Jere Beasley Report_ February 2012 by yaohongmeiyes

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									                                       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 wide.settlement@usdoj.gov 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 info@kymcousa.com,         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.
 fits@steelcase.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.




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

								
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