On December 21, 2017, the Honorable Judge Richard D. Bennett of the United States District Court for the District of Maryland issued an Order and Final Judgment finally approving a $98.3 million settlement in Hodges v. Bon Secours Health System, et al.. The final judgment resolves all claims against the Bon Secours Health System, Inc. for allegedly denying participants and beneficiaries in seven defined benefit pension plans the protections of the Employee Retirement Income Security Act (“ERISA”). Plaintiffs alleged that Bon Secours Health Plan improperly defined these plans as “Church Plans,” which are exempt from ERISA, and for breaching their fiduciary responsibilities in managing the plans under ERISA. Plaintiffs further alleged that application of the Church Plan exemption to the Bon Secours Plans violated the Establishment Clause of the United States Constitution.

The $98 million settlement represents the total amount of the plans’ underfunding on an ERISA basis at the time the settlement was reached and also provides significant financial and administrative protections through August 31, 2025, such as a guarantee of the accrued benefits owed to participants under the terms of the plans, an anti-cutback provision, and requirements regarding information disclosure to participants in the plans.

This settlement is unique not only for covering the total amount the plans that were underfunded but also for the fact that it was reached while three similar Church Plan/ERISA exemption cases, also led by Cohen Milstein, were consolidated before and ultimately granted review by the Supreme Court of the United States.

Cohen Milstein was court-appointed co-lead counsel in this class action.

Background

Originally filed on April 11, 2016, participants and beneficiaries of seven pension plans managed by Bon Secours claimed that they were denied protections of ERISA because Bon Secours improperly defined the benefit pension plans as “Church Plans,” which are exempt from ERISA. In addition to other fiduciary mismanagement claims, plaintiffs further alleged that the Bon Secours Plans violated ERISA in a variety of ways, and, alternatively, that application of the Church Plan exemption to the Bon Secours Plans violated the Establishment Clause of the Constitution.

The seven pension plans under dispute included:

• Bon Secours Health System, Inc. Frozen Pension Plan
• Bon Secours Kentucky Health System, Inc. Pension Plan
• Bon Secours New York Health System Pension Plan
• Employees’ Retirement Plan of Bon Secours Baltimore Health Corporation
• Employees’ Retirement Plan of Bon Secours-St. Mary’s Hospital
• Memorial Regional Medical Center Pension Plan
• Retirement Plan of Bon Secours-Hampton Roads.

On October 6, 2016, plaintiffs filed a consolidated amended complaint, and on December 5, 2016, Bon Secours filed a motion to dismiss, arguing that plaintiffs lacked standing under Article III of the Constitution because they had not suffered an injury-in-fact, that plaintiffs failed to state a claim that the Bon Secours Plans were not proper Church Plans, and that ERISA’s Church Plan exemption did not violate the Establishment Clause.

While the court considered Bon Secours motion to dismiss, on January 13, 2017, more plaintiffs joined the litigation, whereupon plaintiffs filed a second consolidated amended complaint, rendering defendants’ motion to dismiss moot. Simultaneously, plaintiffs filed a motion to request to stay the case pending the Supreme Court’s ruling on three other, consolidated cases, addressing similar Church Plan definition and ERISA exemption issues: Advocate Health Care Network v. Stapleton, 817 F.3d 517 (7th Cir. 2016); St. Peter’s Healthcare System v. Kaplan, 810 F.3d 175 (3d Cir. 2015); and Dignity Health v. Rollins, 830 F.3d 900 (9th Cir. 2016), which the court granted.

Notably, Cohen Milstein was counsel in the afore mentioned cases consolidated before the Supreme Court.

While the case was stayed, plaintiffs and Bon Secours reached a settlement agreement.

Case name: Hodges, et al. v. Bon Secours Health System, Inc., et al., Civil No. 1:16-cv-01079-RDB, United States District Court for the District of Maryland

On March 21, 2017, the Honorable John C. Coughenour of the United States District Court for the Western District of Washington, granted final approval of a landmark $351 million settlement, ending this class action brought on behalf of 73,000 employees at Providence Health Services.

Plaintiffs alleged that the non-profit healthcare conglomerate and its subsidiaries improperly claimed that the Providence Health & Services Cash Balance Retirement Plan qualified as a “Church Plan” under the Employee Retirement Income Security Act (ERISA).

Plaintiffs further alleged that by improperly operating its plan as a “Church Plan,” Providence Health Services did not comply with the many protections afforded to pension beneficiaries under ERISA. In addition to financial restitution, the lawsuit sought to compel the Providence Plan to fully comply with ERISA.

The claims brought against Providence Health Services mirror those in Dignity Health v. Rollins, 830 F.3d 900 (9th Cir. 2016), involving another non-profit hospital retirement plan, which was consolidated with two other “Church Plan”/ERISA exemption class actions before the Supreme Court of the United States. Cohen Milstein was counsel in all three of these cases.

Case Background

Originally filed on November 7, 2014 by a group of nurses who represented 73,000 employees at Providence Health Services, plaintiffs alleged that Providence Health Services violated numerous provisions of ERISA, while claiming that the Providence Plan was exempt from ERISA’s protections because it was a “Church Plan.” Specifically, plaintiffs alleged that the Providence Plan was not a “Church Plan” because Providence was not a church or a convention or association of churches, and because the Providence Plan was not established by a church or a convention or association of churches. Plaintiffs further alleged that Providence Health Services and the plan fiduciaries breached their duties under ERISA by, among other things:

• Underfunding the Providence Plan;
• Failing to furnish Plaintiffs or any members of the class with a Summary Plan Description, Summary Annual Reports, Notification of Failure to Meet Minimum Funding, or Funding Notices, Pension Benefit Statements; and
• Failing to file an annual report with respect to the Providence Plan with the Secretary of Labor.

Class Action Allegations

This lawsuit was brought on behalf of the following persons:

All participants and beneficiaries of the Providence Health & Services Cash Balance Retirement Plan, also known as the Core Plan.

Excluded from the Class were any high-level executives at Providence Health Services or any employees who had responsibility or involvement in the administration of the Providence Plan, or who were subsequently determined to be fiduciaries of the Plan.

Case name: Griffith, et al. v. Providence Health & Services, et al., Case No. 2:14-cv-01720-JCC, United States District Court for the Western District of Washington.

On December 15, 2003, the court granted final approval of a historic settlement against Lucent of $500 million in cash, stock and warrants, ranking it one of the largest securities class action settlements of all time.

Originally filed in 2000, investors who purchased common stock of Lucent Technologies, Inc. from October 26, 1999 through December 20, 2000 filed this securities fraud class action against the company and certain officers for alleged false and misleading statement.

Cohen Milstein represented The Parnassus Fund, one of the co-lead plaintiffs in this action.

Case Background

Plaintiffs’ charged Lucent with making false and misleading statements to the investing public concerning its publicly reported financial results and failing to disclose the serious problems in its optical networking business. 

When the truth was disclosed, Lucent admitted that it had improperly recognized revenue of nearly $679 million in fiscal 2000.

On May 6, 2011, United States District Judge for the Northern District of Illinois Elaine E. Bucklo granted final approval of a settlement in this alleged securities fraud class action. The settlement consists of $27 million in cash plus 474,547 shares of common stock, valued at $13,292,061 as of the market’s close on May 6, 2011, totaling more than $42 million. 

Originally filed in 2009, investors who purchased or acquired the common stock of Huron Consulting Group, Inc. between April 27, 2006, and July 31, 2009 (the “Class Period”) brought this securities class action lawsuit against Huron Consulting Group, Inc. and Huron’s former Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer to hold them accountable for this fraud under Securities Exchange Act of 1934.

Plaintiffs allege that after the market closed on July 31, 2009, Huron admitted that its impressive reported results were the result of improper accounting and that it was required to restate its financial statements from 2006 through the first quarter of 2009, thereby reducing net profit by a total of $57 million. Huron further disclosed that, following an investigation by Huron’s Audit Committee, Huron’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer would immediately resign their positions without severance. Those officers, who were accounting experts, either knew about or, at a minimum, recklessly disregarded, an ongoing accounting fraud. Following these disclosures, Huron’s stock dropped 70% in a single day.

Cohen Milstein was served as co-lead counsel, representing the co-lead plaintiffs, the Public School Teachers’ Pension & Retirement Fund of Chicago and the Arkansas Public Employees Retirement System.

Case Background

Huron Consulting Group, Inc. was founded in 2002 by former Arthur Andersen partners and provides accounting, finance and corporate transaction consulting services. From 2005 through 2007, Huron grew in large part by acquiring other consulting firms in large, multimillion dollar transactions.

This action arises from an alleged scheme to inflate Huron’s reported profits by deliberately accounting for certain acquisition-related payments as goodwill instead of compensation expenses. Allegedly, Huron and its senior management used the inflated profits to tout Huron’s results to investors and analysts during the Class Period. As a result, Huron’s reported income often exceeded analysts’ expectations and analysts frequently noted how Huron’s margins were superior to its competitors, reflecting the company’s profitability.

Plaintiffs allege that after the market closed on July 31, 2009, Huron admitted that its impressive reported results were the result of improper accounting and that it was required to restate its financial statements from 2006 through the first quarter of 2009.

The company ultimately admitted that Huron made multimillion dollar payments to Huron employees – including to selling shareholders of acquired companies who, with knowledge of senior management, “reallocated” such payments to Huron employees – in connection with at least four different transactions. Under plain and longstanding accounting rules, these payments were expenses that reduced Huron’s profits, and Huron was required to record them as such. On July 31, 2009, Huron disclosed that it had failed to do so and that it was therefore required to restate its reported financial statements for thirteen consecutive quarters to reduce net profit by a total of $57 million. Huron further disclosed that, following an investigation by Huron’s Audit Committee, Huron’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer would immediately resign their positions without severance. Those officers are accounting experts who knew about, or at a minimum recklessly disregarded, the ongoing accounting fraud, and they were forced to resign for cause. Following these disclosures, Huron’s stock dropped 70% in a single day — from $44.35 to $13.69 per share.

On May 10, 2018, Judge Thompson of the United States District Court for the District of New Jersey granted final approval of an $8.8 million settlement against McWane, the last-remaining defendant, bringing total recoveries to more than $17.3 million, in this price-fixing conspiracy class action.

Purchasers of ductile iron pipe fittings (“DIPF”) claimed that McWane, Inc., Sigma Corporation, and Star Pipe Products, Ltd.— the three principal manufacturers of DIPF in the United States, representing 90% of the domestic market – allegedly conspired to fix prices.

On May 15, 2012, the court appointed Cohen Milstein as co-lead counsel on behalf of a class of direct purchasers.

Case Background

Plaintiffs allege that defendants McWane, Sigma Corporation, and Star Pipe Products—the three principal manufacturers of DIPF representing more than 90% of the United States Market—first conspired to fix the prices of DIPF from at least January 2008 through May 2009. 

Plaintiffs also allege that from September 17, 2009, through at least January 3, 2012, the defendants McWane and Sigma conspired to monopolize and fix prices in the domestic DIPF Market.

The Federal Trade Commission brought enforcement proceedings against Defendants challenging the same conduct for which the plaintiffs seek relief.  As a result of the FTC’s enforcement action, both Sigma and Star entered into consent decrees with the FTC in which they were directed to cease and desist from conspiring to “maintain or stabilize prices” with their competitors. 

On May 26, 2017, the Judge Harry S. Mattice, Jr. of the United States District Court for the Eastern District of Tennessee granted final approval of a $30 million settlement in this antitrust price-fixing class action brought against McWane Inc. and Charlotte Pipe & Foundry – two of the largest manufactures of cast iron soil pipes in the country, representing 90% of the domestic market.

Cohen Milstein was co-lead counsel in this matter, representing the class of direct purchasers of cast iron soil pipe and fittings.

Case Background

Plaintiffs alleged that AB&I Foundry, Tyler Pipe Company, and McWane, Inc. (collectively, “McWane”) and Charlotte Pipe and Foundry Company and Randolph Holding Company LLC (collectively, “Charlotte Pipe”), as well as the Cast Iron Soil Pipe Institute, Inc. (“CISPI”), first conspired to fix, raise, maintain, and stabilize the prices of CISP from at least January 1, 2006 through December 31, 2013. 

Plaintiffs also allege that Charlotte Pipe’s 2010 acquisition and liquidation of Star Pipe Products, Ltd.’s (“Star Pipe’s”) CISP business, which resulted in substantially decreased competition in the market for CISP, was an illegal acquisition, undertaken to facilitate and ensure the success of the alleged price-fixing conspiracy scheme.

The Federal Trade Commission also brought enforcement proceedings against the named defendants challenging the same conduct for which the plaintiffs seek relief. The FTC launched an investigation into Charlotte Pipe’s acquisition of Star Pipe’s CISP business, resulting in the FTC’s filing of an administrative complaint against Charlotte Pipe in April 2013.  Subsequently, Charlotte Pipe entered into a consent agreement, prohibiting it from engaging in certain anti-competitive activities.

Cohen Milstein represented a certified class of 15,000 chicken processing employees of Perdue Farms, Inc., one of the nation’s largest poultry processors, for wage and hour violations.

The suit challenged Perdue’s failure to compensate its hourly processing workers for “donning and doffing,” i.e., putting on, taking off, and cleaning, protective and sanitary gear and equipment in violation of the Fair Labor Standards Act (FLSA), various state wage and hour laws, and the Employee Retirement Income Security Act (ERISA).

After this suit was filed in 1999, the U.S. Department of Labor filed its own suit related to the same violations, which later settled for $10 million, and Perdue’s agreement to change its pay practices.  While the DOL suit precluded plaintiffs from continuing to pursue FLSA claims for any but the workers who had already opted-in to the lawsuit, it did not block the state law claims. Plaintiffs contended that the settlement obtained by DOL was not sufficient to cover their unpaid time and continued to litigate. In 2002, the Court approved a $10 million settlement for lost wages and attorneys’ fees and costs.

Cohen Milstein was court-appointed co-lead counsel in this matter.

Case Background

Perdue Farms, Inc. is a Maryland corporation that, at the time of the litigation, operated sixteen chicken processing plants in eight states, including Delaware, Kentucky, Maryland, North Carolina, and South Carolina.

Originally filed in 1999, Leona Trotter and six other hourly employees of Perdue represented a class of approximately 15,000 current and former hourly employees of Perdue who worked in any one of Perdue’s chicken processing plants from December 16, 1993 to August 16, 2001, and who were participating in the Perdue Supplemental Retirement Plan at the time. The plaintiffs alleged that Perdue did not compensate them for work done for the company’s benefit – namely, the donning, doffing, and cleaning of required safety and sanitary equipment before and after working on Perdue’s production lines.

Wearing such protective gear and equipment is required not only for worker safety, but to comply with U.S. Department of Agriculture food safety regulations.

Plaintiffs alleged that they were entitled to compensation for that time and asserted claims for

compensation based on the FLSA, and state wage and hour laws of Delaware, Kentucky, Maryland, North Carolina, and South Carolina, and, because under Perdue’s plan, an amount equal to a percentage of their wages earned was paid into the Supplemental Retirement Plan, ERISA.

Plaintiffs sought redress from both Perdue and the Retirement and Benefits Committee of the Perdue Supplemental Retirement Plan, which was appointed by Perdue as the administrator of its employee benefits plan.

On July 23, 2015, Judge Edward M. Chen of the United States District Court for the Northern District of California granted approval to an $8 million cash settlement against Impax Laboratories, Inc. Investors claimed that Impax knowingly made false or misleading statements about serious deficiencies at a manufacturing facility, as well as its inability to timely remedy those deficiencies as was required by the U.S. Food and Drug Administration.

Cohen Milstein was Co-Lead Counsel in this securities class action. The firm represented Lead Plaintiff, Boilermaker-Blacksmith National Pension Trust.

Important Rulings

• On April 18, 2014, The U.S. District Court for the Northern District of California denied the defendants’ motion to dismiss the plaintiff’s complaint in the securities class action Mulligan v. Impax Laboratories, Inc., ruling that the lead plaintiff had adequately pled claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

In its ruling, the Court agreed with the lead plaintiff’s arguments that the complaint adequately alleged the defendants’ statements were false or misleading and made with scienter and allowed the case to proceed stating:

“[It] is ‘absurd’ to think that the CEO and CFO of a pharmaceutical company would be unaware of the alleged substandard, noncompliant conditions pervading their company’s manufacturing and quality control divisions — the heart of a company whose main business is manufacturing pharmaceuticals for public consumption.”

Case Background

The complaint alleged that Impax and certain of its executives issued false and misleading information to investors by failing to disclose pervasive, serious, and known deficiencies at Impax’s manufacturing facility in Hayward, California, as well as Impax’s inability to timely remedy these deficiencies as was required by the FDA. 

The complaint further alleged that the defendants lacked a reasonable basis for their repeated assurances to investors that Impax was capable of bringing its manufacturing and quality control systems into compliance with FDA standards so that a warning letter issued by the FDA in May 2011 to Impax could be resolved. 

Impax’s stock plummeted in March 2013 by 45% when Impax revealed to the market that a recent FDA inspection had found numerous problems at the Hayward facility, indicating that Impax had still not resolved the issues identified by the FDA in the warning letter.

On April 29, 2016, Judge John G. Koeltl of the United States District Court for the Southern District of New York issued an order granting final approval to an $11 million settlement in this securities fraud class action against Orthofix International N.V. and three of its officers.

Investors alleged that Orthofix, an orthopedic medical device company headquartered in Curacao, Netherlands Antilles, made material misrepresentations and omissions about the company’s financial performance and future prospects in the company’s financial statements. 

Cohen Milstein served as Lead Counsel in this class action.

Case Background

The complaint charged Orthofix and certain of its officers and directors with violations of the Securities Exchange Act. Specifically, the complaint alleged that, during the Class Period (March 2, 2010 and July 29, 2013), defendants issued materially false and misleading statements regarding the company’s financial performance and future prospects, misrepresenting or failing to disclose the following adverse facts, which Lead Plaintiff alleged were known to defendants or recklessly disregarded by them:

• Certain revenues recognized during 2011 and 2012 should not have been recognized or should not have been recognized during the periods in which they were recognized;
• Orthofix’s previously issued consolidated financial statements as of and for the fiscal years ended December 31, 2011 and December 31, 2012 (as well as the interim quarterly periods within such years), and for the interim quarterly period ended March 31, 2013, should not have been relied upon;
• Orthofix’s financial statements during 2011, 2012, and the first quarter of 2013 were materially false and misleading and violated generally accepted accounting principles and Orthofix’s publicly disclosed policy of revenue recognition;
• Orthofix’s Forms 10-Q and 10-K for fiscal years 2011 and 2012, as well as for the first quarter of 2013, failed to disclose then presently known trends, events or uncertainties associated with the Company’s revenues that were reasonably likely to have a material effect on Orthofix’s future operating results;
• Orthofix’s disclosure controls and procedures over financial reporting were materially deficient and its representations concerning them during the class Period, including certifications issued by defendants, were materially false and misleading; and
• As a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the Company’s financial performance and outlook during the Class Period.

On July 29, 2013, Orthofix issued a press release announcing, among other things, that it was delaying the release of its financial results for the second quarter of 2013 and that additional time was needed to review matters relating to revenue recognition for prior periods. In response to this announcement on July 29, 2013, the price of Orthofix shares declined from $27.40 per share to $22.71 per share, or by 17%, on July 30, 2013, on extremely heavy trading volume. Then, on August 6, 2013, Orthofix issued a press release stating that it would restate its financial statements for fiscal years 2011 and 2012 and the first quarter of 2013.

After a period of substantial document discovery, during which Cohen Milstein reviewed over 4.5 million pages of documents obtained from Orthofix and approximately a dozen non-parties who had done business with Orthofix, Lead Plaintiff and Defendants exchanged mediation briefs on their respective claims and defenses, which included Lead Plaintiff’s presentation of more than 100 exhibits in support of the Class’ claims. This case posed significant logistical obstacles during investigation and discovery because much of the information relevant to the case—internal Company documents, witnesses, and news reports—were in six foreign languages and located in nine countries on four continents. Nonetheless, Cohen Milstein succeeded in mounting a strong case that ultimately resulted in a favorable settlement for the Class.

On December 5, 2013, the Honorable Richard J. Leon for the United States District Court for the District of Columbia granted final approval of a $153 million settlement, ending this nearly decade-long certified securities fraud class action and multidistrict litigation against Federal National Mortgage Association (Fannie Mae) and its former accountant, KPMG, LLP.

In his opinion, Judge Leon stated, the settlement constitutes one of “the largest securities class action settlements in the history of our Circuit (since the Private Securities Litigation Reform Act (PSLRA) went into effect in 1996).”

The litigation and settlement are also significant given the risk investors faced in trying to hold Fannie Mae accountable since it is a public company that operates under a congressional charter. Specifically, during the course of the litigation, the government intervened and attempted to place Fannie Mae into receivership of the Federal Housing Finance Authority (FHFA), which could have blocked investors from any type of recovery.

Over the course of nearly ten years of litigation, more than five years included extensive discovery, producing more than 67 million pages of documents, deposing 123 fact witnesses, and 35 expert witnesses; multiple rounds of briefing on dispositive motions; several appeals; and a constitutional challenge to FHFA’s regulation of Fannie Mae.

Cohen Milstein served as local counsel for the Lead Plaintiffs, Ohio Public Employees Retirement System (OPERS) and the State Teachers Retirement System of Ohio (STRS).

Case Background

Fannie Mae was created by Congress and operates as for-profit corporation with private shareholders, with the mission of expanding the national home lending market by buying home loans from private lenders and repackaging them as mortgage-backed securities.

In September 2004, Fannie Mae shareholders filed multiple securities class actions alleging that Fannie Mae, its auditor KPMG, and three of Fannie Mae’s former senior executives violated SEC Rule 10(b) and SEC Rule 10b-5 by intentionally manipulating earnings and violating Generally Accepted Accounting Principles, causing significant losses to investors. Specifically, plaintiffs alleged that the defendants publicly issued materially false and misleading financial reports and other statements that artificially inflated the price of Fannie Mae’s securities between April 17, 2001 through December 22, 2004.

On January 13, 2005, the Court consolidated these class actions into a multi-district litigation action and appointed OPERS and STRS as Lead Plaintiffs.

On January 7, 2008, the Court certified a class composed of approximately one million purchasers of Fannie Mae common stock and call options, and sellers of Fannie Mae put options, during the class period.

In September 2008, while discovery was ongoing, the Federal Housing Finance Agency (FHFA) placed Fannie Mae into conservatorship, essentially converting plaintiffs’ case from one against a private company into a case against the U.S. government. Then, in July 2009, FHFA proposed a rule that 1) subordinated securities litigation claims to the lowest level of the statutory priority for unsecured claims in receivership, and 2) prohibited a regulated entity in conservatorship, such as Fannie Mae, from paying securities litigation claims or making capital distributions (redefined to include securities litigation claims) without the FHFA Director’s approval. Concerned that the rule might effectively block any recovery for their securities fraud claims, plaintiffs filed a separate action in this Court challenging the final rule, Conservatorship and Receivership, 76 Fed. Reg. 35,724 (June 20, 2011), on constitutional and other grounds.

Notwithstanding the parallel proceeding regarding the FHFA rule, the parties filed eight summary judgement motions in this litigation in August 2011 – two by Lead Plaintiffs, and six by the defendants. After hearing oral argument on the motions in June 20212, the Court granted the summary judgment motion of the three individual defendants and dismissed them from the case.

With the remaining five summary judgment motions still pending, the parties agreed to enter formal mediation in 2011. After more than two years of mediation, the parties reached an agreement in principle on March 20, 2013 and finalized the terms of the $153 million agreement and filed for preliminary approval on May 7, 2013.

Case name: In re Fannie Mae Securities Litigation, Case No. 04-1639, MDL No. 1668, United States District Court for the District of Columbia