Lawsuits & Judgments

On Sept. 6, the Supreme Court of New Jersey reversed the rulings of two lower courts and withdrew the class action status of HMOs and Insurance Companies who had been suing Merck over VIOXX. The case, the International Union of Operating Engineers Local 68 Welfare Fund v. Merck was filed by the union health plan against Merck and they sought to expand the suit to represent all health plans.

The insurers were suing the New Jersey based pharmaceutical company to recoup their VIOXX related expenditures. Merck, who was represented by the firm of O’Melveny & Myers and their outside counsel Hughes Hubbard & Reed, had always opposed the class certification in the case. The courts ruling was based on the fact that the claims of the plaintiff’s were not narrow enough to warrant class status. For a class to be certified, each of the claimants must be making similar allegation and this was not the case with the insurance companies. Ted Meyer of Hughes Hubbard & Reed explains:

The Supreme Court recognized that a class action was improper because each insurance company and HMO considered different types of information in deciding whether to reimburse patients for VIOXX, and they all went through varied processes with different experts in making those decisions.

This was a big win for Merck as the damages in the case could have reached $18 billion had it been allowed to proceed. However, it does not preclude the insurance companies from initiating lawsuits individually. There are already more than 27,000 VIOXX related lawsuits against Merck and the company’s strategy is to fight them individually. Merck has had some success in this area. According to an announcement on the companies website, more than 4,600 have already been dismissed, 1,170 “with prejudice” , meaning that they cannot be filed again.

The VIOXX issue will be a thorn in the side of Merck for some time and only with hindsight will we be able to tell if their strategy in these cases was successful.

That is 63 followed eighteen (18) zeros and that is an awful lot of money. We are not sure that anyone is actually going to take this seriously. After all, the prison inmate who filed the suit has a history of filing absurd lawsuits and the suit alleges that Mr Vick stole the plaintiffs pit bulls and sold them on e-bay to fund the purchase of missiles from Iran.

None of the claimants previous suits have actually made it to trial and he has sued such noteworthy figures and institutions as: Larry King Live, the Pope and the Magna Carta (yes, the document) according to the dailypress.com

A Kentucky couple has filed a Mesothelioma lawsuit against a whopping 52 companies this week after the husband was diagnosed with Mesothelioma. Mr .William Potter certainly seems to be a likely candidate for the Asbestos related desires, as he worked as a Steel worker and Crane operator for more than 30 years. We can’t blame Mr. Potter for seeking damages in this precedent rich area, but what were the attorneys thinking. 52 companies seems a little excessive. We can only imagine that the discovery process will eliminate a number of these.

The Ontario based law firm of Flaherty Dow Elliott & McCarthy, has launched a $10 million class action lawsuit against the Longhorn Bodyart Studio, an Oshawa ( Ontario, Canada) based body art  parlor.

The suit  alleges that a faulty equipment exposed more than  2000 customers who got tattoos or piercings at the shop  to blood borne diereses including HIV, Hepatitis B and Hepatitis C.  The shop had faulty sterilization equipment which malfunctioned periodically during the period November 2006 and August 2007. As result the staff at longhorn could have been using dirty or infected equipment on otherwise health customers.

So far more than 500 customers have had blood tests according to an article in  The Star and none have tested positive for infection. The problem with these  types of infections is that they may not manifest for months. Several of the customers interviewed by The Star reported, understandably, being deeply concerned about the potential for infection manifesting coming months.

At Lawsuits & Judgments we can’t help but wonder if this suit might expand to the manufacturer of the sterilization apparatus. If it was a fault in the equipment itself, and not in the operation by that one particular customer, than there are probably a number of medical or body art establishments at risk for a similar failure.  We will monitor developments in this case

Most importantly if you were a customer of Longhorn Bodyart Studio since last November, get a blood test and take all the usual precautions (including no sharing needles, safe sex)  against infecting others.

On Tuesday, September 4th, a Federal Judge in Tennessee certified a class action suit against Unum Group. An article in Forbes provides many of the details: The suit, which was originally filed in 2003, claims that the insurance company “schemed” to terminate or deny the benefits of thousands of disabled Americans. Specifically, It is alleged that “non medical” employees at the Unum Group created secret documents that set target dates for the termination of disability payments in violation of the Employee Retirement Income Security Act (ERISA).

The use of the term “non medical employee” is strong allegation. What this means is that business people, not doctors or other medical professionals, were deciding when to stop payments. This implies that the decision to terminate payments was made for business or financial reasons, and not as a result of the patients medical condition.

This may be something of a non suit in the long run. In 2004, an agreement was reached between 49 states and the Unum Group to reconsider almost 200,000 denied clams and for the company to pay a $15 million fine. A company spokesman was quoted in the Forbes article states that today’s decision is “a procedural ruling focused solely on class certification,” and points out that the company has almost completed reevaluating the specified cases.

We have to agree with this assessment it would seem that this case will proceed until it has been determined that Unum has met its obligations under the 2004 agreement. However, the fact that this case may never go before a Jury does not make it any less important. The mere certification of this class may serve as motivation to the insurance company as it continues to reevaluate the disputed cases.

The RIAA (Recording Industry Association of America) is best known for its seemingly endless series of lawsuits that it has filed against alleged music pirates. The front for the record industry has filed more than 21,000 lawsuits on behalf of its member, such as A&M, Sony and Virgin against people who are alleged to have illegally download copyrighted by their members.

Very few of the tthe lawsuits filed by the RIAA go to trial. In fact, it would seem that the lawsuit almost always includes an offer to settle for a few thousand dollars and a promise not to “do it again” The RIAA is taking advantage of the fact that most people can’t afford to take a suit to trial but some analysts claim that settling these suits is a bad deal for the defendant because they are an admission of guilt and offer no real protection against any future action; civil or criminal.

The RIAA has a less than perfect record when their suits do go to court. There have been several embarrassing defeats for the association in which mistaken identity led to suits being filed against the wrong person, sometimes even a person without computer. In one such case, single mom Tanya Andersen, had her case against the RIAA “dismissed with prejudiced”. Now Miss Andersen and her attorneys (Lybeck Murphy) have initiated a class action lawsuit against the RIAA for their heavy haded tactics. The suit alleges that the RIAA is in violation of both the RICO act (Racketeer Influenced and Corrupt Organization ) and the Computer Fraud and Abuse Act.

According to an article in Variety

For years, the RIAA and its member companies have been using flawed and illegal private investigation information as part of their coordinated scheme and common enterprise to threaten, intimidate and coerce payment from private citizens across the United States. As such they have clogged and abused the federal courts for many years with factually baseless and fraudulent lawsuits.

Specifically, the claimant alleges that:

• The investigative firm hired by the RIAA is not licensed to conduct the type of work it is doing for the RIAA and that both this firm and the RIAA know that there methods are flawed and can result in cases of mistaken identity.
• The RIAA believed that Miss Anderson was innocent but would not drop the case because they did not want to encourage others to defend themselves.
• The RIAA employed coercive tactics against Miss Anderson and her family including an attempt to try and force a deposition from her 10 year old daughter.

The fact that the RIAA refused an offer from Miss Andersen’s offer to examine her computer and only dropped the case when ordered by the court to produce evidence of infringement does lead us to believe that the RIAA, or at least their agents in this case were more interested in pursuing the case than they were in justice.

This case lawsuit has been brought in the federal district court in Oregon and the class has not yet been certified.

What do you think?

A Boston judge has certified a class action lawsuit against McKesson Corporation, the largest drug distributor in North America. The Lawsuit, which was filed by the Seattle based law firm of Hagens Berman Sobol Shapiro back in in October of 2006, was filed on behalf of consumers and various third part insurance providers, was finally certified yesterday, August 29th.

The suit alleges that McKesson entered into “secret agreements” to inflate the reported average wholesale price (the AWP) of many, possibly thousands, of the drugs it distributed. The average wholesale price is used by Medicaid and insurance plans to determine what the payment will be to pharmacies and by causing the AWP to be inflated, McKesson was able to increase the profit it made on the drug at the expense of consumers and third party insurance companies.

According to the announcement posted on the Hagens Berman Sobol Shapiro website, the wrongdoing began in 2001when McKesson and publisher of drug industry information, First Databank, reached an agreement to set the AWP for brand name drugs. The result was a larger gap between the reported wholesale price of the drugs and the actual cost paid, which resulted in a higher profit margin for the company. Analysis of pricing information showed that as a result, companies who had been using a 20% mark up in 2000 were using a 95% markup in 2002.

According to Steve Berman, HBSS managing partner and co-lead attorney, McKesson’s intentions were obvious:

It is clear to us that McKesson’s motivation was to extract higher profits on the backs of health care consumers, many of whom are stretched to the economic breaking point…We believe that the damages incurred by healthcare consumers and third party payers could range in the billions of dollars.

Judge Pati Saris certified the class of the case to include millions of health care consumers who made co payments on what may have been artificially inflated prices.

McKesson also face charges under the Racketeer Influenced and Corrupt Organizations (RICO) act as well as California consumer protection laws.

On August 27th, the New York law firm of Abbey Spanier Rodd & Abrams, LLP has filed a class action securities lawsuit against Tween Brands in the US District Court of Southern Ohio.

The lawsuit claims that the company, specifically CEO Michael Rayden, made misleading statements about the company’s financial outlook for the second quarter of 2007, artificially inflating the share price. The shareholders are alleged, of course, to have suffer greatly as a result.

Things don’t look particularly good for Tween Brands in this case as there seems to be some strong circumstantial evidence. The announcement issued by Abbey Spanier Rodd & Abrams, LLP, outlines some of the claims that were made in the complaint. .

1. In May 2007 CEO Rayden announced a favorable earnings estimate for the second quarter. Rayden predicted earnings per share to be in the $.13 to $.16 range and labeled this estimate “conservative”.
2. The CEO also publicly announced that Tween Brands would resume a $150 million stock buy back program on May 29th.

Per the announcement (on PR Newswire) “The Complaint alleges that even though Rayden knew that consumer demand had fallen materially, that rents and marketing costs were ballooning, and that schools had pushed the beginning of the school year later into the summer, he knowingly or recklessly ignored these factors.”

It wasn’t until August 22 , when the company revealed that they had experienced a weak second quarter and Tween Brands subsequently revised, downward, its 2007 forecast. The market reacted strongly to the unexpected news and the Tween Brands share price plunged $11 dropping from $38.59 to $27.59.

What seems to make matters worse is that CEO Rayden sold 150,000 shares of company stock between June 8^th and 11^th when the shares were trading at more than $41 per share. These transactions netted the executive more than $3 million.

If you purchased Tween Brand (TWB) securities during the period from June 8, 2007 and August 21, 2007 you may be eligible to be a member of “the class” in this class action lawsuit. If you think you might be eligible you need to contact Abbey Spanier Rodd & Abrams, LLP before October 23rd, 2007.

Abbey Spanier Rodd & Abrams, LLP

212 East 39th Street
New York, New York 10016
(212) 889-3700
(800) 889-3701 (Toll Free)

A lawsuit was filed against the California toy manufacturer for distributing more than one million toys that contained lead based paint. The suit was filed in Los Angeles Superior Court by Philadelphia firm of Woloshin & Killino.

The suit does not seek any damages, at this time, but instead is asking Mattel to set up a fund to pay for the blood tests and monitoring of children who have been exposed to the tainted toys. The lawyers have estimated that teach test would cost about $50 per child.

The firm is also seeking to verify the safety of toys. A quote from attorney Jeffrey Killino on the website of CBS’ Philadelphia affiliate explains:

“We’re going a step further right now at laboratories in Ivy League universities throughout the country and we are having toys tested. We are suspicious,” said Killino. Explaining that consumers don’t have the ability to test their own toys at home.

Mattel is the latest company to be caught in the massive quality control and corruption scandals originating in China based manufacturing operations. This lawsuit is probably just one of many that will arise as a result.

The Houston law firm of Laminack, Pirtle & Martines filed a lawsuit on August 23, 2007 on behalf of seven Texans over damage caused my the Merck drug, Fosamax.

The plaintiffs allege that Fosemax, which is supposed to stop bone loss resulting from Osteoporosis instead caused permanent decay. Specifically, the patients claim to have developed osteonecrosis of the jaw . The ailment is described in the South Texas Record as “Better known as ‘jaw death,’ osteonecrosis of the jaw is a disfiguring and disabling condition in which the bones of the jaw “die” from infection” The condition is both painful and disfiguring.

The lawsuit alleges that Merck not only knew of the dangers that the drug, didn’t disclose it and that they so far as to bribe physicians to prescribe it.

The plaintiffs are seeking damages plus punitive damages