha assists on Fair Labor Stan- under Judge James E. Kinkeade in the U.S. it comes to preparing students for public www.JereBeasleyReport.com 37 service in government. The rating came from she prepared for the hearing, Stephanie says The broadcast networks want the U.S. the National Jurist, a publication which is God revealed Isaiah 41:9-10 to her and that Supreme Court to turn them loose and not referred to as “The voice of legal education.” she repeated it over and over to herself all make them abide by the standards currently The ratings were based upon each school’s weekend. On the day of the hearing, Stepha- in place, calling them “vague” and “anti- employment data, curricula and other infor- nie says she had complete peace and calm. quated.” I don’t believe the standards are con- mation in creating the list. She says God chose her and chose a path in sidered antiquated to the millions of parents The law school trains law students for the legal field for her. And through this who want broadcast TV and radio to be a rel- careers in public service, preparing them verse, Stephanie says God told her not to fear atively safe place to entertain and inform both to engage critically with difficult legal things chosen by Him. their families. I also believe most folks want and policy questions and to deal practically the networks to be regulated. I firmly believe with the challenges of public service. Inter- I have chosen you and have not that a failure to regulate the industry would estingly, nearly 30% of the graduating class of rejected you. So do not fear, for I am be a huge mistake and that it would result in 2010 chose public service careers when they with you; do not be dismayed, for I am great damage to the moral fiber of our graduated. Jones is widely recognized as an your God. country. exceptionally good law school. The school is Isaiah 41: 9-10 Those in charge of the TV and radio broad- doing extremely well under the leadership of cast industries want the broadcast networks Dean Charles Nelson. I agree with Stephanie, who says: “What to be free to show anything and at any time Source: ALABAR.org an amazing Father we serve!” It’s unfortu- with no restrictions. Eliminating the law nate that many of us fail to recognize that entirely would allow broadcasters to pump truth. nonstop profane language, disgusting vulgar Garnett Turner, a long time member of St. and off-color references and sexual content, XXVI. James United Methodist Church, and a good including pornography, into virtually every FAVORITE BIBLE friend, sent in a verse for this issue. Garnett has been in the insurance business for years living room in the country. That’s something that our government simply can’t afford to VERSES and is a good man. allow. Nor should the public tolerate it. The broadcast networks have asserted a I am the true vine, and My Father is “right” to use the airwaves to air whatever Kathy Eckermann, who is my Executive the vinedresser. By this My Father is they want, regardless of who might be in the Assistant, sent in a verse for this issue. Kathy glorified, that you bear much fruit; so viewing audience, and regardless of how it says this verse has been on her mind a great you will be My disciples. might impact viewers. They want all the priv- deal during this New Year. In order to be ileges that come from the licensed use of a changed into the person God wants us to be, John 15:5, 8 public resource, including billions of dollars Kathy says we must renew our minds of annual revenue, but none of the responsi- through reading his Word. She is correct in bility. The networks’ freedom of expression saying that’s how we can find His will for isn’t threatened, and never was, by the our lives. XXVII. federal government. FCC regulations only Do not conform any longer to the CLOSING limit what can be shown when children are most likely to be in the viewing audience— pattern of this world, but be trans- formed by the renewing of your mind. OBSERVATIONS between 6 p.m. And 10 p.m. Simply put, that which is at stake in this case is whether Then you will be able to test and broadcasters will be allowed to air indecent approve what God’s will is—his good, and obscene material on television with no pleasing and perfect will. our Children deserve proTeCTion restrictions and with children watching. Romans 12:2 While I may be the only person who feels The networks would also claim that they this way, I believe we in America had better must be able to compete with unregulated Krystin McHenry, who is a clerical assis- do whatever it takes to clean up the televi- cable networks. But the same companies that tant in our Toxic Torts Section, sent in a verse sion industry and do it without delay. If we own the broadcast networks (Disney, News- that she says has a very special meaning to fail on this front, I fear we will pay a steep Corp, Comcast, Viacom) also own nearly all her. It not only gave her strength during price for our refusal to get involved. I really of the cable channels they claim to compete some difficult times, but the verse was also believe most folks want children protected against. In my opinion, the federal govern- her best friend’s favorite verse. Her friend, from the filth and garbage being shown daily ment has a duty to protect those who cannot who died about a year ago, wrote it on every- on television screens, with much of it coming protect themselves. t h i ng she e ve r sig ned , accord i ng to during prime time hours. No longer is the Only when the public gets involved, will Krystin. The verse is one of the many things exposure of this junk limited to cable and sat- the networks listen. They pay attention that reminds Krystin of her friend. ellite broadcasters. It’s now almost a daily when an advertiser pulls its ads. Even though part of the regular broadcast networks’ pro- the high court justices are supposed to be I can do all things through Christ who immune from political influence, and I sin- strengthens me. gramming. There have been laws, designed to protect cerely hope they are, they should realize how Philippians 4:13 children from broadcast indecency, in place serious this matter is. Hopefully, they will for years. But unfortunately those laws have rule in a manner that will protect our nation’s Stephanie Stephens, a lawyer in our Per- lots of loopholes and without any doubt they children. sonal Injury/Products Liability Section, also have been fully exploited. Instead of weaken- Our children deserve the modicum of pro- sent in a verse for this issue. Stephanie i ng t hose l aws, however, we shou ld tection offered by the FCC’s indecency rules. handled her ver y first court hearing in strengthen them. We are now facing a most Hopefully, the Supreme Court won’t take this December and said that she was very appre- serious crisis in this country dealing with needed protection away. The duty to protect hensive since it was her first real hearing. As this subject. 38 www.BeasleyAllen.com children is paramount in my opinion and it The only title in our Democracy supe- the words of Jesus when he says in John 15:8: should be a priority for our elected officials. rior to that of President is the title of “this is to my Father’s glory, that you shall Source: USA Today Citizen. bear much fruit, showing yourself to be my disciples.” Those who work in FCA are truly Louis Brandeis, 1937 disciples who spread the Gospel message to student athletes and coaches on a constant some imporTAnT monThly reminders basis. U.S. Supreme Court Justice The FCA had the opportunity in Alabama If my people, who are called by my to minister on over 400 campuses through- name, will humble themselves and out the state last year. There were approxi- pray and seek my face and turn from their wicked ways, then will I hear XXVIII. mately 475 coaches in Bible studies, and over 50,000 student athletes who attended FCA from heaven and will forgive their sin PARTING WORDS hudd les, speci a l event s a nd su m mer and will heal their land. camps. The goals in Alabama for this year are much higher. If reached, it will give FCA the 2 Chron 7:14 opportunity to reach even more young The FCA does Good Work people. Fortunately, they have a solid founda- All that is necessary for the triumph of The Fellowship of Christian Athletes, one tion from 2011 to build on. evil is that good men do nothing. of my favorite organizations, does a tremen- In order for FCA to reach its goal in dous job nationwide. FCA works hard to Alabama, they need an additional four staff Edmund Burke members for this year. I believe their desire bring glory to God and minister to young people in schools and universities around the to take the life-transforming power of the Woe to those who decree unrighteous countr y. Its vision is to see the world Gospel into the junior high schools, high decrees, Who write misfortune, Which impacted for Jesus Christ through the influ- schools and colleges in Alabama will be ful- they have prescribed. To rob the needy ence of athletes and coaches. Athletes and filled. That is my hope and prayer. If you of justice, And to take what is right coaches have a tremendous influence on would like to help FCA take its needed from the poor of My people, That people—especially on young people—and message into our schools, contact them at widows may be their prey, And that that influence can either be good or it can be (334) 279-9399. You can get more informa- they may rob the fatherless. bad. FCA wants to make sure that the influ- tion by going to Alabamafca.org or to the ence is good. I commend them for their hard website of the National FCA which is FCA. Isaiah 10:1-2 work and dedication. org. Of course, you can also contact the My friend John Gibbons serves as Director National FCA by calling them at (800) 289- for the FCA in Alabama. John, and all of the 0909 or writing to 8701 Leeds Road, Kansas others on staff for FCA in the state, live by City, Mo. 64129. 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 39 218 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 Jere Locke Beasley, founding shareholder of the law firm Beasley, Allen, Crow, Jere Locke Beasley, founding shareholder of the is one of the most successful litigators of all Miles, Methvin, Portis & Miles, P.C., law firm Beasley, Allen, Crow, Methvin, Portis & time, with the best track record of all time, any lawyer track record of verdicts of any P.C. is one of the most successful litigatorsof verdicts ofwith the bestin America. Beasley’s law firm, established in 1979 with the in 1979 of “helping those who need it who need it lawyer in America. Beasley’s law firm, establishedmission with the mission of “helping those most,” now employs 44 lawyers and more than support staff. Jere Jere has always always most,” now employs over 50 lawyers and more than 200 200 support staff.BeasleyBeasley hasbeen an been an advocate for victims of wrongdoing advocate for victims of wrongdoing and shareholder of the and has been helping those who need Jere Locke Beasley, founding has been helping those who need it most for over 30 years. law firm Beasley, it most for over 30 years. Allen, Crow, Methvin, Portis & Miles, P.C., is one of the most successful litigators of all time, with the best track record of verdicts of any lawyer in America. Beasley’s law firm, established in 1979 with the mission of “helping those who need it most,” now employs 44 lawyers and more than 200 support staff. Jere Beasley has always been an advocate for victims of wrongdoing and has been helping those who need representation is made it most for overNo30 years. that the quality of services to be performed is greater than the quality of legal services performed by other lawyers.
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